Swisscom Ventures, the corporate venturing subsidiary of telecommunications firm Swisscom, has closed a SFr200m ($199m) fund that included an oversubscribed offering to third-party investors.
Swisscom has committed about $50m to the Digital Transformation Fund, with the rest committed by institutional investors. It will target early to later-stage companies, with half the dealflow expected to come from Switzerland and the rest from the US, Europe and Israel.
Swisscom Ventures has already invested about $100m in approximately 50 startups resulting in 20 exits, including the sale of Switzerland-based business software provider Bexio for a reported $110m earlier this month.
Dominique Mégret, a member of the GCV Powerlist 100 this year, helped launch Swisscom Ventures in 2005. It has gone through a number of iterations, ending up with an an early-stage fund that runs on an evergreen model where returns are reinvested in new portfolio companies.
However, unlike prior spinouts of corporate venturing units, such as Sapphire Ventures from Germany-based enterprise software provider SAP, Swisscom Ventures will remain with its parent company and focused on both strategic and financial goals.
Finding the right mix of financial and strategic returns will be important and comes as peers such as Telstra develop alternative models to leverage corporate cash with financial investors, Telstra Ventures having closed a $500m fund this month with partner HarbourVest.
In a Global Corporate Venturing interview held before the latest fund closed, Mégret said: “We invest in core telecoms and IT services, in technology that will emerge in that space and transform our business within the next three years.
“We also invest in technologies that manage customers and improve customer experience. Then we try to discover new areas of growth which will emerge within the next three to five years for Swisscom.
“That is why we have been taking some bets in areas which seem, at this point, remote but are getting closer to the core business of Swisscom, such as e-health, the internet of things, artificial intelligence, wearables and even fintech.”
Swisscom Ventures has been expanding its team over the past year, hiring Peter Ibbotson in October from a chief financial officer role at venture capital firm Endeavour Vision to be its investor relations director.
Matthias Schmidt moved internally from a senior corporate strategist role to join Swisscom Ventures the same month, and is responsible for strategic value creation across the portfolio and supports investment activities.
Klea Gorgievski joined Swisscom Ventures as an investment manager in January 2018 after compleing an international full-time MBA in Lisbon and at MIT Sloan.
The new fund comes amid greater activity in Switzerland, where almost $940m was invested in startup companies in 2017, about 3% more than in the previous year, according to local industry association Seca.
Swiss pension funds manage more than $800bn but invest about 1.5% in private equity, including venture capital, although a number of local firms are targeting greater commitments from them, including Swiss Entrepreneurs Fund and the Future Fund set up by Henri Meier, a former CRO of pharmaceutical company Roche.
The targeted target size of the Future Fund, like the Swiss Entrepreneurs Fund, is SFr500m, r50% of which will be invested in Switzerland.