Will you be able to achieve the desired returns?
We only invest in attractive companies that have the potential to generate a return on investment (ROI) for us. However, ROI is not our primary driver, but rather a happy by-product of our work, as we invest first and foremost to support Switzerland as a financial center and the role of SIX as a central infrastructure service provider. It is really important to understand that we have a dual objective: our priority is to invest in companies that will safeguard the future competitiveness of our industry through innovative ideas, technologies and business models. These companies will also return money to us in the event of a successful exit, thus paying off our financial investment. By supporting its chosen ventures, SIX FinTech Ventures strengthens the Swiss financial center as a whole. SIX benefits from this whatever happens – whether directly or indirectly is a secondary concern.
Swiss banks are shareholders in SIX. Do you invest in companies that could end up choking off these banks?
We are essentially free to operate and invest as we see fit. So in theory we could end up investing in ideas that bring about a fundamental change in this industry. Why not? That is precisely how SIX keeps its finger on the pulse, learns about emerging businesses and undertakes a form of hedging. If such a start-up were indeed to have such a great influence one day, it would most likely become a takeover candidate for the big players operating in this market. In such a scenario it would of course also be financially advantageous for SIX to be involved. However, there is no sign of any such disruptive innovation on the market at present. But if there were, we would already be too late to invest. Our philosophy is to invest in the early stages of a company’s development – a time when the end effect of an idea or technology is not normally fully visible.
We have been talking a lot about business models, ideas and products. But ultimately behind all that you have people. What do I as a company founder have to bring to the table to convince you to invest?
You should already have brought your innovation to a certain level. Specifically, I am looking for the level that you would have reached in successfully completing the F10 program. In this way you demonstrate to us that you believe in your own idea and that you are capable of achieving major milestones independently. This feeds directly into our philosophy that you would be able to turn your idea into reality even without our help. A team mentality and the ability to learn go without saying, as no one gets to the top alone and those who embrace teamwork tend to learn along the way. You would need to be solution-oriented and of course flexible. No idea ends up being implemented exactly as it was first conceived. You need to be able to adapt to new circumstances, fast. This requires you to grasp in good time that circumstances have changed. Then you prove that you can recognize and understand a changing market. We are talking about the classic entrepreneur profile here. That’s when everything comes together.
When will we see the first IPO of a unicorn in which SIX FinTech Ventures has invested?
(laughs) That could take a while yet. As I have already explained, our primary motivation is not to make a fortune, however nice that might be. We invest with a long-term horizon. We take stakes in potential champions at an early stage. These companies need time to develop – I am talking about a time frame of four to seven years, and we are still right at the start of that process. We must not lose sight of the fact that we only made our first investments in 2018. It would be unreasonable to have high expectations just yet. Even innovations take time to penetrate the market: just because a technology has certain benefits does not mean that everyone will adopt it overnight.
Some years ago you took the first steps in your own development with the F10 Incubator. What is the status now?
That’s right, we didn’t begin with SIX FinTech Ventures. We have developed step by step over a number of years. Similarly to the Swiss value chain, we cover all links in a chain – but ours is a chain of innovation rather than a traditional value chain. We are able to discover ideas, win them for F10, accelerate their development there and ultimately make the requisite investments where there are good prospects of success. This framework has taken some years to develop and was designed to function in just this way. I hope that it will enable us to eliminate some the doubts that existed early in its development. From a purely structural point of view, we have reached our destination with SIX FinTech Ventures. The subject matter is of course another matter: here, we learn more every day. Which is just how it should be!
Many thanks for your time.