Xlife Sciences, a Switzerland-based biotechnology firm, became the first company to list on Sparks, the newly launched SME  trading segment on SIX Swiss Exchange. This comes as many SMEs – both globally and from within Switzerland itself - increasingly recognise the benefits afforded by Sparks - giving SMEs access to the benefits of public markets.

SMEs are sometimes constrained when it comes to obtaining financing. As outlined in this recently released research white paper, produced in collaboration between SIX and the Swiss Research Institute of Small Business and Entrepreneurship at the University of St. Gallen (KMU–HSG) – “The Future of SME Financing” – fundraising can be challenging for various reasons, for instance many investors are reluctant to assume the potential risks that come with being exposed to SMEs. At the same time in other cases a lack of awareness among SME entrepreneurs about the types of financing available to them was also identified in the paper as a major reason why funding for SMEs can be difficult to obtain.   

This is why SIX Swiss Exchange launched the Stage Program in 2016. The service unlocks independent research coverage for SMEs, helping investors better understand the risks and potential of these SMEs while at the same time raising visibility for these companies. Another way of supporting SMEs is the recently launched Sparks IPO Academy, equipping the leaders of some of the best fast-growing Swiss SMEs with the knowhow to take their companies public. Furthermore, a workshop series focused on IPO readiness will launch this summer to help younger companies from the Swiss Scaleup ecosystem open up an additional financing option.

Looking further ahead, the paper finds that more SMEs will likely be able to benefit from the growth advantages that public markets can offer. Today, smaller companies often lack the widespread research and financial information that is being produced for bigger listed companies. The paper forecasts that this imbalance should get better. The on-going explosion in (alternative) data, and further advances in automation, promise to substantially reduce the costs of producing financial information for all companies. This means that smaller companies in particular would benefit by providing investors access to necessary information that is not available today.

According to Valeria Ceccarelli, ‘The dynamics identified in the paper support us on our mission to ensure that the backbone of the Swiss economy — fast-growing and established SMEs — can benefit from the growth advantages of public capital markets. SIX Swiss Exchange will continue to launch new services designed to help more SMEs enjoy these growth benefits.’

Through Sparks, SMEs can tap into the equity capital markets more seamlessly -  enabling them to obtain funding during some of the most critical stages of their business lifecycle and development. Sparks also gives investors access to new and exciting companies  at a time when return generation has been tough due to the volatility and low interest rate environment.  In addition to benefiting from increased visibility and brand awareness, Sparks provides SMEs with a credibility boost:  Being publicly traded on a reputable venue such as SIX Swiss Exchange imposes heightened transparency standards and oversight on companies, which is integral to gaining the trust of investors.

Read the full paper here.