{"id":127106,"date":"2026-04-09T11:36:43","date_gmt":"2026-04-09T11:36:43","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=127106"},"modified":"2026-04-09T11:36:43","modified_gmt":"2026-04-09T11:36:43","slug":"switzerland-venture-capital","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/switzerland-venture-capital\/","title":{"rendered":"Switzerland: Venture Capital"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-127106","comparative_guide","type-comparative_guide","status-publish","hentry","guides-venture-capital","jurisdictions-switzerland"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">B\u00e4r &amp; Karrer Ltd.<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/bk_logo_108U.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">B\u00e4r &amp; Karrer Ltd.<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/bk_logo_108U.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Venture Capital laws and regulations applicable in Switzerland<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there specific legal requirements or preferences regarding the choice of entity and\/or equity structure for early-stage businesses that are seeking venture capital funding in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Swiss startups can select either a stock corporation or a limited liability company as their legal entity. Whilst a limited liability company may be attractive for founders due to lower minimum capital requirements at incorporation (CHF 20,000 for a limited liability company vs. CHF 100,000 for a stock corporation, whereby CHF 50,000 need to be paid-in), stock corporations are typically preferred as shareholders and share transfers do not require registration with the commercial register (as is the case with a limited liability company) which is burdensome (e.g., in case of a broad shareholder base due to an ESOP) and unattractive for investors from a confidentiality standpoint.<\/p>\n<p>There are no particular Swiss legal rules that require startups to have a certain equity structure. Like in other jurisdictions, the equity structure of Swiss startups is typically layered with common shares being held by the founders (and employees), and preferred shares being held by investors. Preferred shares typically carry non-participating liquidation\/exit preferences and conversion rights.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the principal legal documents for a venture capital equity investment in the jurisdiction and are any of them publicly filed or otherwise available to the public?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The principal legal documents for a VC investment in Switzerland are typically a non-binding term sheet which sets out the commercial and legal cornerstones of the investment and is then formalized in the investment agreement (incl. subscription form), the shareholders&#8217; agreement, the articles of association and the board regulations. Of these documents, only the articles of association are filed with the commercial register and become publicly available. For confidentiality reasons, the parties therefore often abstain from &#8220;hardwiring&#8221; detailed provisions from the shareholders&#8217; agreement into the articles, thereby relying on contractual protections only.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a venture capital industry body in the jurisdiction and, if so, does it provide template investment documents? If so, how common is it to deviate from such templates and does this evolve as companies move from seed to larger rounds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key venture capital industry body in Switzerland is the Swiss Private Equity &amp; Corporate Finance Association (SECA). SECA provides model documentation for VC investments, including templates for term sheets, convertible loans, investment agreements, shareholders&#8217; agreements, articles of associations and board regulations.<\/p>\n<p>SECA&#8217;s templates often form the basis of the investment documentation in early-stage financing rounds but it should be noted that the templates are on the investor friendly side. The nature and extent of deviations are primarily driven by the specifics of the transaction, including the negotiation power and preferences of the involved parties. On the timeline, deviations from templates tend to increase along the funding stages as initial deviations are typically carried forward and new deviations are negotiated in each round.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any general merger control, anti-trust\/competition and\/or foreign direct investment regimes applicable to venture capital investments in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Swiss merger control and anti-trust regulations are set out in the Swiss Cartel Act and its ordinances. An investment is notifiable in Switzerland if the investor(s) acquire(s) (sole or joint) control over the target company and if additionally, either the applicable turnover thresholds ((1) combined turnover of all undertakings concerned of at least CHF 2bn worldwide or at least CHF 500m in Switzerland and (2) individual turnover of at least two of the undertakings concerned of at least CHF 100m in Switzerland) are met or if one of the undertakings concerned has been held by the Competition Commission to be dominant and the investment concerns the same or a neighbouring\/upstream\/downstream market. Due to high turnover thresholds, VC investments are rarely notifiable in Switzerland. Anti-trust considerations otherwise often play a role in connection with non-compete\/non-solicit undertakings in shareholders&#8217; agreements.<\/p>\n<p>Unlike many other jurisdictions, Switzerland does not (yet) have a comprehensive FDI regime. After a lengthy political process, the Swiss Investment Screening Act was adopted by the Swiss Parliament in the final vote on 19 December 2025. The new Investment Screening Act is expected to enter into force no earlier than 2027.<\/p>\n<p>In line with Switzerland\u2019s traditionally open approach toward foreign investors, the aim is to address security-related risks in a targeted manner while minimizing any adverse impact on the welfare-enhancing effects of foreign direct investment. Against this backdrop, a foreign direct investment is subject to a notification requirement if the following conditions are met: (1) it constitutes an acquisition of control; (2) of a domestic (Swiss) company; (3) by a foreign state-owned investor; (4) in a (security-)critical sector; (5) above the relevant turnover thresholds. Until approval is granted, enforcement is prohibited. Accordingly, investments by private foreign investors remain outside the scope.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the process, and internal approvals needed, for a company issuing shares to investors in the jurisdiction and are there any related taxes or notary (or other fees) payable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A Swiss stock corporation (or limited liability company) can issue shares by way of an ordinary share capital increase, a share capital increase out of conditional capital, or a share capital increase based on a capital band (which replaced the so-called &#8220;authorized share capital&#8221; at the beginning of 2023). The issuance of shares to investors in the context of VC investments is typically done by way of an ordinary share capital increase for which broadly the following process applies:<\/p>\n<p>In a first step, the board proposes a share capital increase and convenes an extraordinary general meeting (EGM) with at least 20 days&#8217; prior notice. If all shares are represented (universal meeting), no convocation is required. In a second step, the EGM (with simple majority in case of a cash capital increase and qualified majority in case of a non-cash capital increase or if the statutory subscription right of the shareholders is curtailed or excluded) resolves on the capital increase in front of a notary public. In addition, where a company has already issued preference shares, the law requires that any further issuance of preference shares conferring preferential rights over the existing preference shares may only be made with the consent a special meeting of the adversely affected holders of the existing preference shares, unless otherwise provided in the articles of association. The capital increase must then be implemented by the board within six months, i.e., investors subscribe for the new shares (by executing a subscription form) and pay the subscription (or at least the nominal) amount onto a blocked bank account in the name of the company whereafter the board issues a capital increase report (which must be audited in case of non-cash capital increases or in case the statutory subscription right of the shareholders is curtailed or excluded) and resolves on the ascertainment of the capital increase and the amendment of the articles of association in front of a notary public. In a last step, the board submits the commercial register application for registration of the capital increase. The capital increase takes effect with registration in the commercial register (upon which funds can be released from the blocked bank account and be paid onto an operating bank account of the company).<\/p>\n<p>In the context of VC investments, the above steps (up to and including the commercial register application) are typically completed on the same day following pre-payment of the subscription (or nominal) amount onto the blocked bank account. The registration of the capital increase with the commercial register typically takes between three to seven business days from submission of the application (although delays can be expected during the holiday period).<\/p>\n<p>The issuance of shares (including any share premium) by a Swiss stock corporation (or limited liability company) is subject to a 1% stamp duty on invested funds which exceed a one-time exempt threshold of CHF 1m. Fees for notarization depend on the canton and the notary but are generally based on the transaction value with ranges and caps (e.g., fees for notarizations in connection with capital increases in the canton of Zurich amount to 1\u2030 of the capital increase amount and range between CHF 500 and CHF 5,000 for non-listed and smaller companies not subject to an ordinary audit).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is participation from investors that are not venture capital funds, including angel investors, family offices, high net worth individuals, and corporate venture capital?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Angel investors, family offices, and high net worth individuals play an important role in the Swiss VC ecosystem. Their participation is particularly prevalent in seed and early-stage financings. Corporate venture capital, like most VC funds, in general tend to target later financing rounds.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the typical investment period for a venture capital fund in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Like in other jurisdictions, the investment period for a VC fund in Switzerland is usually the first three to five years of a fund&#8217;s life cycle which typically ranges between 10 to 12 years (subject to extensions).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key investment terms which a venture investor looks for in the jurisdiction including representations and warranties, class of share, board representation (and observers), voting and other control rights, redemption rights, anti-dilution protection and information rights?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key investment terms which a VC investor is looking for in Switzerland may vary depending on factors such as investment stage, equity stake, and investment approach but typically include:<\/p>\n<p>&#8211; R&amp;W: R&amp;W are typically given by the company and\/or the founders and cover fundamental, tax\/social security, and business matters (often with a particular focus on IP, IT, and data protection in a tech-driven startup environment).<\/p>\n<p>&#8211; Class of share: investor typically ask for preferred shares, which rank senior to ordinary shares held by the founders.<\/p>\n<p>&#8211; Liquidation preference: preferred shares subscribed for by investors typically carry a (one-time) non-participating liquidation\/exit preference and conversion rights.<\/p>\n<p>&#8211; Anti-dilution: anti-dilution provisions offering down-round protection for investors are standard in Swiss VC transactions. The broad-based weighted average method is the most common adjustment method.<\/p>\n<p>&#8211; Governance\/information rights: depending on the equity stake and investment approach, investors may seek board representation or at least board observer rights and in any case information rights (regular financial information, KPIs, budget).<\/p>\n<p>&#8211; Reserved matters: investors always request (fundamental) veto rights for investment protection (e.g., amendment of articles, issuance of senior ranking shares, voluntary liquidation, etc.) and depending on acquired stake and investment approach may additionally request strategic or even operational veto rights.<\/p>\n<p>&#8211; Exit rights: investors typically seek exit rights to secure liquidity for their investment such as the right to initiate an exit after a certain holding period, tag-along, and drag-along rights (with down-side protection).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key features of the liability regime (e.g. monetary damages vs. compensatory capital increase) that apply to venture capital investments in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Founders often lack liquidity and Swiss corporate law puts restrictions on the distribution of funds to shareholders (so called prohibition on capital repayments), investment agreements often provide for a compensatory capital increase and\/or transfer of founder shares at nominal value as compensation mechanisms in case of damages resulting from a breach of R&amp;W.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How common are arrangement\/ monitoring fees for investors in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>VC funds who act as lead investors in financing rounds will frequently lead the due diligence and request company to cover reasonable legal fees and expenses incurred by their counsel (sometimes such costs are capped \/ agreed in the term sheet). In addition, lead investors sometimes also request arrangement \/ monitoring fees but typically such fees are rather seen in private equity set-ups in Switzerland.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are founders and senior management typically subject to restrictive covenants following ceasing to be an employee and\/or shareholder and, if so, what is their general scope and duration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Founders and senior management are typically subject to post-contractual non-compete\/non-solicit undertakings in the shareholders&#8217; agreement and\/or employment agreements.<\/p>\n<p>In terms of scope, non-compete undertakings generally cover the company&#8217;s current product\/service offering whilst non-solicit undertakings generally prohibit the active solicitation of the company&#8217;s employees and customers. Geographically, non-compete\/non-solicit undertakings typically cover the company&#8217;s current (main) sales markets and potentially markets where market entry is imminent.<\/p>\n<p>In terms of permissible duration, Swiss competition and employment law sets certain restrictions. The permissible duration of non-compete\/non-solicit undertakings in shareholders&#8217; agreements depends on whether the relevant shareholder(s) has\/have (sole or joint) control over the company. In case of control, non-compete\/non-solicit undertakings of (co-)controlling shareholder(s) may be entered into for a duration of up to three years after the relevant shareholder ceases having control. For non-controlling employed shareholders, non-compete\/non-solicit undertakings in shareholders&#8217; agreements may from a Swiss competition law perspective be justified for up to 12-24 months after termination of the employment relationship of the relevant shareholder (although no reliable case law exists). Non-compete\/non-solicit undertakings in employment agreements may be entered into for a period of up to three years after termination of the employment relationship (although typically the duration is limited to 12-18 months from termination as the enforceability of the non-compete\/non-solicit undertaking generally decreases with increasing duration).<\/p>\n<p>To ensure compliance, non-compete\/non-solicit undertakings are frequently backed by contractual penalties, which serve as a deterrent and facilitate enforcement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are employees typically incentivised in venture capital backed companies (e.g. share options or other equity-based incentives)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The most frequently seen incentive schemes for employees in Swiss VC backed companies are share option plans (for actual equity) or phantom share plans (for synthetic equity).<\/p>\n<p>Whilst from a corporate law and contractual perspective, phantom share plans are administratively easier to implement as no share issuances\/transfers and no adherence to a shareholders&#8217; agreement is required, &#8220;hard&#8221; equity participation via share options is often preferable for employees from a tax perspective. Phantom shares are taxed as salary income at the time of the realisation of the cash amount and are subject to ordinary income tax and social security charges (in principle uncapped in Switzerland). Therefore, there is no possibility of obtaining a tax-free capital gain. Employee shares are taxed at grant if they are acquired below fair market value, resulting in so-called dry salary income for the employee (also being subject to social security charges); a later sale, however, can qualify for a tax-exempt capital gain (generally after a period of five years; within a five-year period, a partial tax-exempt capital gain might be possible).<\/p>\n<p>Commercially, the dilution from employee incentive schemes, including any required increase, is often a key negotiation point. Investors typically push for these to be included in the pre-money valuation, ensuring that the economic impact is borne solely by founders and existing shareholders. Conversely, founders and existing shareholders seek to (partially) exclude them to mitigate their own dilution.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most commonly used vesting\/good and bad leaver provisions that apply to founders\/ senior management in venture capital backed companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>(Reverse) vesting schedules for founders\/senior management are a common feature in Swiss VC backed companies. Vesting schedules often provide for (reverse) vesting periods of three to five years with monthly or quarterly vesting after a one-year cliff period and accelerated vesting in case of an exit transaction (IPO, change of control or asset sale). The percentage of founder shares subject to (reverse) vesting is a frequent point of negotiation, as founders become increasingly reluctant to accept (new) vesting restrictions in later financing rounds. Meanwhile, investors often push for new vesting periods to ensure founders remain committed throughout their investment period.<\/p>\n<p>Good-\/bad-leaver provisions typically refer to &#8220;good cause&#8221; (a higher threshold justifying immediate termination of employment) and\/or &#8220;justified reason&#8221; (a lower threshold affecting the enforceability of post-contractual non-compete\/non-solicit obligations). These thresholds determine whether a departing employee qualifies as a good or bad leaver. Both thresholds are relatively high, and underperformance on its own &#8211; or a dismissal of an employee due to underperformance &#8211; typically does not justify a bad-leaver case under either threshold. In terms of purchase price, vested good-leaver shares are generally subject to a call option at fair market value or may remain with the employee, while non-vested shares are callable at nominal value. In a bad-leaver scenario, however, all shares are usually callable at nominal value or at a significant discount to fair market value.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What have been the main areas of negotiation between investors, founders, and the company in the investment documentation, over the last 24 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Over the past 24 months, the Swiss venture capital market has seen a decline in investment, especially in seed and early-stage financing (Swiss Venture Capital Report 2025). This has made fundraising more difficult for start-ups, leading to a rise in bridge financing through convertible loans, with valuation caps and discount mechanisms as key negotiation points between investors and founders.<\/p>\n<p>For start-ups securing new financing, down-rounds and their impact on existing shareholders have been a recurring concern. Discussions have frequently centred on anti-dilution protection, including waivers or renegotiations of these rights.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of convertible debt (e.g. convertible loan notes) and advance subscription agreement\/ SAFEs in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Switzerland, convertible loans are a prevalent instrument to provide startups with seed or bridge funding. In contrast, equity or equity-like instruments such as advance subscription agreements or SAFEs are not common, as Swiss corporate, accounting, and tax laws make them tax-inefficient and burdensome to implement.<\/p>\n<p>Under the revised Swiss corporate law, the requirements for a conversion of convertible loans into equity have been clarified and slightly modified beginning of 2023. While it has been clarified that a loan can be converted into equity in the full amount even if the company is over-indebted (i.e., if the loan is not fully covered by assets), the articles of association, which are publicly available, must newly reflect the amount of the converted loan, the name of the shareholder who converted the loan, and the number of shares issued to the shareholder in exchange for the converted loan. Many investors prefer to keep their investment amount and identity confidential. As a result, we frequently observe alternative loan conversion mechanisms. However, these typically require the investor to pay in the nominal amount of the subscribed shares in addition to the loan amount.<\/p>\n<p>From a Swiss tax perspective, arm&#8217;s length interest payments by Swiss borrowing entities would not be subject to Swiss withholding tax provided that the Swiss borrowing entity is compliant with Swiss thin capitalisation rules and receives financing from maximum 10 non-bank lenders (at same terms) or maximum 20 non-bank lenders (at different terms).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the customary terms of convertible debt (e.g. convertible loan notes) and advance subscription agreement\/ SAFEs in the jurisdiction and are there standard from documents?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Swiss convertible loan agreements (CLAs) regularly provide for an interest rate, a valuation cap and\/or discount (particularly in seed financing), conversion triggers with mandatory conversion in the event of a qualified equity financing round or a change of control transaction and voluntary conversion at maturity of the loan, and a subordination clause according to which the loan (incl. interest) is subordinated towards all current and future claims of creditors of the borrower but is ranking pari passu with other unsecured debt (such as other convertible note holders). The subordination clause is key in CLAs to avoid over-indebtedness and the resulting obligation of the startup to file for bankruptcy. The subordination may only be removed if audited (interim-) financial statements show that the borrower is not over-indebted or if the subordination is replaced by another sufficient subordination.<\/p>\n<p>As a result, subordinated convertible loans are typically converted into equity at maturity, since repayment of a subordinated loan is prohibited, and a removal of the subordination is often not possible. Standard-form Swiss CLAs are provided by SECA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of venture or growth debt as an alternative or supplement to equity fundraisings or other debt financing in the last 24 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Although there is no reliable data on the use of venture or growth debt in Switzerland, venture debt financing is less prevalent in Switzerland, particularly as compared to the US. Nevertheless, venture debt has become increasingly popular in the last 24 months as a supplementary or even alternative (low-dilutive) financing source for startups with a proven business model, (realistic potential for) stable revenue streams \/ cash flows, and therefore debt servicing capacity.<\/p>\n<p>We have also observed venture debt being used as bridge financing, typically for short-term liquidity needs. In these cases, the interest rates are high(er), and financing mostly comes from lenders outside Switzerland.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the customary terms of venture or growth debt in the jurisdiction and are there standard form documents?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Swiss venture debt agreements typically contain certain conditions precedent, covenants (e.g., financial covenants, negative covenants such as negative pledge undertaking, and information covenants), R&amp;W of the borrower, an (extensive) list of default events (e.g., breach of R&amp;W, breach of covenants, default, cross-default, deteroriation of collateral\/creditworthiness, etc.), collateral provisions (guarantees, sureties, assignment of receivables and pledges of assets such as bank accounts, shares, IP-rights, real estate) and an equity kicker in the form of subscription rights or warrants for the venture debt provider. There are currently no standard form documents available in Switzerland.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the current market trends for venture capital in the jurisdiction (including the exits of venture backed companies) and do you see this changing in the next year?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Switzerland continued to face challenges in venture capital activity in 2024, with total investments declining by 8.5% compared to 2023, following the sharp 34.8% drop in 2023, according to the Swiss Venture Capital Report 2025. The number of financing rounds fell for the first time since 2012, decreasing by 10.1%. Despite this, total investment remained comparable to pre-pandemic levels (2019), with later-stage rounds proving more resilient, while seed and early-stage funding declined significantly.<\/p>\n<p>According to the latest figures from the Swiss Venture Insights Reports for Q1 and Q3 2025, overall funding through Q3 increased by 66%, to CHF 762m in 2025 from CHF 460m in the same period of 2024. Cleantech was the most active sector in Q3 2025 by amount raised (CHF 391m), while Biotech led in Q1 2025 (CHF 426m).<\/p>\n<p>The Q3 Report for 2025 notes, that the market share is quite distributed in terms of the amount raised, having later stages such as Series B, Series C and Growth a 76% of the total amount raised, whereas the early-stage rounds accounted for 24%.<\/p>\n<p>The third quarter of 2025 showcases clearly an interesting recovery from the Swiss venture capital ecosystem, placing the second highest amount in the last 5 years, only surpassed by the year of 2022.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are any developments anticipated in the next 12 months, including any proposed legislative reforms that are relevant for venture capital investor in the jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As discussed under question no.\u00a04, the Swiss Investment Screening Act was adopted by the Swiss Parliament in the final vote on 19 December 2025. The new Investment Screening Act is expected to enter into force no earlier than 2027. While private foreign investors remain outside its scope, investments by foreign state-owned investors may be subject to prior approval.<\/p>\n<p>In November 2024, the Federal Council released its draft law and the accompanying dispatch regarding the extension of the tax loss carry-forward period from seven to ten years. The draft law was accepted by the Swiss Federal Parliament in December 2025 but might be subject to a referendum. An extended tax loss carry-forward period would especially be beneficial for start-ups and early-stage businesses.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3959<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/127106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=127106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}