SVC – Ltd.: "We want to see development potential"
Beat Brechbühl has been a member of the Board of Directors at SVC – Ltd. for Risk Capital for SMEs (SVC Ltd.) since it was founded six years ago. In conversation he explains what the perfect investment looks like for SVC Ltd.
SVC – Ltd. for Risk Capital for SMEs is an investment company. What differentiates you from comparable companies?
Beat Brechbühl: For us, it’s not about achieving the highest possible yield. SVC Ltd. was founded after the financial crisis as a subsidiary of Credit Suisse in May 2010, in collaboration with the Swiss Venture Club. Their common goal was to strengthen the Swiss employment and labor market.
So is the focus on promoting entrepreneurship in Switzerland?
That’s right, which is why we try to invest sustainably. The capital should be retained, so that the financing can keep going further. That is why we are more interested in financing established companies than financing classic start-ups.
What distinguishes the companies in the SVC Ltd. portfolio?
The key factor is always that the SME must be located in Switzerland. In terms of the industries and regions, we are very broadly diversified. Other important criteria are: We want a strong management team and stable shareholder base. The business plan must be based on a mature business idea with innovation, and be validatable. A certain market acceptance must also be apparent.
Aside from injecting capital, how else does SVC Ltd. engage with its portfolio companies? For example, does it bring in shareholders?
That is another important difference in relation to classic venture capital or private equity companies. We normally do not carry out active investment management and are very cautious with board memberships, because such involvement could generate considerably higher costs and also raise questions of legal responsibility. This in turn would have to be paid for with a higher yield.
What does the perfect investment look like for you?
We want to see development potential. We also invest when nobody else does, because the risk is too high for example, or the potential return is too small. The perfect investment can be a financing requirement, let’s say for developing a new product that already has a patent. The company does not receive traditional bank financing and we invest a sum for realizing the new product. After four or five years a certain market success is achieved: Turnover and profit have increased, perhaps new employees were hired and now a strategic investor is interested, wants to participate or even buy the company. That is the ideal time for us to exit – a classic win-win situation: We were able to help at a time when no one else was willing to, we got a return on our investment, a new product was launched, and new jobs were created.