The Government Council has decided to support sustainable start-ups whose existence is threatened by the corona pandemic. From 27 May 2020, the canton will participate in the federal programme to expand the guarantee system and guarantee up to CHF 5 million.
Under this programme, start-ups can submit an application to benefit from federal and cantonal guarantees until 31 August 2020. The effects of the corona pandemic are also affecting many start-ups. What these young companies need now is capital. The previous federal and cantonal aid programmes, especially the federal programme for COVID 19 guarantee loans, have not been effective for the mostly low-turnover start-ups. Therefore, on 22 April 2020, the Federal Council announced a supplementary guarantee programme for start-ups, which the cantons can make available to their start-ups.
Canton Zug guarantees up to five million francs
The Government Council has decided to participate in the federal programme to support start-ups and to guarantee five million Swiss francs. “A survey conducted by the Swiss Blockchain Federation (SER) in April 2020 showed that more than two thirds of those start-ups that applied for a COVID 19 guarantee credit did not receive it”, explains Finance Director Heinz Tännler and adds: “We are aware that we have to act now, as the Canton of Zug has one of the world’s largest ecosystems for blockchain start-ups in the form of Crypto Valley”. The new guarantee programme is basically structured in the same way as the COVID 19 guarantee programme. Startups can apply for a loan from any bank (usually their principal bank), which is directly guaranteed by a guarantee cooperative and indirectly by the Swiss Confederation (65 percent) and the Canton of Zug (35 percent). The surety guarantee for Zug start-ups totals just under CHF 15 million, of which CHF 5 million is borne by the canton and CHF 10 million by the federal government.
The choice of startups for this programme is the responsibility of the cantons. The government council has decided to support only sustainable start-ups. However, start-ups generally have a high risk of failure. “Determining in advance who tomorrow’s winners will be is extremely demanding,” says Finance Director Heinz Tännler. The selection of the start-ups is therefore carried out in cooperation with experts from outside the administration, who will examine the applications and prepare the basis for the decision for the attention of the Finance Directorate. Applications can be submitted from 27 May 2020 until 31 August 2020 via the federal platform: (https://covid19.easygov.swiss/fuer-startups/).
Start-ups in dire straits due to corona pandemic
Startups are young companies that develop business models that are innovative, knowledge- or technology-based and scalable. In many places, investors who finance early-stage developments up to marketability have withdrawn or limited their support to start-up companies in which they have already invested. “Since many of these young companies currently have no income from the sale of products or services, their existence is directly threatened without investors,” says Finance Director Heinz Tännler. “The above-mentioned survey by the SER has shown that three out of four companies expect insolvency within the next six months”.
Canton Zug as a start-up hotspot
Together with Zurich, Basel City, Geneva, Vaud and Berne, the canton of Zug is one of the cantons with the most start-ups. This is all the more remarkable as Zug is not a university canton. Finance Director Heinz Tännler is delighted: “The business-friendliness, global networking and constructive openness to innovation have led to the formation of first-class clusters in Zug, such as advanced technology, life sciences, financial services, raw materials or block-chain technology”. Crypto Valley, a world-leading block chain hub, is a symbol of Zug’s innovative strength.