Coronacrisis Have Huge Impact on Fintech Industry

Huge Crisis for Fintech Startups

Swiss Blockchain Federation prepared a survey that shows how grave the situation is for fintech startups located in Zug’s Crypto Valley in times of coronacrisis. According to the survey four out of five companies might disappear from the market in next half month. Many fintech startups can’t count on any help, as another survey, conducted this time by Venturelab, showed that 7 out of 10 companies don’t qualify for any kind of help from Swiss government’s aid package prepared to ease the impact of the coronavirus on the economy. Qualification for government grants is based on past income, thus many fintech startups are excluded due to low sales. Survey was conducted among 660 startups from Switzerland.

Aid Package

Swiss government announced on April 8th aid package of CHF85 million for the fintech and financial sectors, that include wage subsidies, lower rent payments, help with funding and paid training courses. Not all of startups can use such measures, and many of them face bigger problems connected with financing or looking for potential investors. As a result some companies have to delay their investments plans. Many startups have simply bigger needs than the government aid can satisfy.

New Crisis, Old Problems

For many startups in fintech or other industry problems faced now are the same like in normal times, just more grave. Generally, only around 10 to 15 percent of startups make it past an average two years of existences. Nowadays due to the pandemic, it is much harder for them to complete round of financing, and many fintech new companies were about to launch such rounds.

Where to Invest?

Many venture capital companies will be forced to write off their investments if rounds of financing are not launched by fintech startups. The coronacrisis has not only hit hard Swiss Crypto Valley, but as the worlds most renowned hotspot of fintech, tech, biotech, IT startups that are very innovative – Silicon Valley. Small startups perish or are taken over by bigger rivaling companies. Bigger firms have issues with liquidity and worry about upcoming IPO’s. Where can VC invest, if not in Silicon Valley? China is not a good idea, as it is a difficult place for foreign investors. The most famous fintech hub in Singapore might be a better option, as the city has become the number one hub, ahead of Zurich or Geneva recently. The technological level of the country and god environment between business and government make Singapore such successful hub for fintech branch.