Career Where can I find money for my business idea?

UBS corporate client advisor Jolanda Schwager Büchel knows how founders can raise capital and access additional finance.

06 Nov 2019

The business plan is in place, but you don't have the funds. How can you obtain seed capital?

Initially from your own funds, including savings, contributions in kind, advance inheritance, and pension assets. Many people also borrow money from family or friends. In addition, there are business angels, state subsidies, and money from technology funds or crowdfunding platforms

What do you think about using capital from pillars 2 and 3?

I recommend that retirement capital is only used for start-up financing when other forms of private financing are not available. In this case, you should start by clarifying which part of your current pension capital you can dispense with. Ensuring separate compensation of the resulting pension gap is equally important.

How can this gap be closed?

Firstly, via pillar 3, which you should reinvest in as soon as money flows into the company. Then you should take out a loss of earnings insurance policy and a death risk insurance policy. Accident and health insurance are also important. These aspects are often underestimated.

Especially since such safeguards incur considerable costs...

Yes, but they save you money in the long run. These costs are also included in a good business plan.

Tips for start-up financing

  1. Draw up a detailed business plan. This includes a financial plan and liquidity planning.
  2. It is crucial to settle private loans in writing.
  3. Do not neglect pension planning – and insurance – even if they don't come free.
  4. Provide lenders and investors with information regularly and transparently.  

If equity isn't enough: as a bank, how do you help young companies that approach you with a good business idea?

A detailed business plan is indispensable. That’s why we offer all founders the opportunity to create their business plan online via our website. There is a template available that they can then interactively design. In addition, our new UBS Start Business platform gives young entrepreneurs access to many attractive benefits such as mentoring when drawing up their business plans. Our corporate client advisors are happy to help by sharing their experience.

Talking of loans: what proportion of debt capital remains healthy for a company?

The amount the company is theoretically able to repay, including interest, within seven years from its free cash flow, excluding real estate. However, this does not mean that a loan has to be repaid in seven years, it is simply a calculation method.

Do you already have to have orders in order to be creditworthy?

Ideally, yes, but in practice it is not the same. I recommend verifying the market potential in advance. You don’t have to have clients and contracts, but you should have explored whether the market is looking for you and your product.

UBS Start Business

The platform for company founders and entrepreneurs

Is it easier for an AG or GmbH to obtain outside capital than for a sole proprietorship?

In Switzerland, more than 50 percent of company start-ups are sole proprietorships that assume the risk of personal liability. In the case of an AG or GmbH, liability is limited to the company’s assets. That’s why, as a bank, we often require a personal guarantee for start-up financing, because it allows us to involve the founders in the risk.

How can the money be prevented from being used up too soon?

By drawing up a financial plan – and sticking to it. Many people are too generous at first. A financial plan also includes a liquidity plan. Especially when companies have to make advance payments or are dependent on large payments.

How does a company obtain growth capital?

Options include taking out a bank loan or leasing means of production. UBS also makes its networks available. The SEF4KMU growth initiative founded with the Swiss Economic Forum (SEF) has so far financed 56 companies with more than CHF 100 million in growth capital. In addition, the UBS Private Investor Circle brings together companies and investors. This has already led to investments of over CHF 120 million.

How should investors be informed about ongoing operations?

Regular personal exchanges establish trust. In addition, the annual accounts are required. I recommend that young entrepreneurs also prepare a quarterly or even monthly statement as a status report.

Investors for your start-up

Business angels assist company founders not only with capital, but also with their know-how and their network. But how do you find investors?

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