Changing The Gatekeepers in Switzerland: Democratizing Access to Silicon Valley and Giving New Meaning to Impact Investing

In Switzerland, a country renowned for its robust financial services and dominant banking sector, venture capital has traditionally played a secondary role, with limited access for individual investors, overshadowed by structured products and conservative investment strategies. Harder still is access to Silicon Valley deals and funds. This landscape, however, is gradually transforming, thanks to visionary leaders like Walter Knabenhans, who are bridging the gap between Swiss financial prudence and the daring innovative spirit of Silicon Valley.

Swiss Finance and the Venture Capital Gap

The Swiss financial landscape has long been characterized by its strong emphasis on privacy, security, and wealth management, with major banks and asset managers dominating the market by offering highly structured financial products. According to Deloitte, the total "live" volume of structured products is roughly CHF 200B, which represents 3% of all securities held in custody accounts in Switzerland. By contrast, venture capital investments in Swiss startups, according to startupticker.ch, only amounted to CHF 2.6B in 2023, roughly 1%of structured products.

Furthermore, while there are many early-stage VCs in Switzerland, growth equity is a bottleneck for startups and investors. This is particularly surprising given the amount of wealth in Switzerland and favorable Swiss tax laws surrounding capital gains for individual investors compared to the US. This financial conservatism often leaves Swiss investors out of some of the most lucrative and innovative deals that are routine in places like Silicon Valley. In the US, at least $170B was invested in venture capital investments in 2023 alone.

A Love Story Becomes a Success Story: An ETH Engineering Legacy

Walter Knabenhans is best known for his role as the former Chairman and CEO of Julius Baer Group where he was renowned for his astute leadership and strategic acumen. His illustrious career took him to firms such as Credit Suisse Group, Bellevue Group AG, Küsnacht (ZH), Finnova AG, Lenzburg, and Bank Morgan Stanley AG, Zurich. While his career was deeply rooted in finance, Walter's interest in Silicon Valley stemmed from a love of engineering and technology that he didn't have the opportunity to fully explore in his first act.

Walter completed his academic education at ETH Zurich and the University of Zurich, earning a Master's degree in Engineering and Business Administration summa cum laude. Walter's first love was always engineering and technology. "I have always approached problems as an engineer first and a business person second," he explained.

In his second act, Walter decided to embark on a venture capital journey with Green Sands, fulfilling his lifelong desire to foster innovation through science and technology.

A Skeptic Meets an Optimist

In 2019, at the Yacht Club in Zurich, a chance meeting with Reema Khan, founder of Green Sands, marked the beginning of a long-term friendship and collaboration. Walter had made a significant investment in a Silicon Valley-based company and wanted a second opinion on the investment from someone based in Silicon Valley.

"The worst way to make a friend is to tell them they are wrong about something in your first meeting," Reema recalled with a chuckle. But she told Walter that the company was a bad investment and he should exit it as soon as possible.

Being a sophisticated investor, Walters appreciated how Reema articulated her understanding of the business and its challenges. Though Reema was the skeptic that day, what followed was the classic Swiss skepticism for the American optimist. To further test Green Sands, Walter personally made a small investment in a biotech company proposed by Reema and received a three-fold return within a year. Subsequently, he made a few more investments and carefully watched the impressive deal generation, due diligence, and exit strategy that included secondaries and M&A in addition to IPOs, Walter bought in.

"I had been investing in private markets for 15-20 years before I met Reema, with my investments spanning across the globe," Walter said. "My conviction was that the US market was significantly more sophisticated when it came to the money and people behind the startups. Being active in the Green Sands universe in the past 4-5 years has further confirmed these findings. The US has a much larger market that you can tap into. It is much easier to scale a business in the US market, where there is one legislation, currency, capital market, etc."

Even if Swiss investors share the same thesis as Walter, their access to rewarding private markets, such as Silicon Valley-based venture capital, has traditionally been limited to only the largest institutional investors.

"If you're a very large investor, you have access to the blue-chip names in Silicon Valley," Walter explained. "Otherwise, it is nearly impossible. Even if you can invest in one of the renowned institutions that have blue-chip access, like Partners Group, you never have the same closeness to the underlying investment that I could get through Green Sands."

Although Walter started investing with Green Sands in 2019 personally, it was not until 2021 that Walter, along with a team that included veterans in the financial industry, established Green Sands Switzerland GmbH. Thomas Ladner's expansive network, Adrian Leunberger's strong deal structure abilities, and Ernst Bütler's investment experience aligned with Reema and her team's leadership in Silicon Valley, which includes a trail-blazing NASA scientist Davide Venturelli, and a multi-billion dollar startup founder Helmy Eltoukhy. The team's strong knowledge base is bolstered by PhDs from Stanford University (USA), the University of Grenoble (France), the International School of Advanced Studies SISSA (Italy), and ETH and Harvard MBAs.

"It took a long time to build our respectable careers and reputation, so do not make mistakes that tarnish what took a lifetime to build," Reema says, recalling the pressure to perform from the Swiss partners. She began including the Swiss mindset into Green Sands, which emphasized the establishment of systems and processes with extensive detail to create repeatable and reliable results. "Today, I am seen as the Swiss in America and the American in Switzerland," remarked Reema with a smile.

A Deeper Connection: Purpose-Driven Value Creation with Wealth as a Side Effect

The Green Sands partners were driven to push the boundaries of innovation, creating new knowledge and solutions for humanity's well-being—a compelling vision that was hard to resist. Walter was particularly captivated by the firm's proactive approach to sourcing disruptive companies and technologies, which promised not only financial returns but also the opportunity to drive significant societal impact through technological advances.

Green Sands invests in Frontier Tech (such as Quantum & BCI), Space, Health, and Data-driven AI applications via hardware and software. "While these sound like science projects, we strike a fine balance between pragmatism and moonshots," assured Walter.

Particular tech investments that came up in conversation with Walter were Airbnb and SpaceX, which returned a three-fold and five-fold multiple on invested capital (MOIC) through an IPO and a secondary sale, respectively. Biotechnology deals ReViral and Motus Bioscience returned a three-fold and twelve-fold MOIC, respectively, both via M&A. In Frontier Tech, a quantum computing company Good Chemistry returned a three-fold MOIC. All of these exits were achieved within a short 3- to 5-year horizon.

"Airbnb was a particularly standout deal for me among my investments with Green Sands," Walter emphasized. "It was one of the better-known situations, as by then, the company was in a pre-IPO stage, but it was difficult for anyone to get access to the deal, even through any Swiss institutions. Green Sands not only got access but also got it in a straightforward way, structure-wise. It turned out to be a value accretive situation for all of us involved. European startups tend to be very thinly capitalized, resulting in small rounds unless they have massive corporate backing. While the VC sector in Switzerland is also continuing to mature and create value, it is prudent to balance one's Private Equity and VC exposure with investment in not just Silicon Valley-based companies, but to the Silicon Valley mindset for comparison."

Bridging Capital and Impact

"We aim to be a deliberate part of human progress"—a mission statement that Green Sands and its team embody and wholeheartedly embrace.

"We invest in Health to help humans live longer, healthier lives, we invest in Space to gain new perspective on our own world and worlds beyond, we invest in Data related hardware and software because data is the digital twin of humanity, we invest in Frontier Tech because progress lies not in improving what is but in advancing toward what will be. The best way to predict the future is to create it," shared Reema and Walter.

When asked, "Do you do it for the returns or for science and innovation?" Reema responded with a quote from Walt Disney: "We don't make movies to make money; we make money to make more movies." In collaboration with Reema, Walter and the Swiss partners strive to provide Swiss investors with access to the finest Silicon Valley investment opportunities, often obscured beneath layers of financial products.

By connecting the investors more directly with the innovation and impact that their capital enables, Green Sands hopes to inspire purpose-driven investment. While the full impact of this collaboration is yet to unfold, the prospects are bright. In a world increasingly polarized both geopolitically and economically, the need for bridge builders has never been greater.