The lockdown has been a real headache for most EPFL startups. All but a few were forced to halt their development. The pace of the economic recovery will play a decisive role, and experts are cautiously optimistic about fundraising opportunities going forward.
Startups may be dynamic, flexible companies, but they’re also vulnerable during times of crisis. There are many reasons why young companies struggle when the economy is flagging: research and development can take longer, revenues may be low or even nil for a couple of years, and significant outside investment may be needed. To stay afloat for the next few months, more than a quarter of the 208 companies in EPFL’s Innovation Park (EIP) applied for a loan under the federal government’s guarantee program. How well the economy picks up will, of course, play a key role in these companies’ future development. So far, none of them has gone under, but campus experts are calling for caution over the coming months. They nevertheless remain optimistic about fundraising opportunities.
Some startups have kept growing
EIP didn’t shut down completely. Many startups were able to continue developing their devices, provided they complied with the strict hygiene rules. “Some people involved in testing equipment continued to come to work,” says Laurent Coulot, the CEO of Insolight. Other young companies, like Ouay, which was founded by EPFL students and whose workshop is located in an EPFL lab, were able to take their equipment home just before the campus closed.
Medical startups were hit particularly hard by the two-month lockdown – hospital-based tests were stopped short, in some cases forfeiting several months of work and financial investment.
But some startups were able to quickly adapt their devices to meet new needs. Examples include Technis’s people-counting solutions, Rovenso’s cleaning robots and Abionic’s sepsis tests. Other startups have been developing technologies over the past few years that are now proving particularly useful, like the transparent face masks developed by Hello Mask.
No panic among investors
But most startups did not fare well during the pandemic, and observers think that close to half of them may be in danger. Jean-Philippe Lallement, EIP director, initially sensed a bit of panic about the lack of visibility. But that was soon allayed by the guarantees announced by the federal government at the end of April. A lot of companies on campus have made use of them, and some 10 million Swiss francs in support have also been granted by the Canton of Vaud.
“The support is very welcome but it’s not ideal for a startup,” explains Jordi Montserrat, the head of Venture Kick in French-speaking Switzerland. “The loans have to be repaid over five years, so it might end up taking that long for the company to start turning a profit.” EPFL Innovation Park has also set up a support plan, which 70 companies from EPFL and Campus Biotech have applied for. The financial aid will go towards rental costs and other park-related expenses. For a large number of companies, costs have already been cut because of the lockdown, so they should be in a better position as they wait for the economy to pick up again. “It’s going to take somewhere between four and 12 months for business to get back to normal,” says Montserrat. “Provided there isn’t a second lockdown, that is.”
But not everything came to a standstill for the past two months: a number of large funding rounds still took place. Lunaphore, for instance, raised 25 million Swiss francs, and Flybotix 1.5 million francs. There’s as much money available now as there was before, especially since two new Swiss-based venture capital funds aimed specifically at domestic startups were created recently.
But things are out of kilter, and investors may well proceed cautiously over the months ahead. “Companies might find they have less room to negotiate fundraising terms and conditions,” says Lallement. Montserrat adds, “Unless we see a rapid V-shaped recovery, as some experts hope, it might be worth being a little conservative for a change.”
Three start-up share their work during the confinement
Insolight embarks on a funding round
Insolight, which makes solar panels with close to 30% efficiency, was due to start running assembly tests on its Spanish production lines in April. “But our suppliers went into lockdown one after the other,” says Laurent Coulot, Insolight’s CEO. “So just before the borders closed, we brought the equipment back to Switzerland in order to run tests here.” The science park stayed open and a few employees continued to go to the workshop, taking all the necessary safety precautions. The rest of the team worked from home.
There was a lot of uncertainty at the start of the lockdown, and Coulot filed a request for compensation for reduced working hours for his employees, although the plan was not to use it. “We saw quite quickly that we could still meet our objectives – things would just take a bit longer. The government support was aimed primarily at small to medium-sized companies that get by on their income alone, like hairdressers and small shops. Our startup relies on other funding sources in order to survive, and a delay in product development could have had a detrimental impact, especially in terms of our investors.”
But the company’s investors continued to trust in Insolight, as the startup is about to raise close to 5 million Swiss francs. “At the start, we were afraid that some investors might throw in the towel. But our worries soon faded.”
The production and assembly tests should start up again soon in Europe. This will increase production volumes, and the panels should go on sale by the end of the year. “The challenge now is to mitigate external risks, since some of our suppliers and clients could end up going under,” says Coulot.
EPFL spin-off Abionic was planning to launch its product in March, a machine called the Abioscope that promises to detect sepsis up to 72 hours earlier than today’s standard of care. Instead, the start-up has been deploying its technology since early March to several hospitals in Switzerland, France and Italy for diagnosis of COVID-19 patients.
“We are very happy to participate to the effort to fight the coronavirus, by providing physicians with the most rapid diagnostic platform in the world,” says Abionic CEO Nicolas Durand. “Our device has demonstrated the capacity to identify sepsis and bacterial superinfection up to 72h earlier, which contributes to decreasing the mortality rate of covid-19 patients”.
Durand is convinced that the nanofluidic-based technology of the Abioscope disrupts current blood-testing standards.
Sepsis affects more than 30 million people worldwide and possibly kills 6 million people every year. According to Professor Jean-Daniel Chiche, designated future head of ICU at the CHUV and interviewed on BFM.tv,, sepsis may account for half of critically ill COVID-19 adult patients deaths. It is unclear why sepsis occurs in COVID-19 patients, but early diagnosis leads to early implementation of life-saving procedures, including the prescription of appropriate antibiotics at the right time.
According to the CDC, Sepsis is the body’s extreme response to an infection. It is a life-threatening medical emergency. Sepsis happens when an infection you already have -in your skin, lungs, urinary tract, or somewhere else-triggers a chain reaction throughout your body. Without timely treatment, sepsis can rapidly lead to tissue damage, organ failure, and death.
Written by Hillary Sanctuary
Ouay: “The lockdown has shown just how useful our devices are”
When the lockdown began, Ouay – which makes smart speakers to help the elderly communicate more easily with people outside their home – had already sent out some of its devices to clients for testing . “Unfortunately, we had to postpone the test phase, but the lockdown has shown just how useful our devices are,” says Sven Borden, the startup’s CEO. “They would have made things easier for elderly people who became even more isolated during the lockdown.”
The startup didn’t apply for compensation for reduced working hours. “We halted our work and took the equipment on campus home with us,” says Borden. The tests will start again this summer. “The lockdown has also been good in a way because a lot of elderly people starting using tablets more in order to keep in contact with people.” The only break the Ouay team will get this summer is for the exam session, which has been pushed back to August.