In 2009, a book with the title “Start-up Nation” was published celebrating Israel. No such book has been published yet with this title for Switzerland – maybe that should be the case?
Switzerland is almost a paradise for entrepreneurs and their potential success stories.
Is that true for investors as well? If we look at the invested capital in startup since 2012, we can clearly state that investors are discovering Swiss Startups. In 2012 the total amount of investments was below 400 million CHF, while in 2020 we reached 2.124 billion CHF.
Why do we consider it a paradise?
- Outstanding Engineering Schools and other Universities
ETH Zurich is considered one of the Top Ten Universities around the world. EPFL in Lausanne follows in ranking to be one of the top 20. Both Schools offer first rate education that allow students to acquire traditional engineering skills, knowhow that will enable them to develop new technologies.
These two Polytechnic Universities are the most well-known, but many other schools across Switzerland offer high quality education in all fields.
- A conservative legal framework and a prudent approach by business services
The incorporation of a company is straightforward. On the other side lawyers and accountants are more conservative than in other countries, leading to easier due diligences and very few companies have “skeletons in the closet”.
Most company documents are drawn in English which is helpful to attract foreign capital.
Most Term Sheets and investment contracts are modelled after US ones.
Compared to other European Countries, corporate and tax laws are relatively straightforward as well.
- A flourishing Innovation ecosystem
In the past 15 years, many new initiatives came to life in Switzerland to support the ecosystem, especially at very early stages.
You will find many business plan competitions, incubators, accelerators, angel investors group and foundations.
The Swiss Confederation has been pivotal with the creation of Innosuisse, which promotes science-based innovation in the interests of industry and society in Switzerland. In addition to funding for projects, Innosuisse offers coaching and mentoring, preparing Startups for professional financing rounds.
- Good Engineering Talent pool available
The first impression is that Switzerland may be a country where manpower costs are high, but skilled talent is available. For instance, Google’s largest R&D centre outside of the US is in Zurich.
Fortunately, there are still few foreign professional investors focusing on Swiss Startups, therefore, valuations are still very attractive.
At the end of 2020 Tech Crunch, sensing the attractivity of the Swiss ecosystem, published an article on this matter as well and interviewed Lucian Wagner, one of our GP’s, https://techcrunch.com/2020/10/21/9-zurich-area-investors-on-switzerlands-2020-startup-outlook/
We now see increasing numbers of US investor starting to look at European companies, but what does it take to be successful?
Follow us, we will tell you more next time.
Privilège Ventures Team