Is Switzerland starting up? (long version)
Here’s the long version of my guest post published on the NEXT Berlin official website last Friday.
Switzerland is often ignored from famous tech blogs as TechCrunch or the likes. As a consequence, most people outside Switzerland just ignore what is going on here. Of course, it’s not - yet - like Silicon Valley or London… or Berlin.
If I say “not yet”, it’s because there’s still a lot to achieve to be at a competitive level, but I believe Switzerland in a whole (not just Zürich or Geneva) has the ingredients needed to be a key location on the web scene.
First, let speak about technological innovation, which is mostly done in the 2 Swiss Federal Institute of Technology (ETH Zürich and EPF Lausanne), completed with 10 other universities spread across the country. 7 “Fachhochschulen” complete the educational landscape with a strong local and industrial anchorage. It means that within 45 minutes trip from almost everywhere, you can reach a university level school. In contrary to most countries, nothing is far away in Switzerland. You can travel by train from Lausanne to Zürich in around 2 hours, going from a tech hot spot to the other in the same afternoon, and backwards. If you’re like me and based in the middle (close to Biel/Bienne), that’s so easy: I’m less than 2 hours away from almost every relevant location! Imagine that I’ve been meeting startup founders a morning in Geneva, then jump on the train to meet some other entrepreneurs and attend a conference in Zurich and back home before 11 pm. In which country is it possible to be in both economic center of a country in one day, just travelling by train? I say: SMALL IS BEAUTIFUL!
As a positive consequence, innovation and great engineers are spread across the whole country, and not just concentrated in the “hotspots” Zürich or Lausanne!
In Switzerland, technology parks are almost as numerous as the number of cantons (26), which means that you can relatively easily get some support when you have some innovative ideas. The Swiss Confederation is also supporting innovation with helpful tools, like academic/industry research projects, training program (venturelab), startup coaching during 24 months (CTI Start-up) and an investing club (CTI Invest). But federal support programs are not sufficient to build a sustainable startup ecosystem and we see some private initiatives to boost the most valuable swiss asset: the brain! Just some weeks ago, The Founder Institute was launched, completing the tools for wannabe entrepreneurs (FI is filling a gap, as nothing was really present for entrepreneurs working fulltime and trying to grow their project alongside). All these iniatives mean you can get free and top level support… if you do your homework, naturally!
Web & mobile events are popping in Switzerland, some originated by the public sector, but most on the private side, which proves that something is moving. Startup Weekend’s first chapter in Switzerland was organized in November 2010 in Geneva and is now spreading to other swiss cities (Zürich, Geneva and Lausanne had 2 editions, Bern one. Jura (outside a city, in which I’m deeply involved) and Luzern chapters will be run on 11th May 2012). Startup Weekend is a great initiative in the sense that it enhances and gives a window for early stage entrepreneurs, and helps building an innovative community network (80-90% of the projects are web based, as shown here). Webmonday (generalists) and Webtuesday more technical) are regularly hold in Zürich. Once a year, the Swiss Startup Camp (one day Barcamp event mostly dedicated to web entrepreneurs) takes place in Basel. But the most famous tech/web event in Switzerland is Lift Conference, which happens yearly in Geneva, gathering the local (understand swiss) scene and top people from across Europa and USA. Completing the worldwide Mobile Monday, which takes place 10 times a year here, a new tech conference has been launched in January in Bern and will happen twice a year: Mobicamp (bringing together entrepreneurs only and allowing them to network with international experts). Mobile shows an interesting potential, as more than 58% of people use a smartphone. Some hackathons were successfully organized since a few years and some OpenData workshops were also hold across Switzerland.
Web/mobile startup oriented events give a small indication of the activity of a scene… And there’s definitely a lot more than 2 years ago! And since 2010, West Switzerland-based ICT association AlpICT finally help promising startup to go to LeWeb in Paris, with a clever and funny program called “More than chocolat”.
There’s also some awards to celebrate the realization of the best swiss projects: Best of Swiss Web (Swiss wide and also a new one launched this year in West-Switzerland) and Swiss App Award (1st edition happened in March). Additionaly, the Swiss e-Ecommerce Award and an another award were launched in late 2011: “Top 100” of swiss startups (cross-domains).
Recently, 2 new acceleration programs for web startups were launched in Zürich area: incubate@DeinDeal.ch and Centralway. These kind of programs are probably not able to compete with YC or TechStars, but… it’s at least showing that an increasing number of people (who are entrepreneurs) believe in the swiss location to launch web companies!
On the investing side, Switzerland has a lot of private individuals who could fuel the startup ecosystem, but it’s currently not quiet the case. But there are some regulatory changes currently in progress, like tax exemption for business angel in some cantons or to attract more Venture Capital money to be invested locally.
There is a big trend in the crowdfunding concept and Swiss legislation allows such initiatives. Fortunately, we have the chance to have already 2 excellent crowdfunding platforms: investiere.ch or c-crowd.
Some professional Business Angels clubs are also active in Switzerland (Go Beyond, Mountain Super Angels, Business Angel Switzerland, b-to-v, etc.) and some smart international Venture Capital funds are based here (Index Venture, Redalpine, Venture Incubator, Eurofin, etc.). Other ones have representation offices (Creathor Venture, etc.) or come regularly to startup presentations (Balderton, Earlybird, etc.).
The biggest problem swiss web startup face are not to deliver world class software: it’s to raise a proper Serie A. That doesn’t mean seed funding is easy, but most of worthful projects find an amount of EUR 500’-800’000.- in the early stages. A manager of a well-known VC fund once told me that he’d better come to Switzerland for a board meeting on a Thursday than flying to Dublin, for a simple reason: he can bring his family with him and then go skiing during the week-end! To convince more international VC to invest in swiss startups, we maybe have to leverage this advantage!
Historically, most successful software companies in Switzerland were built with a strong focus on B2B. But that’s not especially by choice, more because of the relative lack of funding for B2C web applications. The reazon for this is quite obvious: swiss market is too tiny (just 8 millions inhabitants) to be profitable on your home market when you have business model which requires a lot of users. Furthermore, Switzerland is a difficult country if you plan to build a B2C application: 4 languages (German for 2/3 of the population (or rather Swiss German), French for 20%, Italian, Rumantsch and other people who don’t speak an official swiss language).
The exceptions for B2C applications are in e-commerce, mostly because (most) swiss citizens have enough money to spend and almost everyone has access to internet (for a too expensive price, but that’s another story!). The most successful e-commerce company in Switzerland is probably Ricardo, an auction marketplace which successfully resisted eBay - Switzerland is the only country in the world where eBay is not #1! This company now generate a yearly turnover of around EUR 500 mios, in Switzerland, Denmark and other niche countries. Ricardo.ch has proved that it was possible to build great companies with a highly defensible position in its home country. The main reason why eBay failed to be n° 1 in Switzerland is that they haven’t tried to understand the complexity of Switzerland (remember the 4 languages): you were redirected to ebay.de or ebay.fr, which could have been OK if the price would have been displayed in Swiss Francs, which wasn’t the case for a long time. Switzerland is a little country but which can be really rewarding, at least for e-commerce, if you really make the effort, what Zalando has really understood for instance for its launch some months ago.
DeinDeal.ch, a group-buying website, is another successful venture which started early 2010, made a partial exit just after 16 months (sold 60% of the company to Ringier, a swiss media group) and is still operated as a startup (but with more than 170 employees in March 2012).
OK, but you’re probably thinking that these companies are just copycats of existing models. In the recent years, the most famous success for swiss software startups (non exhaustive) were Doodle (the easy scheduling service, partially sold to Tamedia), Wuala (a bootstrapped secure cloud storage service sold to Lacie for EUR 11 mios), Pixelux (especially famous for providing thetechnology to make the film Avatar), LiberoVision (a provider of 3D virtual sports enhancements software sold to Vizrt), Housetrip (the biggest european AirBnB competitor, funded by Index Ventures and Balderton, now mostly based in London), TypeSafe (the company behind Scala programming language), Poken (started with amusing virtual business card but now focused on providing NFC technology for trade fairs) or paper.li (which has/had Guy Kawasaki in the Board of Advisors). In 2012, we now see an emerging “community” of serial entrepreneurs in the web business and under 40, who want to do it again and again.
But probably the most successful swiss web entrepreneur ever (I think) is David Marcus, the new CEO of PayPal! After starting 2 businesses in Switzerland, David started a new one (Zong), took it to the USA and sold it to PayPal last Summer for $280 mios.
There are numerous promising swiss startups who compete with most prestigious companies and are on their way to success, to name a few: Kooaba (a mobile application capable to understand images), SublimeVideo (the first HTML5 cloud-based videoplayer as a service), Scandit (barcode scanner to enhance your real life shopping experience), NewsMix (provider of unique news channels from real people, beating Flipboard), Fontself (font creation service crowdbased), connex.io (ubiquitous address book), salsaDev (semantic SearchBox as a service), Hyperweek (powerful tool to create your own social network or collaborative intranet), nViso (emotion recognition software), webdoc (rich social media post editor), Ueepa! (turning the smartphone into lifesaving device), MySollars (a game based CO2 compensation service).
Like most of developed countries, Switzerland is experiencing a strong lack of software developers and will welcome most of them wanting to relocate (of course, if you’re smart enough). If you’re a web or mobile developer and desire to establish yourself in a tech hotspot with an amazing quality of life, let me know…
Disclosure: my company, Creapole, invested in NewsMix, salsaDev and Hyperweek.