Wired UK published last Friday its selection of the 10 hottest startup capitals in Europe. London, Berlin, Paris and Stockholm are on the map, of course. Tel Aviv, Amsterdam and Barcelona are also there. More surprising (no, it’s not really a surprise for me) are Moscow, Helsinki and Istanbul in the top 10. Yes, Moscow is a startup capital, with a large home market (France + Germany populations cumulated), as does Istanbul (almost German population). Helsinki is probably benefiting from Nokia’s success (even if it is fading, it has generated many, many spin-offs) and Rovio’s.
Where is Switzerland in this ranking? Nowhere. Scandalous or just ignorance? Or just reality?
Startups in Switzerland are spread country wide, with hottest spots in Zürich and Lausanne (where the 2 Swiss Federal Institute of Technology are based). No one is big enough to really be compared to one of the above mentioned cities. Zürich, as the biggest city in Switzerland, has a lot to offer and can probably be compared to Dublin (but there’s “only” Google in Zürich, while the Irish capital is welcoming other big names of the tech industry). Maybe, we should consider whole Switzerland as a single city? Would Switzerland then have a chance to be on the map?
What I’m sure is that entrepreneurship is really alive in Switzerland. And that there is no shortage of smart and ambitious guys here! Yes, even if you often hear the comment that people are not seeing the big picture (go international from start), most guys (if not every) I’ve met during the last 5 years have big – international – ambitions.
There’s also no lack of support organizations… not at all. There’s even a common joke on the scene that “there are more coaches than entrepreneurs”. Fortunately, that’s only a joke. Yes, there are many coaches. The problem with coaches, if any (it’s the responsibility of entrepreneurs to carefully choose their coach. If you can’t choose who you’d like to be working with and the relationship is not working… don’t hesitate to seek advices/mentoring elsewhere!), is that most lacks real startup experience (no, consulting business is not startup experience). I think I’m qualified to say that, as a formerly startup mentor and occasional consultant (alongside my startup). I’ve heard that sometimes coaches can hurt your business. Yes but no. It’s your job as an entrepreneur to be critical to every advice and find what’s applicable to your business!
What do we need to bring Switzerland to the next stage as a hot startup scene? In my humble opinion, we lack EXITs. Big EXITs! Who remember the last Swiss startup which IPOed? Or the latest trade sale with 9 numbers (outside of the life sciences’ industry, which is completely different to ICT businesses)? But let’s face reality: big exits are rare. Everywhere. So, what we need in a first phase are more liquidity in the market. It’s no news that there aren’t enough business angels in Switzerland. Yes, there is a lot of money in Switzerland, but not enough flowing into startups! The biggest problem is that active business angels (the ones who do invest) have not an unlimited bank account. As a consequence, as long as their don’t see some money back, how could they invest more? Where are the institutional investors, who could buy back business angels’ investments? There are lots of startups who reach profitability and turn into real business, but maybe miss the promise of exponential growth (that’s why angels or VCs do invest in startups). Bad business? No. But a liquidity problem for people who put money in!
How can we change that? Good question. It probably needs a political decision (hum, probably not the best one, as it needs LOT of lobbying and take such a long time). Could pension funds, which manage billions, be able to do something there? Why don’t we foster them to invest in profitable – but illiquid (no exit foreseen) – SME’s and get dividends?
But back to the ranking. No Swiss city is among hottest European’s startup spots. Do we really care? Yes and no. Personally, I don’t care about such ranking. Switzerland is a hot spot regarding innovation and we have the talent to compete internationally. Switzerland is multicultural and multi-languages (what is often highlighted as a key asset for startup hotspots). Many extremely high-qualified people come to Switzerland to work, and there’s probably a brain gain (in opposition to brain drain). The problem is that these guys don’t come to work for a startup, at least initially. So maybe there’s something to do here!
Finally, I’m convinced of one thing: Switzerland has a culture of quality and is good at execution. We see it more and more in startups. Swiss startup ecosystem is maturing.
What do you think?