Dynamics shaping Switzerland’s startup ecosystem.

Interesting post which echoes most of the complaints I hear about Switzerland as a startup hub (especially from founders who are raising money for the first time, which you may or may not be).

As someone who founded their own startup in Zurich, raised multiple investment rounds and scaled internationally, and then joined a second startup which just raised a big series A round for international expansion, it seems to me that you haven’t quite hit on the real challenges for founders in Switzerland. I’d like to quickly talk about why the two main challenges you mentioned aren’t (directly) significant for the startup scene in Switzerland and where I think the real problems/solutions lie for the symptoms you have noticed.

To your first challenge of there not being enough appetite by Swiss investors for providing capital in high-risk areas (such as seed investing) I say ‘thank god for that’.

The simple (and perhaps uncomfortable for some) truth is that when it comes to scaling a startup internationally (which you have to do from Switzerland because the internal market isn’t big enough) then you need smart money. That means capital provided by investors who have in-depth experience of scaling startups in your vertical internationally. There are a few of these investors in Switzerland, but a) they are in high demand and can invest in foreign startups as well, and b) they only cover a few specific verticals and markets so are probably not too useful for your company.

So what Switzerland really needs is for our best founders to take money from the very best investors for their individual case (who probably aren’t in Switzerland) and then to come back to Switzerland later with the capital and experience of their own to help the next generation.

Unfortunately too many Swiss startups are taking what I will generously call Switzerland-specific-smart money. Second time founders seem to understand this much better than first time founders.

Your second point about Switzerland a) having exceptional talent and b) losing it to other startup hubs doesn’t really hold water in my opinion either. Of course the ETH and EPFL are excellent technical universities, however only a vanishingly small number of really successful startups need a cofounder with highly specialised technical skills of the kind that the ETH/EPFL can offer but (to a pick a random, less prestigious institution) the University of Applied Sciences in Bern cannot. Much more important (at the early stage) and harder to find are the marketeers, sales people and developers who have real startup experience and can get things done.

Our talent pool in Switzerland may be competitive when it comes to theoretical technical knowledge, however when it comes to hiring the kind of people you need as your first 20–50 employees at a fast growing startup, we’re a third world country in comparison to most startup hubs.

The solution to this is actually the opposite of what you were proposing: We shouldn’t try and force our top talent to stay in Switzerland — we simply don’t have the startups, opportunities and mentors here for them to be competitive with candidates from other startup hubs.

Instead, let’s do our best to send our technically adept students abroad to work in Silicon Valley, Berlin and London, to learn how to build startups from people who have got it figured out. When they come back they will have connections and experience which we can’t provide here. At the same time, let’s focus our recruiting much more heavily on stealing foreign star employees from other hubs to come and work here and teach us what we’re missing.

I hope that gives you a new perspective on your article and wish you all the best with your new venture. Feel free to hit me up for coffee if you are in Zurich.