Fertile ground in Switzerland for ventures tackling climate change
Switzerland is ranking 1st place in the Global Innovation Index since 2011, same year when Climate-KIC started its activities in Europe and in Switzerland. And what sets the country performance apart from others? Many things, of course, but also the whole startup ecosystem which has developed enormously over the last years and keep on adapting itself to better serve entrepreneurs who decide to launch their ventures in Switzerland.
When it comes to Swiss cleantech ventures or in general Swiss startups tackling climate change with their businesses, one can find significant financing rounds flowing to such companies. Last year, Climeworks, a Climate-KIC alumnus, raised CHF 30 million to grow their company and fast track the deployment of their technology for CO2 capture from ambient air.
In order to get more in-depth insights from the Swiss startup ecosystem, we talked to Anil Sethi, a serial entrepreneur who raised over CHF 100 million for his first company Flisom, a spin-off of ETH Zurich. Nowadays he is Entrepreneur-in-Residence at ETH Zurich and teaches an elective on enabling entrepreneurship. He is also a dedicated coach to the Climate-KIC Startup Accelerator Programme in Switzerland and joined our last Climate-KIC Entrepreneurship Night event as a key note speaker. Finally, he also authored “From Science to Startup” published by Springer, which was recognized as one of the top five books in ‘innovation and entrepreneurship’ in the world in 2017. The interview below highlights why Switzerland is a fertile ground for your venture tackling climate change to flourish.
Interview with Anil Sethi, Entrepreneur in Residence at ETH Zurich and Climate-KIC startup coach
“Keep in mind that it takes longer than you anticipate”, Anil Sethi.
Please, tell us a bit about your background.
I did my basic education as well as two master’s degrees in finance and economics, and worked in consulting in India. 1998, I went to the UK and did my MBA at the London Business School. I saw the dot com boom and realized that I wanted to be involved in entrepreneurship, since I believed (and still do) that it provides opportunities to create impact and to make the future better.
So why you’ve decided to come to Switzerland?
I came to Switzerland in 2000 with a startup and fell in love with the beautiful country. The startup went bust within 3 months, but I continued with a larger company for a few years, until I started my first company in 2005.
How was it to launch a cleantech startup in Switzerland? Can you walk us through some benefits but also challenges?
My first company, Flisom, was in clean tech. I realized that although many people, investors and customers wanted to talk about clean tech, ultimately, the final customer buy-in was going to be based on customer relevance and financial considerations. “Nice-to-have” is not good enough reason for a clean-tech (or any other) startup to survive. It’s important to address a customer pain by helping them increase profits or reduce costs.
Switzerland is different from the US in one critical way. Here, entrepreneurs think about institutionalization, or long-term. In the US, entrepreneurs and investors think in transactional terms, which is far more short-term. Thus, in the short term, tech startups are challenging, particularly if investors are from the US. However, the long-term sustainability and impact is far greater for the startups, customers, and finally the economy, in case of Swiss startups.
Now, with many years of experience in the country, what do you think differentiates the Swiss startup ecosystems from others? And where is there still room for improvement?
The Swiss ecosystem is very vibrant and investors including family offices recognize the importance of supporting outstanding companies and keeping them here in order to sustain the prosperity of Switzerland, which is driven by innovation-based manufacturing excellence. There is still room to improve this by forging stronger links between outstanding tech startups and long-term focused investors (including Stiftungs) to ensure that good startups get larger funding rounds in Switzerland and continue to remain here.
Could you tell us about some of the business ideas and startups you’ve seen recently in Switzerland which are tackling Climate Change?
Although many startups are modest in their aspirations, every now and then, I have the privilege to advise startups that are addressing larger global societal challenges, relating to water sustainability, better utilization and re-use of rare earths, or better tracking of the quality of and risk to our existing infrastructure. These form the bedrock on which our civilization has been built and it’s easy to take them for granted. Our greatest risk is complacency.
How do you think Climate-KIC’s Startup Accelerator Programme in Switzerland has contributed to the success of teams you are coaching?
Every investor is interested to invest once the startup has demonstrated the technology, manufacturability, financial viability and customer traction. What sets Climate-KIC’s support apart is that you actually enable teams with great technologies to take the steps necessary to develop customer traction and develop the manufacturability as part of your support.
Climate-KIC starts with believing in their potential. Other supporters or investors often wait for startups to demonstrate this potential before they support or invest.
What is your main advice for founders willing to launch and grow their ventures tackling climate change in Switzerland?
Keep in mind that it takes longer than you anticipate. Cleantech is where the world is going, but the startups need to have another “raison d-ėtre” beyond that, which is to address a customer pain. Startups should focus on the replicability or manufacturability of their solutions. The quantum of the pain equals the revenue opportunity. The network effect beyond the initial customer equals the scale opportunity of the startup.
