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Switzerland government raises investment funds to support Swiss startups

68 points by bontoJR 9y ago

valentinebm 9y ago
>87% of investment in Swiss start-ups comes from abroad. Wow. Definitely time to give a cash boost.
- mirimir 9y ago
  So what are the major sources for SV capital?
- likelynew 9y ago
  I will not be very surprised if just 2-3 international start-ups started in Switzerland gets 87% of the funding.
- deleted 9y ago
  [deleted]
- malthaus 9y ago
  It's not for the lack of capital though. The capital is already here, it's just not used for VC investments due to reasons on both supply and demand side.
mschuster91 9y ago
The main problem for Switzerland is not a lack of venture capital, but rather the Swiss Franc. Cost of living in Switzerland is extremely high, which means a company has to pay huge salaries, and thus command bigger prices for its product. While that works fine when the product is luxury watches, diamonds or highest-quality cheese, it does not work out for "mass production goods" as any product (be it a physical product or a web service) can be cloned in the EU or in China for way less and then sold to Swiss people...
- pulse7 9y ago
  Cost of living in Silicon Valley is not lower than Switzerland...
- siscia 9y ago
  I dont think that Switzerland is more expensive than say San Francisco... While it is true that is one of the most expensive European countries the cost of living is very close to the one in the bay area...
  - fla 9y ago
    It is not much a matter of cost of living but rather cost of the Swiss Franc versus other currencies. Currently, the swiss Franc is very strong, therefore making any Swiss product expensive to the exterior. It can become a huge problem for an economy based on trading with neighbors.
    - mschuster91 9y ago
      > It can become a huge problem for an economy based on trading with neighbors. Exactly. Switzerland has just 8.5M people living there, while the US has 322M and Germany 82M. If Germany were expensive, for example, it'd still have a sizable inner-country market while Switzerland does not.
      - remline 9y ago
        It changes what you try to do, but Switzerland and Germany isn't all that different from Silicon Valley and the US. You use premium resources in Switzerland and try to sell German (or EU) resources back upon lower markets at a high enough volume and mark up to make the high market costs incidental.
      - throwawaymanbot 9y ago
        The EU has 510 Million.
    - siscia 9y ago
craigvn 9y ago
I would suggest the main reason they leave is the US is the largest single country market that is accessible. China is probably a bigger market going forward but for western companies a bigger cultural change.
tmsldd 9y ago
Although it is nice to have more funds available, which increases the competition among VCs, the main point is not lack of funds. I used to say that a good VC brings you two important things: money and market. Money alone doesn't bring you much (don't get me wrong ..). In my eyes that is the main issue in the startup scenario in Switzerland: lack of market. Having a population of about 8 million people means that your startup has to focus in exporting products & services since the beginning... which adds some layer of complexity/bureaucracy ... Startups tend to establish themselves as close as possible to the client market to simplify as much as they can their initial operation..
- bontoJR 9y ago
  > Although it is nice to have more funds available, which increases the competition among VCs, the main point is not lack of funds. I agree on that, on the other hand I don't see the lack of market as a big problem. I like to take Spotify as example, it started in Sweden, which is a market comparable to the Swiss one in terms of size, but after the first prototypes and early versions, it went global almost immediately. Schneider-Ammann said that a change of mentality is required in Switzerland. He noted that while in the US, business failure is greeted with a “better luck next time” or with a similar attitude, on the other hand, in Switzerland, “if you fail with your business idea here everyone points the finger at you. You are branded a looser”. This seems to be the main goal and I totally agree with him. IMHO, a company can move to a global scale from the start with the right plan, but it's the mentality and the fact that Swiss VCs care more about patents and product protection preventing Swiss Start-up to compete with the rest of the world, instead of caring about quality of the actual product and picking the right time to enter the market. I heard some stories about companies collecting 500-800k in seed investment, spending 50% of it in legal fees protecting a product they still have to develop, failing later in execution for lack of cash... this is what, I think, needs to be fixed in Switzerland.
  - tmsldd 9y ago
    I understand your point. Yeah.. this is king of a ecosystem.. which needs to be balanced. The good news about the report is that it shows a mindset shift.. Switzerland is stable, warm (people) and radiates freedom .. for sure it is a good candidate to become the next hub.
xkr 9y ago
It's not clear from the text how they define "Swiss startups". For example, being a foreigner, can I start a company there and ask for an investment?
- bontoJR 9y ago
  A "Swiss Startup" is a startup actually based in Switzerland. As far as I know, foreigners with permanent residence in Switzerland have the same rights of Swiss people, plus more than 25% of population is actual foreigner in Switzerland, so that should not a problem at all.
- eps 9y ago
  > Can I start a company? Depends on where you are from exactly. If you are an EU national, then you can. Otherwise you will first need to get a work permit (against a promise to start a company, reviewed and approved by the canton) and it's generally a slow and expensive hassle requiring an experienced attorney. Whether this will make your company eligible for a startup loan is an open question, but I'm pretty sure that it will.
- gpresot 9y ago
  If you have a Resident Permit (type B or C), you can start a company. That means you should already be in switzerland with a regular employment contract (or as a spouse of a swiss citizen or swiss resident). What I do not know is if you can ask for a permit in order to then start your company (i.e. come to Switzerland for the specific purpose of starting a company), although apparently Swiss authorities are very helpful if you choose to move your already existing company to Switzerland.
malthaus 9y ago
There are a lot of political initiatives, corporate accelerators etc going on at the moment but they don’t fix the inherent problem here in Switzerland: Cost of living is absurdly high, unemployment is low and life is just really convenient. Why risk it all for a startup when you can just cruise through life with a 42h-week and long lunches at a bank and save a ridiculous amount of money doing so. Because of this cultural issue and the fact that a overproportional number of very large corporates are based in Switzerland, the whole ecosystem is geared towards that. One part is certainly that there is basically no VC money available but just throwing a bunch of money at it won’t fix the underlying issues.
- sschueller 9y ago
  I don't see anything wrong with that. We don't need an Uber here. There are still a lot of startups and yes things move more slowly and carefully but for the better of everyone. The culture is what makes Switzerland such a nice place to live.
  - malthaus 9y ago
    Spoken in a true Swiss way... slow change :) An Uber would actually be nice to have as the (eventual) exit would maybe create a scene of true local angel investors.
    - sschueller 9y ago
      Sorry but a successful Uber would indicate that is ok to ignore any law[1] in your way and effectively ruin many peoples lives to enrich a few VCs. No thanks. Not that Switzerland doesn't have its corrupt Corporations but we don't need more. [1] http://www.uberscandals.org/all/ http://www.uberscandals.org/all/
- louisswiss 9y ago
  I hear this argument all the time whenever people talk about the lack of a startups scene in Switzerland and I think it's way off the mark. People who want to found companies will always found companies - and in Switzerland we are really lucky to have a solid (personal) financial base to build on and the knowledge that, if the startup doesn't work out, there will be a great job to go back to. I'd almost go as far as to say that a lot of people start companies in Switzerland who otherwise wouldn't be in a situation to start a startup anywhere else in the world. The real problem we have in Switzerland is the 'investor-incest' which dictates where the significant amount of available capital is invested. It is a horrible old-boys club of epic proportions, focussed on back-slapping and box-ticking instead of innovation and potential (and I say this as someone who benefits from the fact). Aside from this problem, investors in Switzerland are generally less sophisticated than SV investors (especially at the angel/institutional levels) and tend to focus on the solution not the problem when making investment decisions. This leads to most of the Swiss capital in Switzerland being invested into technologically advanced university spin-offs with no market or use case, while teams with a real product-market fit have to go abroad to find investors with the right mindset.
kyledrake 9y ago
Liberalizing their immigration laws that prevent availability of talent for startups (and everyone else) is a better solution to this problem than just throwing together a giant pile of dumb money. But that's going to require some pretty existential changes to Switzerland that I sincerely doubt they're actually interested in making.
- raverbashing 9y ago
  They can have anyone from the EU and getting a visa is not hard (with sponsorship)
  - kyledrake 9y ago
    Switzerland has 8 million people that can work without nasty visas and their related problems. California has 321 million.
    - raverbashing 9y ago
      Read that again: "They can have anyone from the EU" (with no need for visas) That's 510 Million people - take 65Mi out when the UK leaves but that's still a bigger number (Google gives a total European population if you google that, but that's a wrong number)
      - kyledrake 9y ago
        Swiss voters are trying to tear that up: http://www.expatica.com/ch/visas-and-permits/Guide-for-EU-EFTA-citizens-and-family-moving-to-Switzerland_443220.html#Freedom http://www.expatica.com/ch/visas-and-permits/Guide-for-EU-EF... Also WTF is a "residence permit". It sounds like a visa to me, and has similar requirements.
        Klockan 9y ago
        The typical procedure for getting a permit to Switzerland is to first move there and when you live there you go get it automatically at your nearest office, you will never get rejected as long as you have a job.

68 points by bontoJR 9y ago

valentinebm 9y ago

>87% of investment in Swiss start-ups comes from abroad. Wow. Definitely time to give a cash boost.

mirimir 9y ago
So what are the major sources for SV capital?
likelynew 9y ago
I will not be very surprised if just 2-3 international start-ups started in Switzerland gets 87% of the funding.
deleted 9y ago
[deleted]
malthaus 9y ago
It's not for the lack of capital though. The capital is already here, it's just not used for VC investments due to reasons on both supply and demand side.

mschuster91 9y ago

The main problem for Switzerland is not a lack of venture capital, but rather the Swiss Franc. Cost of living in Switzerland is extremely high, which means a company has to pay huge salaries, and thus command bigger prices for its product. While that works fine when the product is luxury watches, diamonds or highest-quality cheese, it does not work out for "mass production goods" as any product (be it a physical product or a web service) can be cloned in the EU or in China for way less and then sold to Swiss people...

pulse7 9y ago
Cost of living in Silicon Valley is not lower than Switzerland...
siscia 9y ago
I dont think that Switzerland is more expensive than say San Francisco... While it is true that is one of the most expensive European countries the cost of living is very close to the one in the bay area...
- fla 9y ago
  It is not much a matter of cost of living but rather cost of the Swiss Franc versus other currencies. Currently, the swiss Franc is very strong, therefore making any Swiss product expensive to the exterior. It can become a huge problem for an economy based on trading with neighbors.
  - mschuster91 9y ago
    > It can become a huge problem for an economy based on trading with neighbors. Exactly. Switzerland has just 8.5M people living there, while the US has 322M and Germany 82M. If Germany were expensive, for example, it'd still have a sizable inner-country market while Switzerland does not.
    - remline 9y ago
      It changes what you try to do, but Switzerland and Germany isn't all that different from Silicon Valley and the US. You use premium resources in Switzerland and try to sell German (or EU) resources back upon lower markets at a high enough volume and mark up to make the high market costs incidental.
    - throwawaymanbot 9y ago
      The EU has 510 Million.
  - siscia 9y ago

craigvn 9y ago

I would suggest the main reason they leave is the US is the largest single country market that is accessible. China is probably a bigger market going forward but for western companies a bigger cultural change.

tmsldd 9y ago

Although it is nice to have more funds available, which increases the competition among VCs, the main point is not lack of funds. I used to say that a good VC brings you two important things: money and market. Money alone doesn't bring you much (don't get me wrong ..). In my eyes that is the main issue in the startup scenario in Switzerland: lack of market. Having a population of about 8 million people means that your startup has to focus in exporting products & services since the beginning... which adds some layer of complexity/bureaucracy ... Startups tend to establish themselves as close as possible to the client market to simplify as much as they can their initial operation..

bontoJR 9y ago
> Although it is nice to have more funds available, which increases the competition among VCs, the main point is not lack of funds. I agree on that, on the other hand I don't see the lack of market as a big problem. I like to take Spotify as example, it started in Sweden, which is a market comparable to the Swiss one in terms of size, but after the first prototypes and early versions, it went global almost immediately. Schneider-Ammann said that a change of mentality is required in Switzerland. He noted that while in the US, business failure is greeted with a “better luck next time” or with a similar attitude, on the other hand, in Switzerland, “if you fail with your business idea here everyone points the finger at you. You are branded a looser”. This seems to be the main goal and I totally agree with him. IMHO, a company can move to a global scale from the start with the right plan, but it's the mentality and the fact that Swiss VCs care more about patents and product protection preventing Swiss Start-up to compete with the rest of the world, instead of caring about quality of the actual product and picking the right time to enter the market. I heard some stories about companies collecting 500-800k in seed investment, spending 50% of it in legal fees protecting a product they still have to develop, failing later in execution for lack of cash... this is what, I think, needs to be fixed in Switzerland.
- tmsldd 9y ago
  I understand your point. Yeah.. this is king of a ecosystem.. which needs to be balanced. The good news about the report is that it shows a mindset shift.. Switzerland is stable, warm (people) and radiates freedom .. for sure it is a good candidate to become the next hub.

xkr 9y ago

It's not clear from the text how they define "Swiss startups". For example, being a foreigner, can I start a company there and ask for an investment?

bontoJR 9y ago
A "Swiss Startup" is a startup actually based in Switzerland. As far as I know, foreigners with permanent residence in Switzerland have the same rights of Swiss people, plus more than 25% of population is actual foreigner in Switzerland, so that should not a problem at all.
eps 9y ago
> Can I start a company? Depends on where you are from exactly. If you are an EU national, then you can. Otherwise you will first need to get a work permit (against a promise to start a company, reviewed and approved by the canton) and it's generally a slow and expensive hassle requiring an experienced attorney. Whether this will make your company eligible for a startup loan is an open question, but I'm pretty sure that it will.
gpresot 9y ago
If you have a Resident Permit (type B or C), you can start a company. That means you should already be in switzerland with a regular employment contract (or as a spouse of a swiss citizen or swiss resident). What I do not know is if you can ask for a permit in order to then start your company (i.e. come to Switzerland for the specific purpose of starting a company), although apparently Swiss authorities are very helpful if you choose to move your already existing company to Switzerland.

malthaus 9y ago

There are a lot of political initiatives, corporate accelerators etc going on at the moment but they don’t fix the inherent problem here in Switzerland: Cost of living is absurdly high, unemployment is low and life is just really convenient. Why risk it all for a startup when you can just cruise through life with a 42h-week and long lunches at a bank and save a ridiculous amount of money doing so. Because of this cultural issue and the fact that a overproportional number of very large corporates are based in Switzerland, the whole ecosystem is geared towards that. One part is certainly that there is basically no VC money available but just throwing a bunch of money at it won’t fix the underlying issues.

sschueller 9y ago
I don't see anything wrong with that. We don't need an Uber here. There are still a lot of startups and yes things move more slowly and carefully but for the better of everyone. The culture is what makes Switzerland such a nice place to live.
- malthaus 9y ago
  Spoken in a true Swiss way... slow change :) An Uber would actually be nice to have as the (eventual) exit would maybe create a scene of true local angel investors.
  - sschueller 9y ago
    Sorry but a successful Uber would indicate that is ok to ignore any law[1] in your way and effectively ruin many peoples lives to enrich a few VCs. No thanks. Not that Switzerland doesn't have its corrupt Corporations but we don't need more. [1] http://www.uberscandals.org/all/ http://www.uberscandals.org/all/
louisswiss 9y ago
I hear this argument all the time whenever people talk about the lack of a startups scene in Switzerland and I think it's way off the mark. People who want to found companies will always found companies - and in Switzerland we are really lucky to have a solid (personal) financial base to build on and the knowledge that, if the startup doesn't work out, there will be a great job to go back to. I'd almost go as far as to say that a lot of people start companies in Switzerland who otherwise wouldn't be in a situation to start a startup anywhere else in the world. The real problem we have in Switzerland is the 'investor-incest' which dictates where the significant amount of available capital is invested. It is a horrible old-boys club of epic proportions, focussed on back-slapping and box-ticking instead of innovation and potential (and I say this as someone who benefits from the fact). Aside from this problem, investors in Switzerland are generally less sophisticated than SV investors (especially at the angel/institutional levels) and tend to focus on the solution not the problem when making investment decisions. This leads to most of the Swiss capital in Switzerland being invested into technologically advanced university spin-offs with no market or use case, while teams with a real product-market fit have to go abroad to find investors with the right mindset.

kyledrake 9y ago

Liberalizing their immigration laws that prevent availability of talent for startups (and everyone else) is a better solution to this problem than just throwing together a giant pile of dumb money. But that's going to require some pretty existential changes to Switzerland that I sincerely doubt they're actually interested in making.

raverbashing 9y ago
They can have anyone from the EU and getting a visa is not hard (with sponsorship)
- kyledrake 9y ago
  Switzerland has 8 million people that can work without nasty visas and their related problems. California has 321 million.
  - raverbashing 9y ago
    Read that again: "They can have anyone from the EU" (with no need for visas) That's 510 Million people - take 65Mi out when the UK leaves but that's still a bigger number (Google gives a total European population if you google that, but that's a wrong number)
    - kyledrake 9y ago
      Swiss voters are trying to tear that up: http://www.expatica.com/ch/visas-and-permits/Guide-for-EU-EFTA-citizens-and-family-moving-to-Switzerland_443220.html#Freedom http://www.expatica.com/ch/visas-and-permits/Guide-for-EU-EF... Also WTF is a "residence permit". It sounds like a visa to me, and has similar requirements.
      - Klockan 9y ago
        The typical procedure for getting a permit to Switzerland is to first move there and when you live there you go get it automatically at your nearest office, you will never get rejected as long as you have a job.