Is Switzerland starting up?

Swiss blogger and investor Sébastien Flury explores the challenges and opportunities in the Swiss startup scene…

Guest post by Sébastien Flury, an official blogger for NEXT Berlin and author of Startupolic:

Switzerland is often ignored by the famous tech blogs  Of course, it’s not – yet – in the same league as Silicon Valley or London… or even Berlin.

But as many Swiss tech people descent on that city for NEXT in a few days, I believe Switzerland as a whole (not just Zürich or Geneva) has the ingredients needed to be a key location on the web scene.

Technological innovation is being driven by the two Swiss Federal Institutes of Technology (ETH Zürich and EPF Lausanne), along with 10 other universities spread across the country and 7 Fachhochschulen. Nothing is far away in Switzerland. You’re never more than 45 mins from one of those educational institutions. You can travel by train from Lausanne to Zürich in around 2 hours, going from one tech hot spot to the other in the same afternoon, and back. 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!

As a consequence, innovation and great engineers are spread across the whole country, and not just concentrated in the hotspots of Zürich and Lausanne.

The Swiss Confederation is also supporting innovation with helpful tools, like academic/industry research projects, a training program (venturelab), startup coaching for 24 months (CTI Start-up) and an investing club (CTI Invest). Just some weeks ago, The Founder Institute was launched, completing the tools for wannabe entrepreneurs.

Recently, 2 new acceleration programs for web startups were launched in Zürich area: [email protected] 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 entrepreneurs believe in Switzerland as a place to launch their startup.

On the investing side, Switzerland has a lot of private individuals who could fuel the startup ecosystem, but it’s not quite happening – yet. But there are some regulatory changes currently in progress, like tax exemption for business angels in some cantons to attract more Venture Capital money to be invested locally.

We have two excellent crowdfunding platforms – and c-crowd – and some professional business angels clubs – Go Beyond, Mountain Super Angels, Business Angel Switzerland, b-to-v, etc.- and some smart international Venture Capital funds are based here.  That doesn’t mean seed funding is easy, but most worthwhile projects find  €500,000 to €800,000 in the early stages. A manager of a well-known VC fund once told me that he’d rather come to Switzerland for a board meeting on a Thursday than flying to Dublin, for one 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 applications. But that’s not particularly by choice, more because of the relative lack of funding for B2C web apps: the Swiss market is just too tiny (just 8 million inhabitants) to be profitable as your home market when you have business model who requires a lot of users. Furthermore, Switzerland is a difficult country if you plan to build a B2C application: 4 languages (Swiss German for 2/3 of the population, French for 20%, then Italian and Rumantsch).

There are some exceptions in e-commerce, mostly because (most) citizens have money to spend and almost everyone has access to internet (at a too high price, but that’s another story). The most successful e-commerce company in Switzerland is Ricardo, an auction marketplace which successfully resisted eBay – Switzerland the only country in the world where eBay is not #1!, a group-buying website, is another successful venture which started early 2010, made an 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).

In recent years, other success stories include :

Doodle (the easy scheduling service, partially sold to Tamedia), Wuala (a bootstrapped secure cloud storage service sold to Lacie for €11m), Pixelux (especially famous for providing the technology to make the film Avatar), LiberoVision (a provider of 3D virtual sports enhancements software sold to Vizrt), and (which has/had Guy Kawasaki in the Board of Advisors).

In 2012, we now see an emerging “community” of serial entrepreneurs who are under 40, and  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 $280m.

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 crowd based)
  • (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 developed countries, Switzerland is experiencing a serious lack of software developers and will welcome most of them wanting to relocate – if they’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.