From the Alps to algorithms: Switzerland on its way to becoming Europe's Silicon Valley

Can Switzerland become the European analogue of Silicon Valley? While London, Berlin and Paris are generally regarded as Europe's main startup hubs, the Swiss cities of Zurich and Lausanne have been rapidly gaining momentum in recent years. Tech giants and venture capitalists are increasingly turning their attention to these cities and are actively investing heavily in them, demonstrating Switzerland's growing potential in the tech sector.

According to the IFJ's Institute for Young Entrepreneurship, more new businesses were created in Switzerland in the first half of the year than ever before. Almost 26,000 new companies were registered, an increase of 4.5 per cent on the previous year. Of course, not all of them will be successful, but there is a noticeable increase in the number of ‘unicorns’ - companies with a billion-dollar valuation - in Switzerland, especially in the technology sector. Recent examples include logistics software developer Scandit, environmental company Climeworks, security specialist SonarSource and online privacy company Proton. Switzerland now leads Europe in the number of technology ‘unicorns’ per capita.

Success factors for Swiss startups

Pascal Mathis, co-founder of Swiss venture capital firm Wingman Ventures, says the rapid growth of startups in the country largely reflects two factors. ‘One has been the cultural shift we've seen in recent years: young Swiss people have become much more confident in starting their own businesses early in their careers, rather than going to work for, say, one of the big banks,’ Mathis says. ‘Another crucial support has been our fantastic technical universities, which attract incredibly talented people from all over the world.’ ETH Zurich and EFPL in Lausanne together attract more students than US universities such as MIT, he says.

Many of Switzerland's most promising startups originated at these universities, which are world-renowned for their achievements in robotics, industrial automation, artificial intelligence, computer vision and climate science. The high calibre of graduates attracts the world's leading technology companies to the country, strengthening its technology ecosystem. IBM has long had a presence in Switzerland, and in recent years Google has joined with a team of 5,000 developers. Other major companies operating in Switzerland include Disney, Nvidia, Meta, Huawei and Intel.

As a result, Switzerland's international reputation is growing. The country recently topped the Global Innovation Index for the 14th consecutive year, with the organisation praising its educational institutions, human capital and business sophistication. Switzerland's attractiveness as a place to live has also contributed to this, and while the high cost of living has historically been a barrier to startups, rising prices in other European cities are beginning to level the playing field. ‘We also have very favourable authorities willing to work with startups,’ Mathis says of the tax and legal systems that companies have to navigate.

How Switzerland attracts global venture capitalists

Venture capitalists who had not previously considered Switzerland are now showing increasing interest. In recent years, Swiss companies have started to receive funding from first-time investors, including Bessemer Venture Partners, Sequoia, Index Ventures, GV, Atomico, General Catalyst, Left Lane Capital, Eurazeo, Eight Roads Ventures, L Catterton and Blossom Capital. According to law firm CMS, last year was a record year for venture capital investment in Swiss technology companies, totalling almost CHF 4bn (about €4.23bn) through more than 380 funding rounds. ‘Despite the challenging economic environment, Switzerland has maintained its reputation as the best place to invest in high-tech,’ said Jérôme Levrat and Weik Müller of CMS.

Switzerland now has the important task of keeping successful businesses inside the country, preventing them from being sold to larger companies or moving abroad. It is interesting to note that despite the growth of startups in the initial stages, only one major technology company is listed on the Swiss stock exchange - software and peripherals maker Logitech. ‘Almost all the pieces of the puzzle are in place; this is our chance to build a European Silicon Valley,’ says Mathis, ‘But we need to work harder to convince these companies to stay in Switzerland.’ He believes that support from the Swiss government is beginning to help, as is growing interest from large venture capital firms willing to invest in later rounds.