The Top Worldwide Venture Hubs
San Francisco, New York, Berlin, London, Shanghai… If I asked you to list the top startup tech hubs globally, these established powerhouses would certainly top the charts. They produce the majority of the elite of tech companies and the lion’s share of venture returns. And every city is trying to become the “next Silicon Valley” — without the massive homelessness and extreme inequality, of course 🙂
But as an American expat (and serial entrepreneur, startup growth and strategy advisor, occasional investor, and aspiring VC) that recently moved back to Zurich, Switzerland, I must say, I was shocked at the rapid growth of the startup scene and the relative lack of notoriety/recognition that, given my opinion and experience with startups and venture, the innovation hub clearly warrants — especially with a population of only 400k.
(Are you a Swiss startup changing the world? Join our swissSTARTUPS community on Slack to network with other like minded founders, investors and innovators doing great things here in Switzerland!)
With an outcrop of both new and established private and public venture funds, a growing number of successful startup studios, and cutting edge R&D constantly spinning out of ETH (one of the top 5 engineering schools worldwide), it is no wonder the local tech ecosystem is booming. And unlike many tech centers I’ve been a part of, Zurich has managed to build a successful bridge between industry and upstarts, leading to solid corporate venture funds, partnerships, and other city and government assisted-or-funded efforts to further Swiss innovation.
Overall, I am very impressed. There are more and more startups getting launched and funded here every day and it feels like there is something in the air. So you can see how surprised was when talking with a colleague at TechStars and when I found out Zurich wasn’t one of the 34 cities where they ran accelerator programs. As someone who increasingly views himself as “Swiss-ish” — other than eating lots of bread and cheese :) — this was a big disappointment for me, basically akin to saying Zurich was not one of the top 34 startup cities worldwide.
I know this article isn’t going to change that. But if it helps move Zurich a little further in its ascent as a top European and worldwide startup hub, I’ll consider it a success.
In order to conduct research and learn more about the top players in the space, I reached out to the top startup investors to get their feedback and asked each of them (where applicable) the following questions:
- What is your most successful Swiss investment to date?
- Who is your favorite or the most promising Zurich-based startup?
- What three investment verticals is Zurich strongest in for startup talent?
- What company would you fund in a heartbeat if they knocked on your door? And/or what are your basic investment criteria?
- What is most lacking in the Zurich startup scene or needs the most improvement?
- How many public investments did you make in 2020 and what is your average check size?
- Who else would you include in a list of Zurich’s top startup scene players?
Now, as Jerry Maguire would say:
Zurich Top Venture Capital Firms
Before we start, a quick note on the rundown: To avoid bias, the firms are not listed in any particular order and the list is by no means comprehensive.
Blue Horizon Ventures is a food tech venture fund founded in 2018 with the aim to support the movement toward a more sustainable food system and to promote a positive global impact on the environment, human health and animal welfare. Large focus areas for the firm include: plant based proteins and cellular agriculture (clean meat).
Most successful Swiss investment (and most promising): The Live Kindly Collective
Top Three Industries: Technology, Design and our space Food Tech
Company they’d fund again in a heartbeat: TIPA because of its fantastic founder, team, and focus
Blue Horizon Ventures did ten deals in 2020 with an average check size of 5M CHF.
Tomahawk VC is an entrepreneur-led early-stage venture capital firm that invests in Fintech and DeFi, global-first (often remote) companies from Pre-Seed to Series A.
Most successful Swiss investment: A tie between Amorana, a less-taboo sex toy company and Frontify, an all-in-one brand management software as a service which was built in St.Gallen and has almost 150 employees globally.
Favorite (or the most promising) Zurich-based startup: GetYourGuide, a tours, activities, and attractions platform has gone from a group of ETH students to a company with more than 1000 employees and many millions in funding over the last few years, while weathering Covid-19.
Top Three Industries: Blockchain/DeFi, Fintech, and B2B SaaS
Company they’d fund again in a heartbeat: “I think we’re currently just scratching the surface of what’s possible with decentralized infrastructure and so any company that successfully leveraged decentralized infrastructure and technology to do something that has a real world implication and an impact on our daily lives, is what I find most convincing these days.
We invest very early on, typically in a company’s first or second funding round and at that point what’s most important to us is the team, the human capital. Seeing that the founders have combined themselves, as well as the early team that they’ve hired in a meaningful way gives us confidence beyond any one single brilliant idea or solution. Second priority is seeing some sort of product validation or product market fit for a pre seed round. That might mean signed or existing relationships with potential future recurring customers, and for a seed round, want to see clear signs of product market fit.”
What is most lacking in the Zurich startup scene: “I think over the past seven years since I first started to invest in Zurich a lot has changed. There’s more capital, there’s more support and there’s also a better culture towards founders and failure. That said, a bridge into other markets is still lacking. I still see companies trying to perfect their sales strategy and processes in Switzerland instead of quickly going after much bigger markets like Germany or the US.
Tomahawk made five public investments in 2020 with an average check size of 250k to 1.5M CHF and a sweet spot of 500–750k.
The Technology Fund managed by Emerald Technology Ventures
The Technology Fund is a partnership with the Swiss government and Emerald Ventures funded by CO2 taxes that focuses on granting low interest loans to sustainability and environment-oriented startups and small businesses.
Most successful Swiss investment: While they are not able to publicly disclose numbers, HeiQ Materials recently went public via SPAC and is doing very well.
Top Three Industries: Software, Mobility as a Service, Robotics
What is most lacking in the Zurich startup scene: Life is too easy without having to risk things/opportunity cost (See pros and cons below)
The Technology Fund guarantees 20–35 new loans per year with an average check size of 1.6M CHF to Swiss-based Series A-ready companies interested in debt rather than equity-based financing.
Verve Ventures is the leading European startup investment platform for qualified and institutional investors with a fully digital platform that since 2010 has enabled private and institutional investors (5000+ investors, family offices, and pension funds today) to build their portfolio.
Most successful Swiss investment to date: Beekeeper
Favorite (or the most promising) Zurich-based startup: There are quite a few that are progressing nicely, making it tough to pick just one. Some examples are Beekeeper, Verity, Scrona and Memo Therapeutics.
Top Three Industries: Deeptech technologies coming mainly out of ETH in both the digital and tangible space.
Company they’d fund again in a heartbeat: “We see 95% of deals before they happen in Switzerland so any interesting company is already on our radar. We invest in health, digital and tangible startups from early stage (after seed) all the way to late stage.”
What is most lacking in the Zurich startup scene: “A few years ago I would have said access to growth stage funding, but that gap is closing fast.”
Verve Ventures invested CHF 45 million in 2020 and added more than 20 startups to their portfolio (more than 100 in total).
Übermorgen Ventures is an early stage venture capital firm founded in 2020 with a focus on climate tech startups that optimizes for both financial returns and GHG emission reduction/capture potential.
NOTE: Übermorgen Ventures is a relatively new but the team behind Übermorgen has an impressive entrepreneurial and investment experience and as such, all responses are representative of the Managing Partners, not the venture capital firm itself.
Most successful Swiss investment to date: Farmy.ch
Favorite (or the most promising) Zurich-based startup: Yova — Great team with a great vision and incredible execution power.
Top Three Industries: FinTech, Energy Tech, Climate Tech
Company they’d fund in a heartbeat:A company with a convincing value proposition and business model around soil regeneration.
What is most lacking in the Zurich startup scene:A large home market. This can be both boon and bane, in that growth potential is limited but the startups willing to grow further have to think about internationalization early on.
Übermorgen Ventures made five investments in 2020/2021 with an average ticket size of EUR €350k.
Wingman Ventures is an early stage fund that invests in pre-seed Swiss founder teams building tech companies with the potential to become global market leaders.
Most successful Swiss investment to date: Wingtra
Top Three Industries: Robotics, Artificial Intelligence/Machine Learning, Material Sciences
Company they’d fund in a heartbeat: A team of complementary founders with international ambitions bringing a truly innovative product/service to a large market in need of change.
What is most lacking in the Zurich startup scene: Strong venture funds that can compete internationally in talent, strategy, and performance to support Swiss teams in building category-winning companies.
Wingman Ventures made eight investments in 2020 with an average check size of 750k CHF as the lead investor during the startups’ first financing round.
EquityPitcher is an early stage Venture Capital firm that supports promising startups from the DACH region through with not only capital, but close cooperation with renowned industry experts, contacts, and know-how.
Most successful Swiss investment to date: OnlineDoctor, Futurae, Xatena, Roomz, Guuru, ANYbotics, AirConsole, vestr
Favorite (or the most promising) Zurich-based startup: Futurae
Top Three Industries: ICT, FinTech and DigitalHealth Startups
Investment criteria: Series A, DACH Region and industry agnostic.
What is most lacking in the Zurich startup scene: “ ‘No Fear of failure culture’, later stage investors, knowledge sharing of serial entrepreneurs, too much bureaucracy, and attractive tax schemes.”
EquityPitcher did eight investments in 2020 with an average check size of 500k-1M CHF.
Redalpine Ventures is a seed and early-stage venture investor that invests in European-based disruptive tech companies, with a strong focus on highly scalable ICT and Health Tech models.
Top Three Industries: Biotech (Schlieren), Deep Tech, Crypto
Investment Criteria: please refer to our website
What is most lacking in the Zurich startup scene: Role models. Experienced entrepreneurs who bring back their knowledge, networks and money
Redalpine made eight investments in 2020 ranging from 0.5–5M CHF.
BackBone Ventures strives to provide goal-oriented, profitable and sustainable support for promising and innovative start-ups that will have a positive impact on the future living. They focus are pre-seed, seed and early-stage investments, primarily in the area of innovative ICT, FoodTech and disruptive technologies.
Most successful Swiss investment to date: neon Switzerland AG
Favorite (or the most promising) Zurich-based startup: Although it is difficult to only pick one, Imburse has an exceptional team, precise execution, and excellent development in a very short period that we are excited about for the future.
Top Three Industries: FinTech, Robotics & Cleantech
Company they’d fund in a heartbeat: This topic would certainly spark a hot discussion internally. To name a few: Sennder, Auterion, Bitpanda.
Investment focus: A broad industry with a slight focus on FoodTech, DACH & Israel, early stage
What is most lacking in the Zurich startup scene: “Switzerland certainly still lacks large competent venture funds that can support startups in the late stages. Furthermore, the mindset in Switzerland regarding failure needs to evolve. Unfortunately, this is often still frowned upon here, while it is embraced in other countries such as Israel or America.”
Backbone Ventures made 11 investments in 2020 with an average ticket size 400k CHF.
Other Notable Venture Firms that Didn’t Respond
- Lakestar — Portfolio includes: Spotify, Revolut, OpenDoor, and Harry’s
- Mountain Partners — Portfolio includes: Scout24, Alando, Bab.la, and Lieferandro
- Swisscom Ventures — Portfolio includes: Scandit, Beekeeper, Adello, and Avrios
But it isn’t only investors that make or break a city’s tech startup aspirations. If anything, the talent is what draws return-hungry investors in the first place, and it is for that reason it is worth including some of the top contributors to the space.
(Are you a Swiss startup changing the world? Join our swissSTARTUPS community on Slack to network with other like minded founders, investors and innovators doing great things here in Switzerland!)
As one of the largest and most prominent players in the Swiss/Zurich startup ecosystem, Venturelab does everything from early stage startup and business training and incubation/acceleration (where I happen to be one of their startup coaches — more about me here) to direct investing, startup-investor roadshows, and their renowned Top 100 Swiss Startups Award
Favorite (or the most promising) Zurich-based startup: They maintain a database on their website for this. Generally, Cutiss is certainly one of the local stars.
Top Three Industries: ICT, Life Sciences, Fintech
Company they’d fund in a heartbeat: Great teams with a great idea to change the world.
What is most lacking in the Zurich startup scene: Working permits for non-EU/EFTA residents
Venture Kick invested 5 million into 149 projects in 2020: https://www.venturelab.ch/Swiss-Startup-Highlights-of-the-Year-2020
Kickstart is an initiative of Impact Hub Zürich and one of Europe’s largest zero equity scale-up programs for later-stage startups using deep tech innovation to solve humanity’s biggest challenges. Each year they bring in around 100 startups to Switzerland to collaborate with corporate players for proof-of-concept pilots and other innovation partnerships. They run the accelerator in five verticals: EdTech & New Work, FinTech & InsurTech, Food & Retail Tech, SmartCity & Technology, HealthTech, and the Circular Economy.
F10 is a top notch fintech accelerator funded by SIX (a global financial infrastructure provider and operator) that focuses on collaboration between startups, incumbents and investors in finance, blockchain, and insurtech spaces.
Startup Studios and Venture Builders
Swiss Startup Factory is both an all-around a venture builder for corporates and startups to help innovate and accelerate the best new technologies to market and a connected investment network and service provider to help startups raise outside capital.
Sparrow Ventures is an autonomous venture builder and growth equity investing subsidiary of Migros focused on eCommerce, FinTech, LogisticTech, Digital Health and Happiness, Community & Lifestyle. Companies they supported with growth equity to date include bestsmile, VIU and Selma Finance while on the venture building side they launched for example the startups Snäx and Miacar.
ETH is one of the top 10 engineering, science, and technologies universities in world. Notable alumni include: Einstein, Alfred Werner, John von Neumann and many more of history’s most notable scientists and thinkers.
ETH has a strong entrepreneurial and spinout program, setting a record for 34 new spinoffs in 2020. The university also maintains an intensive database of 100s of ETH-launched and supported spinoffs, of which, 40+ have been acquired since 2000
Impact Hub Zürich is an extensive of Impact Hub’s extensive worldwide network of creators and a major contributor to the Zurich startup ecosystem focused on the power of innovation through collaboration. When we are not living through a pandemic, they host numerous startup and technology events in their citywide co-working spaces to create a thriving innovation ecosystem across organizations, cultures and generations collaborate to solve the grand challenges of our time (*as defined by the United Nations).
In addition to the burgeoning startup tech scene, there are other major factors that make Zurich such a great place to build a startup or business which are worth mentioning.
- Access to capital — While Zurich (and Switzerland as a whole) is no San Francisco or London when it comes to startup funding, it is one of the preeminent banking capitals of the world, with more private and corporate wealth than people know what to do with. Although many are generally more risk averse than your average American or Brit, there are still plenty of angel investors and institutions for founders to turn to and try to sell their vision of success.
- Family friendliness — As a small but vibrant city of 400k+, Zurich has far and away the most public playgrounds and family organizations of any city I have ever visited or lived in. Between the Gemeinschaftszentrums (which are basically enormous, city-sponsored indoor and outdoor playground/community centers that offer programs and parental help (even throughout Covid) and the robust private Kita/childcare system (that has also managed to keep its doors open), there are plenty of opportunities for family support, and for working moms/dads to thrive. Although these can be quite expensive, the city helps subsidize costs for families unable to pay the lofty premiums that childcare demands.
- Local support — One thing I have noticed again and again which living in Switzerland is that while the Swiss can often be initially tough to connect with, they are fiercely loyal to their country and their way of life. Products here are often labeled: “Made in Switzerland” or “Produced in Appenzeller” (or whichever Kanton they come from) where not only the quality, but the origins of the product matter. And in an inflated economy of success and high prices, that is a major advantage for entrepreneurs — both the willingness of consumers to buy local and the governmental and cost restrictions that prevent big players like Amazon from operating here and disrupting local business.
- Educated populace and access to talent — Zurich has one of the most educated workforces worldwide. And with universities like ETH and the University of Zurich, very low cost tuition, an elite primary education system, and an innovative, experience/internship-based alternative (for some) to traditional secondary schooling, it is no surprise. Add the fact that companies like Google, Swisscom, IBM, SAP, and Microsoft have large offices here, and Zurich as a whole is brewing with talent.
- Political stability — Switzerland is one of (if not the most) stable, respected, and unequivocally neutral democracy in the world. No need to say more.
- Privacy and data security — Switzerland is neutral about many things, but certainly not privacy and data protection. There is a reason that banking and finance have such a strong influence here, and that blockchain and fintech startups are thriving. With some of the most robust privacy laws in the world plus the independence of being outside the EU (despite having many of the benefits), Switzerland has both a phenomenal reputation/brand for startups looking to focus on consumer protection and the legal structures to back it up, should hostile governments or organizatons (or Facebook or Google) ever want access to your data.
- Public health and safety — With one of the lowest crime rates in the world and one of the best-run healthcare systems, that is one less thing entrepreneurs or employees need to worry about. As someone who has been self-employed in the States (which is a bit like playing Russian roulette with crappy healthcare and exorbitant expenses), I can say without a doubt, the Swiss/European model is better.
- An independent, stable currency — Unlike the EU and the Euro, Switzerland’s Swiss Franc (CHF) is very highly regarded (thanks to the stability and image of the country) which means your money goes further, especially when traveling abroad. For reference, as of writing this, 1 CHF is equal to $1.08 USD, €0.91 EUR, or £0.78 GBP.
But as with everything in life, there are advantages and disadvantages. And Zurich is no different…
- Cost of living — Zurich (and Switzerland as a whole) consistently rank as one of (if not the most) expensive places in the world to live. Between the desire of many to live here (for the reasons above and more) and the booming economy and artificially high Swiss Franc (CHF), it means that salaries here need to be quite significant, which can ruin a startup’s chances or runway.
- Opportunity cost of taking a startup job — For a place with so many options and such potential for an educated, motivated workforce, it can be challenging to attract top talent for much riskier startup endeavors. If you could have a cosy banking job or IT job with awesome pay, great benefits, and six weeks of vacation of year, what motivation do you have to start or build something new?
- Cost and complexity of starting a business — Startups looking to incorporate in Switzerland face major economic hurdles. Unlike in the US or the UK where it costs a couple hundred dollars max to get your business up and running, opening a GmbH (limited liability company) or an AG (public company: S or C Corp) — which you would need to raise outside capital — requires large financial commitments of “share capital,” basically, to ensure the founder has enough vested interest into the enterprise to make it a success. This severely limits the ability of unfunded individuals/founders to start a startup.
- Residence permits — As mentioned previously, Switzerland is not technically a member of the European Union. As such, it is more challenging than other EU member states when it comes to importing talent due to working permits, paperwork, and more.
- Language barrier— Although I personally love languages, the fact that Switzerland is so diverse can sometimes present challenges for companies or organizations looking to make Switzerland their headquarters. With four official languages (based on the region you find yourself in): Swiss German (similar to German but different enough to create real challenges), French, Italian, and Romansh, you can imagine the headache in needing to translate things and communicate/market nationally. Luckily, Swiss schooling involves very thorough language studies in German, English, and French very early on, so this is normally not an issue for native Swiss residents, but often can create problems for foreigners.
Summing things up
Zurich is no Shanghai, LA, or Boston (yet!), but it is coming. Underneath its polished veneer of banking and high society, the city is brimming with talent, innovative spinoffs, investors, and a growing number of entrepreneurial oriented ventures and incubators… along with all of the obvious perks of the city itself. And although we are still waiting on the first big Swiss unicorns to emerge onto the scene and take the world by storm, they are coming, and Zurich is at the eye of the storm.
Give it a few years, and Zurich almost certainly will rank prominently on many startup leaderboards, especially for top startup hubs in Europe.
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