Written by Author Name 1/30/16 | 4 Comments

What makes Switzerland so innovative and what can we learn from it?

What is needed to make a startup ecosystem thrive over time? We can learn from the best practices of how to make our ecosystem grow faster and more efficiently.

In 2019, for the 9th time, Switzerland got rated as the most innovative country in the world according to the World Intellectual Property Organization. Today we’ll do a deep dive into the Swiss innovation ecosystem to better understand its success drivers. How digitalswitzerland helps to shape the Swiss ecosystem and what are the learnings our speaker Matthias Zwingli, Head of startup enablement & international at digitalswitzerland shared at Touch Digital Summit 2019.

Ecosystem is a term widely used, everyone talks about them, but no one really understands it and that’s exactly the point. Innovation ecosystem is the term used to describe the large number and diverse nature of participants and resources that are necessary for innovation. But an ecosystem can be a complex phenomenon to replicate. For instance, we have Silicon Valley, Israel, China, maybe Switzerland and they’re all doing great. A couple of years ago everyone tried to build the next Silicon Valley, but no one succeeded since it’s very difficult to replicate an ecosystem. There are so many factors, so much timing that takes into place. To replicate something like that entirely is pretty much impossible, but what you can do is learn, take what you think makes sense and adapt it to your local customs.

If we do a quick dive into Switzerland’s story and try to get some insights, we’ll see that inside Switzerland is like Georgia. As small countries, they both lack a big domestic market and don’t have many resources. For a small country like Georgia and even Switzerland, it can always be more difficult because you don’t have a huge domestic market, so not too many people are coming for you, saying that they want to start a business in Georgia or in Switzerland and that’s because of a small market worldwide.

What could it be that makes a country successful and innovative while others not so much?

There are always various factors, but we are going to narrow it down and give you a quick insight. It’s a lot about talent, and talent is coming from universities. So what Switzerland really has is world-class, at the same time, affordable universities. If it comes to talent, it’s really global and if you look at ecosystems, where does innovation happen? It happens at some place where you bring bright talents from all around the world together to work on one specific thing and that’s exactly what’s happening. Universities and colleges are at the very forefront of innovation as they bring skilful people together and allow them to pursue new interesting ideas together. So, it’s more about giving them a stable place where they can develop their talent.

Advice for cities and countries - In the modern startup world, all the countries and cities want to promote and brand themselves on the hottest topics. But you have to rethink, are you really good at it, is there more to it than just the trendy topic, do you bring something better or how you should position yourself to do it. 

If you want to be known for something, reduce it to one or two things. Don’t try to do everything and think about what you are truly better at, how you can place yourself to really differentiate from all the other countries that want to be the best. So the focus is the key. But, of course, that doesn’t mean you don’t do the rest. 

Although Switzerland is a small domestic market, they are number 7 among top multinational headquarters which means it’s quite an incredible hotspot when it comes to b2b business. So if you want to work together with bigger companies in the world, it’s a good place to start and get the deals done.

What about venture capital?

According to the Swiss venture capital report, Swiss startups received about CHF 1.24 billion in investments in 2018, they grow around 30% year by year. It shows the maturity of an ecosystem, the more venture capital money is around, the bigger the rounds are the more scale-ups [] and bigger companies you get. The hardest part always is to start because the money has to come from somewhere and as soon as you have success cases, this inflates and afterwards, it’s like a self-running organism. But you need a big number to occur, otherwise, without capital nothing's going to change. That’s exactly one of the challenges Switzerland faces as an ecosystem, they don’t have enough growth capital. But you find solutions to change it. When you look at dominant sectors in the startup ecosystem, you see that it kinda correlates with it. So we have most of the startups coming from the robotic, software-hardware crossover sectors, then medtech. Many spin-offs coming from Swiss universities.

What is really interesting and important about an ecosystem?

  • Know and understand yourself first, think about what’s your maturity rate, what is important now for the future, focus on what you’re good at and what you can change across the world. It can be a regional cluster as well. To tackle the European market, for example, is a very good starting point.

How did the local cross-industry association play a big part in building the innovation ecosystem?

digitalswitzerland is focusing on three key areas: attracting outstanding digital talent, helping existing companies master digital challenges and significantly strengthening the Swiss startup ecosystem. It gives impulse, catalysts, connects and inspires for digital innovation in Switzerland. 

There were almost no acceleration programs in Switzerland a few years ago. Kickstart accelerator was initiated by digitalswitzerland as one of the first based on the American model. What the program tried to do was introduce startups to a corporate network and try to build a POC together. But the thing is when you start working with a big corporate multinational, you answer a b2b cycle, so that takes 6 to 18 months to close the deal, but unfortunately, startups don’t have enough funds for that period. So the program was switched and it became more scale-up orientated, more market entry faced. This resulted in more acceleration programs in the country.

Finally, it can be said that innovation is a continuous process. Building an ecosystem is hard, replicating it is almost impossible. A successful innovation ecosystem is a flow of ideas, talent, capital and this fluidity is absolutely essential. So what countries can do is focus on the things they are good at, ask themselves what makes them special and what they can do to bring good to this world.