European Startup Monitor: Some surprises regarding Swiss start-ups

The German Startups Association and the European Startup Network have published the 2nd European Startup Monitor report. The study represents 2,515 start-ups from 18 different countries, including Switzerland, one of the newly added countries this year. In comparison to start-ups from other European countries Swiss companies have a high number of employees, are able to attract more money and have experienced founders.

The European Startup Monitor (ESM) is a comprehensive study of the European startup ecosystem and ensures transparency while highlighting the growing importance of young companies for the European economy.  The 2nd edition involved eight additional countries in the research: Cyprus, Finland, Portugal, Slovenia, Greece, Hungary, Switzerland and Ireland.

In Switzerland, the study surveyed 105 startups with disruptive or innovative business models or technology that are less than 10 years and have a significant growth in revenue and number of employees, were assessed. The Swiss country report was prepared by the Center for Innovation & Entrepreneurship at ZHAW. Given that 66% of the participating startups stem from the region Zurich – one of the main hubs for startups in Switzerland, and mainly from the fintech sector, the results are not fully representative for the entire Swiss startup ecosystem.

Among the respondents, 89 % were male, 11 % female, and their average age is 36.5 years (European average: 29.9). The respondents, in their respective companies, provided the following details:

Employment: The Swiss startups surveyed employ 13.5 employees on average, excluding the founders. This is the highest number of employees in Europe. The average European start-up has 9.5 employees. They further plan to hire another 5.8 people on average within the next 12 months. Therefore, startups of this study create a positive impact on the Swiss economy by creating jobs.

Funding: 60% of the Swiss founders surveyed gave insights into their startup's financing. Switzerland has the highest share of start-ups funded by founders’ savings (96.8%) and family and friends (57.1%) in Europe. Business angels are another important source of funding for Swiss start-ups. Switzerland has the second highest share of companies supported by business angels (46%) topped only by Finland (56%). In addition the Swiss start-ups in the sample raised higher amounts of money than the average European start-up. 25% of the Swiss start-ups raised between €1 million and €5 million versus 12% of all European start-ups.

Political environment: In order to derive useful recommendations for potential initiatives on the political level, which help to support the business environment for startups around Europe, the ESM participants were also asked to evaluate their national politicians in terms of support and understanding of startups on a scale from very bad (1) to very good (6). On average, the national governments’ support for the startups ecosystem was rated worse (2.7) than the year before (3.3). The rating for Switzerland is not good (3.2) but better than the average. The best ratings were 5.0 for Finland and 4.0 for both Israel and the United Kingdom. Regarding the national governments’ understanding of startups, this year’s rating was, again, 2.7 overall and slightly better for Switzerland (2.9).

Cooperation with established companies: Another important element of a vital entrepreneurship environment is the openness of established companies to cooperate with start-ups. Although it slightly decreased from last year, established companies received an evaluation of 3.1. Switzerland is slightly above the average (3.4). The highest evaluations were received by established companies from Finland (4.5), Israel (3.9) and France (3.7).

Positive attitude and optimism: 49% of the Swiss founders surveyed had previously founded a startup, 14% had even started more than three businesses. Serial entrepreneurship seems to be more common than one might think, and may even be on the rise. This demonstrates that Swiss startups are indeed highly optimistic and have a positive attitude towards starting a business. In fact, more than half of the surveyed founders stated that they would start another business, if their current business fails. 22% would like to work as an employee, 16% as a freelance or consultant, and only 4% would get involved as a business angel or investor.

This study reflects some fundamental patterns of the Swiss startup ecosystem, nevertheless with its small sample size of 105 startups, it has to be regarded as a qualitative research result rather than a statistically and quantitatively representational one. Therefore, the findings need to be explored through more comprehensive samples and further research.

The ESM and the Swiss country report which was prepared by the Center for Innovation & Entrepreneurship at ZHAW can be downloaded below.