SWITZERLAND Trends and Developments Contributed by: Karim Maizar, Nicolas Mosimann, Alexandre Gachet and Nicolai Nuber, Kellerhals Carrard
The internationalisation of the Swiss start-up ecosystem has several positive implications. It enhances the stability of the ecosystem by providing access to a broader pool of capital, reducing reliance on domestic funding sources. This diversification of funding sources mitigates risks associated with economic downturns and market fluctuations. Additionally, the presence of foreign investors fosters a competitive envi - ronment, encouraging Swiss start-ups to strive for excellence and innovation. The global inter - connectedness of the ecosystem also facilitates knowledge exchange and collaboration, driving the development of cutting-edge technologies and solutions. Challenges and areas for improvement Despite its strengths, the Swiss start-up ecosys - tem faces several challenges. Growth financing As mentioned previously, Switzerland has emerged as a centre of world-class innovation, especially in deep tech. Despite the region’s exceptional technical talent and ground-break - ing research, it has yet to produce global leaders in these transformative fields. To address this gap, it is essential to increase late-stage capital, prioritise global leadership over regional excel - lence, and build a robust support ecosystem to transform cutting-edge research into market- leading solutions. The notable gap in growth financing, particularly for large-scale invest - ments, seems among the most pressing chal - lenges in this respect. It remains to be seen if 2025 will be the year where such rounds resur - face. While it is encouraging to see that at the end of 2024, almost 50 funds from VCs oper - ating in Switzerland were in fundraising mode, many of them are smaller to mid-sized funds, thus not able to address the need for growth financings, thereby underlining the continued
dependence of the Swiss start-up ecosystem on foreign investors. Exit opportunities/FDI control The number of exits remains low, and enhanc - ing exit opportunities through strategic partner - ships and acquisitions is essential. Switzerland is one of the world’s largest recipients of foreign investments and one of the world’s largest inves - tors abroad. Accordingly, Switzerland has so far maintained a policy of openness towards for - eign investment. Currently, there is no generally applicable law regarding the screening of foreign investments. There are, however, sectoral laws regulating or restricting foreign investments, par - ticularly in the banking and real estate sectors, and in telecommunications, nuclear energy, radio and television, and aviation. More importantly, the Federal Parliament is currently considering tightening the rules by subjecting foreign buy - ers to greater scrutiny in Switzerland. Although foreign investments would remain permitted in principle, they would now be subject to authori - sation under certain conditions, especially in the event of security concerns. By applying such a regime to any buyer, and not only those that were state-controlled, exits of Swiss companies would become more complicated, thereby pos - sibly dampening increased M&A activities. Job creation Swiss start-ups tend to create fewer jobs com - pared to their counterparts in other countries. Fostering job creation and scaling operations can enhance the overall impact of the ecosys - tem. The report suggests that providing targeted support for high-growth start-ups and promoting policies that encourage job creation could help address this issue.
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