Zurich: Entrepreneurial Hub
While Zurich’s status as an international investment and finance hub remains its forefront for economic activity, in recent years it has picked up pace as a leader in European entrepreneurship. Since 1996, the number of new Swiss startups has skyrocketed by 700% , with hundreds being launched in the year 2018 along. Roughly 30% of these new ventures have launched in Zurich, and the city’s growing emphasis on innovation and business-friendly climate are driving new developments even faster. Boasting a high quality of life, strong talent pool, esteemed universities and educational outlets, and an impressive access to capital and resources, the Swiss city has emerged as a hotbed for startup innovation. A quick snapshot of the city reveals a number of aspects that are driving its success:
Zurich is home to some of Europe’s most innovative universities, including the Swiss Federal Institute of Technology (ETH) in Zurich, which ranks highly on Reuters’s list of most innovative European universities. Zurich’s ETH has provided a major pipeline of talent to startups: over 2,500 jobs have been filled by ETH for startups in recent years. Zurich is also home to the University of Zurich and the Zurich University of Applied Sciences, two renowned universities that help the city draw on a young and innovative workforce to sustain its growing startup field.
Switzerland’s largest city is simultaneously its largest center for communication and information technology (ICT). There are 5,000 companies in the Greater Zurich Area, employing 50,000 ICT professionals from all over the world – many of them highly specialized researchers and developers, giving Zurich lot of ammunition to grow their operations and develop its reputation as a hotspot ICT location. Furthermore, a considerable portion of ETH graduates come out as experts in fields that are vital for startups – Life Science – Information Technology – Fintech & Blockchain – Robotics & Intelligent Systems, and Advanced Manufacturing. Global corporations, SMEs, startups, and spin-offs from institutes of higher education form a dense, creative ICT network in Zurich and the city’s ICT sector is world-class on several counts.
The Corporate Connection
Fortune 500 businesses have found a formidable foothold in Zurich – 15 of the 500 companies are headquartered here, and over 70,000 companies are registered in Zurich. With a number of established giants in the field such as ABB, AMAG and Zurich Insurance (to name a few), startups are finding an access to not just brand names, but the capitalization and market value that they bring. Buoyed by the presence of large corporations, startups in Zurich have a strong local market to sell their services and products to, and to make a case that their business model is effective on the largest stage.
This synergy between larger corporations and fledgling startups has created a noticeable “multiplier effect” whereby the production and workforce output of a large corporation can create up to 3 times as many jobs downstream for startups. “Multinationals also have a significant multiplier effect on employment and entrepreneurship”. In the pharmaceutical industry alone, an additional 3.2 full-time equivalent jobs are created in companies in other sectors for every one job created in pharmaceutical jobs. With 43,000 jobs in the pharmaceutical industry in Switzerland, this amounts to another 138,000 jobs.
Friendly Climate for Investor Hubs
One of the key drivers for startup growth in Zurich is a strong network of business and innovation resources. Various accelerators and incubators have provided Zurich (and Switzerland at large) with nearly 1,000 innovators that are spearheading the dialogue and thought leadership behind Switzerland’s tech startups. In recent years Switzerland has also seen the launch of a number of programs and meetups that help investors collaborate and exchange ideas, helping drive business innovation and networking at a grassroots level.
Access to capital is another factor contributing to a burgeoning startup presence in Zurich. In 2018 alone, startups raised ~$788 million and investors are recognizing the success and stability that Zurich-based businesses have demonstrated over the years. As one example, fintech companies have seen a considerable increase growth over the past several years. At the end of 2018, there were 356 fintech companies in Switzerland, corresponding to an increase of 62 percent on the previous year.
A Diverse Blend of Industries – Machine Learning, Life Sciences, Software & More As Swiss investors try to balance their startup portfolios, a number of emerging industries are taking foothold as popular picks for Series A & B funding. While financial ventures and fintech have been traditionally seen as the core of Swiss economic growth, a strong shift towards life sciences, engineering, and even Machine Learning Talent companies has also been picking up pace. Currently machine learning ventures make up approximately 10% of Zurich’s startups, a number that is expected to increase to about 30% over the next decade; the trio of life sciences, software, and electronics (machine learning included) comprise roughly 40% of the current market. – This ratio is impressively high, and is enabled in large part by the highly educated workforce and access to innovation labs that Zurich and Switzerland provides.
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