Unicorns and gazelles. Facts and figures about start-ups in Switzerland
Each year, 40,000 new companies are founded, 400 of which are considered high-growth. What conditions in Switzerland promote innovation, and where is there room for improvement? Also, what do unicorns and gazelles have to do with start-ups?
In financial and start-up terminology, the unicorn (at home in our imaginations) and the gazelle (at home in the steppes) symbolize two types of successful start-ups. The gazelle stands for high-growth companies, which generate employment growth in excess of 20 percent in three years and are no more than five years old at the end of this growth period. As we know, the unicorn is very rare. It stands for companies valued at more than a billion US dollars. The most famous unicorns in recent years have been Uber, Airbnb, Snapchat, and Pinterest. Thus far, Switzerland has had just one unicorn start-up: Mindmaze. The neurotechnology company uses virtual reality to help stroke patients recover.
Company start-ups in figures
Not every company founded in Switzerland can or should be a gazelle or unicorn. Each year, some 40,000 new companies are launched in Switzerland.
of all start-ups are from the tertiary sector
of the new companies have one employee
employ two to four employees
have more than five employees
Source: Swiss Federal Statistical Office (SFSO), survey from 2015.
The highest number of new jobs was created in the Lake Geneva region, followed closely by Zurich and the Mittelland region. Ticino had the lowest number of new jobs.
According to the latest BFU survey, most companies, or 56.4 percent, were started by men. However, women are not far behind, as shown by a comparison with earlier surveys. 9.8 percent of all companies were founded jointly by women and men, and 33.8 percent were founded by women alone.
Innovation in Switzerland
The Swiss financial center is attractive for start-ups, as shown by various innovation rankings. Switzerland ranks second behind the US in the Global Entrepreneurship and Development Index (GEDI) from 2017. It even ranks first in the Global Competitiveness Report 2016-2017 from the World Economic Forum. The most frequently listed reasons that make Switzerland a hotspot for innovation include:
- geographical location in the heart of Europe
- high quality of life
- liberal legislation
- well-educated workforce
- first-class universities, especially both Federal Institutes of Technology
- high level of private investment in research and developmen
- close cooperation among business, politics, and universities
The same conclusion has been reached by the Swiss Start-up Monitor, founded by the Universities of St. Gallen, Zurich, and Basel. The 2015/2016 report also identified room for improvement in the following areas:
- Start-up assistance needs improvement among universities of applied sciences.
- Most start-up initiatives are limited to Switzerland; few offer assistance for global growth.
- Venture capitalists are available in Switzerland to support start-ups. However, in the seed stage of a start-up, it is very difficult to obtain capital.
- Entrepreneurship as a way of life and career option is rarely, if ever, taught at all levels in schools and universities.
The World Bank's "Doing Business" ranking is even more critical than the WEF report on the subject of company incorporations; it ranks Switzerland in 33rd place. This report particularly notes the need for improvement in regulatory areas, specifically:
- in the protection of investors
- in the founding process
- in receiving building permits
High-growth companies: the rare 1%
Highly innovative companies are almost always equated with high-growth companies. A study by Ecoplan and the State Secretariat for Economic Affairs (SECO) classifies high-growth companies under the Eurostat/OECD guidelines as follows:
Companies whose number of employees grows by an average of at least ten percent annually for three years and that previously already had ten employees.
Similar to medium-to-high-growth enterprises, but with employment growth of at least 20 percent annually.
High-growth enterprises that are also no more than five years old after a three-year growth period.
According to the study, 12 percent of all companies (usually start-ups) in Switzerland with more than ten employees are in the first category of medium-and-high-growth enterprises; another 3.5 percent are part of the high-growth companies. Another 0.2 to 0.8 percent, or 80 to 400 companies, are gazelles.
With 400 high-growth companies among 100,000 companies per capita, Switzerland is well ahead of most other countries studied. Credit Suisse actively encourages this development: As the Bank for Entrepreneurs, it fosters young, high-growth companies not only with banking services tailored for start-ups, but also with its network.
For instance, Credit Suisse is partner of the prestigious "TOP 100 Swiss Startup Award," which names the 100 most promising and innovative companies each year. Making this list often triggers a positive chain reaction that helps young companies obtain additional financing.
Looking at the companies on the TOP 100 list, it is clear that Switzerland's only unicorn may soon have to share its grassy meadow with other start-ups.
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