"To be successful, it's not enough to patent an idea."
Having set up several firms including founder portal startups.ch, Michele Blasucci has become an expert on the subject. In this interview, he talks about the sectors with the greatest potential and explains why even the best idea can go wrong.
How has the Swiss start-up scene developed in recent years?
It's in a state of flux. The model of setting up your own company in order to earn a living has made its way from the United States to us over here. Smaller firms are more agile, and can implement ideas faster than big corporations. And sometimes it's a way to earn a lot of money.
Is it just the US influence that has led to more start-ups in Switzerland?
No, it's also down to the universities and the homework they've done – specifically the two Swiss Federal Institutes of Technology: the ETH and the EPFL. Start-ups resulting from scientific work are generated much faster nowadays. They're able to solve problems, whereas larger companies are not as agile. And the universities assist them in that process.
How do Swiss start-ups differ from their foreign counterparts? Indeed are there any differences?
Yes, differences do exist but it really depends on the sector. Conditions in Switzerland are ideal for companies engaged in medtech and biotech. To the outside world, Switzerland is still regarded as the seal of quality in these areas. Companies that get off the ground in these sectors can become highly valued in a very short space of time. Why is that the case? Because they solve global problems. The same applies in environmental technology as well as other areas of the natural sciences. Switzerland can be difficult for start-ups that are bound by the language, financial system, or other legislation: The fact that there are eight million inhabitants and three languages can be a major obstacle.
But presumably not every start-up evolves into a highly valued company...
No, about 90% of start-ups are simply one-man or one-woman operations. It's the architect, engineer, marketing or communications expert, computer scientist, or advertiser. Many of them set up a small agency; frequently it involves a transition phase in which they first of all reduce their hours to 80%, then 60%, until they finally become fully independent. Digitalization has given rise to a whole series of new activities. An entire industry has grown up around online marketing.
In which industries do you see the most start-ups?
It's wherever the set-up costs – or barriers to entry – are lowest. That includes online marketing, as I mentioned, as well as communication: Here all you need is an office, a computer, and a phone. It's relatively easy to afford. Sectors that manufacture something are a lot more difficult because the initial investment is so high.
Where does the greatest potential lie?
I see lots of potential in internationally oriented projects based on blockchain technology. This is enabling barriers to be broken down. There are also lots of interesting projects among university spin-offs, some of which are based on brilliant concepts. But to be successful, it's not enough to be a researcher and get an idea patented. It also takes entrepreneurial talent, and that's not always a given. I've seen projects where I've thought: brilliant, awesome! But in the end the commercialization process failed. Or it took them too long.
I've seen projects where I've thought: brilliant, awesome! But in the end the commercialization process failed.
Michele Blasucci, founder of start-ups.ch
Are the Swiss generally slower to act when it comes to start-ups?
Compared with the Americans, definitely. Over there, they manage to make money much more quickly. The Swiss find it difficult to progress with the work because it takes so much time and effort to raise money. That's a problem, because if you've got a good idea the capital should ideally be available immediately. If you've got to wait four years, the technology will already have changed.
What exactly is different in the US? How do start-ups there find it easier to obtain capital?
It's all down to mentality, and a willingness to take risks. Plus the fact that the sums of money awarded by venture capital firms are in a different league. If the board really likes an idea, it can put together 200 million within three months.
On a different topic altogether: Do an equal number of men and women set up companies? Or is there a gender gap?
There's definitely a gender gap: 75% of companies are set up by men, and 25% by women. Women tend to be a bit older, and also better prepared, organized, and structured. The downside is that some women spend too long planning and thinking about whether they really want to take the risk – and perhaps decide not to go ahead in the end.
The first year is especially critical. What are the success factors in your view? What do you need to get right in order to survive your first year?
Having a solid customer base is crucial. An architect who starts out with two or three commissions will tend to survive compared with another who says: "I'll have a think about it." Another factor is the team: Lots of people give up when they start getting into arguments. It often happens when there are three founders – that rarely works.
Then you've got administrative problems, such as poor bookkeeping and VAT statements that have not been dealt with. Or, perhaps the business idea doesn't work, the market is too small, or customers show insufficient interest. There are companies that function perfectly with two to four people, but then they grow to a team of ten employees and all of a sudden they're no longer profitable. A different plan is needed when a firm gets to that size. It needs controlling, professional bookkeeping, and liquidity planning. You also need more time for your staff, and so on and so forth... Expansion has its downsides.
Credit Suisse is a universal bank, which is a big advantage for start-ups: From start-up to succession planning, Credit Suisse can take care of everything.
Michele Blasucci, founder of startups.ch
Startups.ch works with various partners, one of which is Credit Suisse. What benefits does that have for a start-up?
Credit Suisse is a universal bank, which is a big advantage for start-ups: From start-up to succession planning, Credit Suisse can take care of everything. You start off with a straightforward business account. Later on you might need a loan, or you might be doing business with firms abroad and need FX solutions – potentially including currency hedging. Some firms need to lease vehicles or machinery – and in a small number of cases they can go all the way to a stock exchange listing. Right from the outset, Credit Suisse gives you everything you need no matter which direction you take – including internationally.
You've set up several companies yourself. What are your top tips?
Having a coach or mentor with whom you can exchange views is extremely valuable in my view. It could be an accountant, experienced entrepreneur, or maybe even a Credit Suisse advisor. That person will be willing to listen, give you their opinion at a crucial juncture, and perhaps also make use of contacts. But ultimately you're the one who has to do the work – and that's no mean feat.