Silicon Alps

Michael Stucky has three minutes to convince a group of San Francisco-based investors that his company’s product – a back brace that can be worn by industrial workers doing heavy lifting – is a winner. After the presentation he’s hit with questions from his three judges, who are deeply vested in the world of health tech. Is the product appropriately priced? How can its health benefits be monitored?

Auxivo, Stucky’s firm, is one of six early-stage Swiss start-ups presenting their products to US-based investors on this late October demo day, showcasing ideas from women’s health solutions to implants that monitor neurological disorders. The event – held online this year due to the pandemic – is organised by the San Francisco chapter of Swissnex, a 20-year-old global network of governmental outposts and “science counsellors” that promote Switzerland’s scientific research, higher education and start-ups. The rather unique model – imagine a diplomatic outpost but focused on promoting research – has since been copied by other countries, including Germany, Denmark and Norway.

“We were always very strong in Switzerland in science, innovation, deep technology,” says Gioia Deucher, who heads Swissnex in San Francisco and created the start-up incubator programme just a decade ago. “We’re probably better than many US start-ups in that sense. But where we’ve lagged behind is, how do we take these technologies to market? Taking these science and technology-based start-ups out of the labs at a very early stage and exposing them to the ecosystem [in Silicon Valley] felt like such a no-brainer, to help them understand what’s needed out there in the market.”

In other words, Switzerland has long had the brains – with university researchers in labs making breakthroughs in “deep technology” sectors such as health, biotechnology and energy – yet business-minded entrepreneurs have typically looked elsewhere for investment. Part of the reason is that there wasn’t really a culture of taking risks. Switzerland had already built up a reputation as a centre for corporate multinationals; it didn’t need start-ups.

“When I started in entrepreneurship 30 years ago, launching a start-up was not an option for a graduate from university, because corporate careers were just too attractive,” says Beat Schillig, who joined an organisation for young entrepreneurs back in 1989 and founded the country’s first major start-up incubator, Venturelab, in 2004. “Everybody was laughing at me at that time. My peers from the University of St Gallen all went after jobs at ubs or Nestlé or Roche, Goldman Sachs or McKinsey.”

That mindset has changed dramatically in the past 20 years. The World Intellectual Property Organisation (wipo) placed Switzerland seventh in its ranking of the world’s most innovative nations in 2008. Three years later, Switzerland claimed the top spot and it has kept the title for the 10 years since. Schillig puts this down to two fundamental shifts: the decline of traditional corporates and the rise of a Swiss start-up culture. The first is more about global trends: the financial crisis helped make corporate banking jobs less of a sell to the average student. The second shift was spearheaded by groups like Venturelab, Swissnex and a steady stream of changes in Swiss universities such as eth Zürich, which incorporated business-minded innovation arms into their programmes.

Auxivo is a case in point, having taken advantage of the new Swiss infrastructure every step of the way. Stucky, the company chairman, is the business brains of the product but the technical know-how comes from Volker Bartenbach, who developed the patented back brace while doing a phd at eth Zürich. Like many researchers at Switzerland’s highly technical universities, Bartenbach didn’t really think of himself as an entrepreneur when he started. “It was not a goal from the beginning,” he says, seeing his place more as a scientist fascinated by robotics and the medical field. But when he developed the back brace, its industrial applications quickly became clear. So he applied for a grant under eth’s “pioneer fellowship” – a one-year programme that gave him continued access to research labs to develop the product, initial funding and business classes – to see whether he could build a company around it. He was assigned a business coach – Stucky – and a scientific advisor, professor Roger Gassert. Auxivo was incorporated in 2019.

From there, Auxivo received support from Venture Kick, an offshoot of Schillig’s Venturelab, which financed him for another nine months, as well as a one-year grant from Innosuisse and the Swiss National Science Foundation,  government agences that finance promising research. Only after all that did they turn to private investors, closing their seed round in 2020. Now they’re turning to the country offices of Swissnex to make connections to foreign investors and build a customer base abroad. All the while, Bartenbach has had access to expensive equipment in eth’s research labs to keep developing his technology. Would all of this have been possible 10 years ago? “Not the way it is today,” he says. Bartenbach could have “bootstrapped” the product with his own money and maybe developed the industry contacts himself. “But these programmes make it much easier. The personal sacrifice you have is much lower.”

Deucher in San Francisco says that venture capitalists in the US are increasingly starting to take notice. “There are more and more investors here in the Bay Area that [are showing interest] specifically in start-ups in Europe,” she says. “They have really interesting technology. If we pair them with the right Silicon Valley expertise, those are really the winning combinations.”

In the eyes of the Swiss government, all of this is done out of necessity. Members of Swissnex emphasise that Swiss companies need to be “born global”. There isn’t enough of a market at home. “Switzerland is a very small country,” says Felix Moesner, head of the Swissnex outpost in Shanghai. “We don’t have any natural resources except brains, so we have to invest in brains.”

Moesner’s outpost in Asia tends to be one of the final stops. Swiss companies will look to make their mark in Europe first, then perhaps apply for Deucher’s incubator programme in San Francisco before pivoting east. Part of that is cultural. “We in Europe tend to feel closer to the US than Asia,” says Moesner. That makes the job of Swissnex in China all the more crucial. Deucher in San Francisco emphasises the need for start-ups to be independent – her job isn’t so much to “sell Switzerland,” she says, as it is to promote a good product. Meanwhile, Moesner in Shanghai says that the job isn’t just to help Swiss companies acclimatise to China; it’s to help the Chinese acclimatise to the Swiss. “We help to break the ice,” he says. And it doesn’t hurt to have a stamp of approval from an entity linked to the Swiss government. “Not only in China but in Asia, it’s helpful when you have a diplomatic platform. It gives a different standing,” says Moesner, adding that the potential – given the size of China – remains tremendous. “The Chinese are very curious,” he adds. “The companies are in need of constant progress, because there’s constant competition as well. But you also have this vastness; you have the scale, which is literally breathtaking. There is deep interest in Swiss start-ups to see what they can do.” 

step 1: Research, research, research: Join a phd programme at one of Switzerland’s universities and invent something in the health, robotics or energy sectors.

step 2: Upgrade your PHD: Apply to join a “pioneer” entrepreneurship programme to gain access to funding, a business coach and a scientific advisor.

step 3: Join an incubator: Apply to a privately run start-up incubator, such as Venture Kick, for more funding and coaching to knock your idea into shape.

step 4: Test the private market: It’s time to see whether your idea has legs: launch a seed round to raise money from private investors.

step 5: Take the show on the road: Swissnex can help you reach out to investors in Europe, followed by Silicon Valley, China and beyond.