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Research - 11.04.2023 - 11:00 

"Unicorn Nation Switzerland" study: Better framework conditions and less bureaucracy needed for start-ups in Switzerland

A study by the University of St.Gallen comprehensively examined the framework conditions for start-ups in Switzerland from a legal and economic perspective. While the higher education landscape and the financing conditions for start-ups are considered satisfactory, there are clear deficits in terms of administrative requirements. The start-up process in Switzerland in particular is too complex, lengthy and expensive in international comparison.

Switzerland offers good conditions for start-ups and has produced a number of so-called "unicorns" such as On, Mindmaze and Wefox, which are rapidly growing companies valued at over one billion US dollars. As a country that regularly leads rankings such as the "Global Innovation Index" and has an excellent university landscape and a strong financial center, the general conditions in Switzerland are very good. Nevertheless, the question remains how can more success stories be written.

Researchers from the University of St.Gallen (HSG), under the scientific direction of Prof. Dr. Dietmar Grichnik and Prof. Dr. Markus Müller-Chen, have investigated this question and, in addition to the positive aspects, have also identified some obstacles: Experts involved in the Swiss start-up ecosystem consider the bureaucratic process of founding a company to be very complex. From the preparation of the necessary documents to the public notarization and registration with the commercial register, time-consuming physical processes are necessary instead of being able to found an online company in a one-stop shop and using a digital notary’s office. In this regard, Switzerland lags behind other countries in terms of digital solutions. There are also warning signals regarding venture capital activities. Switzerland is increasingly falling behind other European countries. Prof. Dietmar Grichnik emphasizes: “Switzerland has a great opportunity to establish itself as a unicorn forge for start-ups. But only if we don't lose touch with the international location factors of digital founding, attractiveness for investors, taxes and regulation.”

Specific Challenges

In the MedTech and FoodTech sectors in particular, start-ups are of great structural relevance in Switzerland. However, this is precisely where a high level of regulatory uncertainty and rigidity is causing problems. Prof. Markus Müller-Chen explains: "Innovations in these key industries are hampered by slow, insufficiently digitized and sometimes non-transparent approval procedures." MedTech start-ups have also suffered from the suspension of mutual recognition of conformity assessments (Mutual Recognition Agreements, MRA) with the EU since 2021 due to the lack of an institutional agreement. Another problem that affects start-ups in all sectors equally is the possible classification of venture capitalists (so-called "business angels") as commercial securities traders. A legal amendment could create more legal certainty.

Basis for political advances

The study was prepared by HSG on behalf of the Swiss Entrepreneurs & Start-up Association SWESA. The association is committed to improving the economic policy framework for start-ups and innovative SMEs in Switzerland and runs the secretariat of the parliamentary group Start-ups and Entrepreneurship. FDP National Councilor Andri Silberschmidt stated that, "The results of this study will help us to derive political advances and take concrete measures to offer start-ups in Switzerland optimal conditions." The Schweizerische Mobiliar Genossenschaft sponsored the study.

The "Unicorn Nation Switzerland" study is available for download.

Image: University of St.Gallen (HSG)

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