Startups in Switzerland: Still some potential

Switzerland`s founding rate stands (7.3%) below average among innovation-based economies (8.5%). The Swiss TEA rate (Total Early-Stage Entrepreneurial Activity) tends to be higher than in neighbouring countries such as Italy or Germany, but among the comparison group, Canada (14.75), Australia (12.8%), the United States (11.9%) and Israel (11.8%) differ considerably.

A look into the industry profile illustrates the obvious emphasis on knowledge and service-based industries in Europe and North America. The most important sectors of new ventures in Switzerland are created in health, education, government and social services (27,2%). Whereas Finance and ICT and manufacturing are fully male-dominated, women’s activities refer principally to Personal / Consumer Services, Retail and Restoration.

The entrepreneurial intentions of Swiss inhabitants (7.0%) are on the same level as 2014 but under the average (11.4%) for innovation-driven countries. Most remarkable are the differences between Switzerland, the United States, Norway, Israel, Portugal and Australia.

Entrepreneurship not seen as good career choice
In Switzerland only 40.0% see entrepreneurship as a good career choice compared to 79.2% in the Netherlands, 64.5% in Israel and 63.4% in Portugal. It seems that an entrepreneurial career is still not established well enough in Swiss society. Media attention for entrepreneurship increased in Switzerland and is, at 59.5%, now on the same level as the average for innovation-driven economies.

A lot of opportunities
In the 2015 census the perceived opportunities (41.8%) to start a business are lower in Switzerland than in 2014, but above the average (39.8%) for innovation-driven economies. Nordic countries (such as Sweden, Norway, Finland), Israel, Canada, Australia, Netherlands and the United States remain at the top when it comes to available opportunities.

Switzerland shows, as in previous years, a rather high perception of capabilities (44.0%) paired with a low fear of failure (33.8%). While Switzerland’s perception of capabilities is at least as good as, or even better than, the European benchmark, it still lags behind the United States inhabitants’. The findings regarding opportunities and capabilities could be a signal for the higher self-confidence for entrepreneurial behavior in Switzerland but the results on entrepreneurial intentions are not so positive.

Entrepreneurial Framework Conditions
The overall entrepreneurial framework conditions in Switzerland, along with those in Canada, are generally better than those of other innovation-based economies included in the study. Switzerland achieves outstanding results in finance, commercial infrastructure, tertiary education, and knowledge and technology transfer, as well as in government programs. Though the experts see the entrepreneur­ial framework conditions in a slightly positive light, several points for improvement are mentioned:

• Increasing the funding opportunities in each maturity stage, from seed capital to series financing, e.g. the banking services in Switzerland, which could extend more to the entrepreneurial community.
• Upgrading fiscal incentives for startup investments and adjusted taxation for startups.
• Developing competency in leadership, creativity, innovation & entrepreneurship in primary and secondary school levels of education.
• Female entrepreneurship: supporting re-integration pro­grams after maternity leaves.
• Fostering founding spin-offs and the availability of techno parks and incubators/accelerators.
• Improving startup advisory services (possibly at cantonal level) especially in terms of affordability of such services for young firms/entrepreneurs rather than their availability.

Businesses stopped due to bureaucracy
GEM tracks the number of individuals who have discontinued a business in the last 12 months. First of all it must be highlighted that in Switzerland the percentage rate of people who abandon their business is the lowest (1.7%) compared to their peers of innovation-driven economies. But one fact is noteworthy: 50.2% of all businesses stopped in Switzerland is due to bureaucracy. Issues such as complicated regulatory systems that increase the bureaucracy of starting and exiting businesses may produce barriers to entry, as well as barriers to exit, reducing people’s willingness to venture into starting a business.

Global Entrepreneurship Monitor
The School of Management Fribourg, in collaboration with the ETH Zurich, SUPSI Manno in Switzerland and the ZHAW School of Management and Law, collected data for the international Global Entrepreneurship Monitor (GEM). 2’000 telephone interviews and 36 talks with experts revealed entrepreneurial attitudes, activities and aspirations, and identified the factors influencing the type and extent of the entrepreneurial activities.

The Global Entrepreneurship Monitor Report 2015/2016 on Switzerland illustrates national differences in entrepreneurial activity between economies, revealing the factors that determine the nature and level of national entrepreneurial activity, and identifying policy implications for enhancing entrepreneurship in Switzerland. The GEM data complements already existing indicators of competitiveness and innovation.

The complete report on Switzerland can be downloaded below.

(SK)