New Swiss Startup Radar: Start-ups are shaping artificial intelligence

Software-as-a-Service solutions have fundamentally changed the IT industry; artificial intelligence (AI) will transform not just an industry but the entire economy. This year’s edition of Swiss Startup Radar focuses on these two topics in order to clarify the position, opportunities and challenges of Swiss start-ups in an international comparison based on data.

1000 AI start-ups

Even though the activities of technology companies are the focus of public attention when it comes to AI, start-ups also play a decisive role in its development and application. This is demonstrated by the large number of start-ups active in the field generally and in Switzerland in particular: we have been able to identify more than 1,000 companies in this country.

In order to get a clear picture of AI start-ups, it is necessary to differentiate between the companies. We have defined four groups: 1) enablers that develop and offer AI tools, 2) application developers that use core AI applications such as data analysis, image and speech recognition to bring innovative products to market, 3) companies that have adopted AI, and 4) companies that are active in the field of generative AI.

In Switzerland, 10% of all start-ups belong to the application developers group and 4% to the enablers. In recent years, about 50 companies have been founded in each of these two categories. Compared with other countries, the Swiss figures are good, but not outstanding. In terms of per capita density, Switzerland is on a par with the UK and ahead of Sweden. However, Israel and Singapore perform significantly better. The gap between Switzerland and the leading nations is significantly smaller in our third group – start-ups that have adopted AI technology. Swiss start-ups are particularly strong when it comes to the spread of artificial intelligence.

Low investment

Although the number of AI start-ups is generally impressive, Switzerland’s position in terms of investment is significantly worse. In hardly any other country is the median investment as low as in Switzerland. The gap between it and the leading nations is enormous: Israeli enablers and application developers attracted 10 times more money than AI companies in this country.

More ICT start-ups

The number of annual ICT start-ups overall has risen sharply. Swiss growth was higher than in more mature IT locations such as Israel, the UK and the US. As a result, Switzerland’s position in terms of the density of ICT start-ups has improved.

As it has grown, the Swiss ICT start-up scene has retained its special character, characterised by the diversity of business models. In no other country in our comparison are companies as evenly distributed across B2B SaaS, B2B services, B2B hardware and B2C as they are here.

Few SaaS providers

In international comparison, the high density of B2B service start-ups and young hardware companies stands out. However, the proportion of B2B SaaS start-ups is low at 40%. Since these have a higher scaling potential than hardware or service companies, it is not surprising that the overall investment figures in the ICT sector lag those of other countries. No other country has a lower average invested amount per financing round.

Number of venture back companies on par with Israel

A comparison of jobs created by start-ups shows clearly that software development is not a flagship discipline on the Swiss scene. On average, significantly more jobs are created by companies that use technologies in large markets, such as the financial industry, than by software companies. However, it is particularly evident in AI start-ups that younger companies create more jobs – at least a positive trend can be observed in this sector.

Since start-ups on average grow only into medium-sized companies, the number of companies is crucial for their economic importance. Things look good for Switzerland here: it has made significant gains in the number of start-ups that have been able to attract investment and is now on a par with Israel. The intensive efforts to support start-ups have paid off. At the same time, the increase in Swiss venture capital investors is having an impact.

You can download the full report in our assets section.

(Stefan Kyora)