A step towards the US

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Stefan Kyora

25.10.2019
Gmelius

The five winners of the Swisscom Startup Challenge are in Silicon Valley for a week, however, several of them are working to build a lasting presence in the US, lured by the big market, investors and potential acquirers. But there are challenges to be considered.

Winning the Swisscom Startup Challenge has come at the right time for the five start-ups – they are all trying to attract US customers. Gmelius already has its own representative in the US, CREAL3D has a co-founder and investor in Silicon Valley who takes care of business development, and DeepCode is actively seeking someone for sales and business development in the US.

There are plenty of good reasons for a Swiss start-up to be present here. Alex Fries, an experienced investor in start-ups with Alpana Ventures and who bridges the gap between Europe and the US for them, cites the big market, the presence of virtually all big companies in Silicon Valley, the availability of venture capital and not least potential buyers. “About 80% of all start-ups are sold to US companies,” explains Fries.

Nevertheless, the decision to build a presence in the US should not be taken lightly. “The structure of a company should follow the strategy,” says Venturelab founder and president Beat Schillig, whose organisation co-runs the Swisscom Startup Challenge. And he stresses that there are disadvantages to Silicon Valley, such as the very high salaries and the rapid turnover of employees, who usually stay with a company for only six to nine months. In addition, start-ups that do not develop deep-tech products run the risk of being copied by competitors with more generous capital resources. In his view, it is important to come to the Valley early-on, if you have the ambition to really make it the global number one or if you have very unique technology and are after an early exit.

Florian Bersier of Gmelius thought long and hard about a US move. The company’s software makes Gmail’s inbox a fully-fledged collaboration tool for businesses, and it already has 100,000 daily active users, with the largest group in the US. Having graduated from Y Combinator this Summer, the Geneva-based company has attracted interest from US investors, which tend to think that such ambitious European start-ups should relocate to the US. Bersier intends to set up an operations office in the US next year and hire more people for sales. Development, however, will remain in Europe, as there is talent and employer retention is higher.

DeepCode CEO Boris Paskalev also wants to expand the user base of his software in the US. DeepCode offers a kind of auto-correction for software code that finds errors and offers example solutions automatically. This is based on data from the bug fixes of more than 12 million developers and 150,000 developers that DeepCode already counts as part of its community. The development teams of some start-ups in the US are organic users and marketing should help with further development – a PR agency in Florida is already working for the Swiss start-up. As part of the Swisscom Startup Challenge, Paskalev met a journalist from Infoworld, an information portal for enterprise software. The article was already published. He also liked the various pitch training sessions, which have allowed him to formulate more ambitious goals for the pitch over the week. In forthcoming Series A financing round, the entrepreneur hopes to attract US investors.

For Tomas Sluka, CEO of CREAL3D, the key meetings in Silicon Valley have been with large potential customers. CREAL3D has developed a display for virtual and augmented reality eyewear that displays images with true depth. Today’s glasses show a two-dimensional image, which irritates the brain and leads to dizziness and headaches within a short time. This, in turn, slows down the spread of virtual and augmented reality. CREAL3D’s technology can change this; thus, the potential of the start-up is correspondingly large. However, it does not want to bring the eyewear to the market itself, but to work with large providers. The meetings with these companies during the Swisscom Startup Challenge took place in secret but reportedly went well. In addition to discussions with customers, Sluka found it interesting to hear from Swiss entrepreneurs who have sold their start-ups to major US tech companies.

That a CEO of an early-stage startup like Tomas Sluka finds the topic of exits interesting in this early phase of company development might be a sign that the Swiss startup scene, in general, is getting more mature and learned from the Silicon Valley.

Picture: Florian Bersier (Gmelius) and Karim Nemr (PXL Vision) - from left to right. (Daria Gfeller, Swisscom)

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