Choosing the right location – what matters for founders

Since 2017, the university of St. Gallen (HSG) has been awarding the HSG-spinoff label to companies founded by its alumni. Through its annual "HSG Spin-Off Barometer", the university tracks the development of HSG spin-offs based on a selection of KPIs. There are 171 HSG spin-offs and these are estimated to have created a total of over 6,000 jobs. On average, the spinoffs create 23 jobs, outliers are Planted Foods which has 190 employees and digital insurance company WeFox which has created more than 1000 jobs across Europe.

For the barometer, 37 HSG spin-offs were surveyed further in a non-representative, qualitative study. The spinoffs are active Finance and insurance (19 per cent), software (16 per cent), retail (14 per cent) and food and agricultural technology (11 per cent).

Location preferences

Where a startup establishes its headquarters is a critical decision founders make based on a set of criteria. Soft factors play an important role and make up two of the top 5 criteria. "Quality of life provided by location" ranks second. Personal factors" follows in fifth place. Very high on the list are two criteria in which Switzerland certainly scores well, "Good infrastructure" and political and legal conditions.

Not all business criteria important

Usually, three factors are mentioned that make up a good business environment for start-ups: talent, availability of venture capital and access to a large market. For the HSG spinoffs, however, only one of these factors is among the top 5 criteria: customer potential on site. Neither the criterion "qualified personnel on site" nor "attractive funding options" made it into the top 10.

Access to capital may not be that critical because the majority of the 37 spinoffs surveyed are bootstrapped. In terms of personnel, it might play a role that the companies have learned to access the necessary human resources through suppliers, service providers and subsidiaries abroad. 

Focus on sustainability

A new requirement requires the spinoffs to focus on at least three of the 17 UN Sustainable Development Goals. The recently published Barometer shows that 78 percent of spin-offs are already oriented towards at least one of these goals – climate protection, the reduction of inequality and the development of high-quality educational opportunities are particularly well represented. In addition, 51 percent of the spin-offs surveyed would like to improve their sustainability in various areas.

The complete HSG Spin-Off Barometer 2022 is available for download here.