Too Many Silicon Valleys and the Swiss Cute Startup Problem

In Switzerland there is a multitude of Silicon Valleys. Switzerland’s promotion agencies love to label any new technology ecosystem with a Silicon Valley moniker. Does it work?

In Switzerland there is a multitude of Silicon Valleys: The Crypto Valley; the Drone Valley; the Robotics Valley; the Trust Valley. Switzerland’s promotion agencies love to label any new technology ecosystem with a Silicon Valley moniker. Does it work? I don’t think so. This actually points to a more fundamental challenge in Switzerland: How to create successful startup investments that can be scaled.

The US Silicon has an unparalleled +20 years track-record. It has produced hundreds of unicorn companies such as Google, Meta, OpenAI, Tesla and AirBnB. It has made thousands of founders and investors rich beyond imagination. It is an unstoppable growth engine that pairs world-class international talent with mountains of money. Its most powerful tool: outstanding narratives such as colonizing Mars, creating artificial general intelligence or kick-starting the green EV revolution.

No wonder the Silicon Valley has become the envy of the world and spawning copy cats from Europe to Asia and the Middle East. Switzerland in particular fell in love with labelling any new tech cluster with the Silicon Valley moniker.

Has it worked?

The US in a league of its own

In 2023 $179,6 billion were invested in US startups - a drop to a six-year low. In comparison, Switzerland’s venture capital investment in 2023 fell to a measly CHF 2,6bn. This equals to 1,4% of the US funding.

Any other metric, from number of unicorn companies to exits, tells the same story. The US Silicon Valley is in a league of its own.

So, labelling any Swiss technological subset as a new “Silicon Valley” is outright silly. Frankly, it is a diversion from Switzerland’s underlying startup problem.

Let me explain why.

What Switzerland’s tech ecosystem is really missing

Do you believe that renaming my local football club (FC Seefeld) to “Manchester United” would catapult it in the same league as the UK original? Do you think this would transform our Swiss players miraculously into Messis and Ronaldos - including their pays?

Not that the Swiss have no football talent: Granit Xhaka recently became football champion, not in Switzerland but in Germany (Bundesliga). Another Swiss footballer called Xherdan Shaqiri became UEFA Champions League champion with his UK team Liverpool.

They both became champions abroad because, like with startups, Switzerland does not have a very competitive football ecosystem. If you want to make it big, you have to go abroad.

If you want to make it big, you have to go abroad.

The same applies to Swiss startups. Over the years, I have been speaking to dozens of US investors and Swiss startups that made it big in the US. All of them told me a similar story:

Switzerland produces high quality products. But Americans are much better in selling the dream. This has some very real consequences. US investors told me multiple times that for a Swiss product in the Swiss market the valuation for its US equivalent can be easily ten times more. This is a massive advantage not only for investors but also for founders. If you can, go to the US! The US has simply produced an incredible bench of successful founders and investors that keep investing and spreading their knowledge. The result is an incredible growth engine that surpasses anything we see here in Europe.

By far.

Found, invest, exit, repeat

The Swiss startup ecosystem has three fundamental problems that are overlooked:

Track-record

A lack of later stage funding is not an investor problem, it is a startup problem! If startups become repeatedly huge success stories, they create a positive financial benefit not only for founders but also for investors. Those investors repeat their success and invest in other startups. Money follows financial returns. The lack of returns in Switzerland is the real problem.

Size of the Ecosystem

Labeling just about anything in Switzerland as Silicon Valley clearly shows the lack of understanding what makes the US original so unique. The US, besides China, is the largest startup ecosystem of ambitious founders, smart investors and talented employees. It is unrivalled in breadth and depth. It is not the name that made Silicon Valley, but it’s amazing outcomes! Like in football, you have to first win championships before you get the Ballon d’Or.

Making money

I have attended hundreds of Swiss startups events. They all showcase great tech and wonderful products with serious founders. Switzerland’s tech is truly amazing, its commercialization often not so. However, they never showcase mega successful founders or super rich investors. There are just not many. As a result, the startup growth flywheel is not spinning in Switzerland (yet).

In the end, it all boils down to financial success – making lots of money is the best motivation for ambitious talent and smart investors.

How to fix the “cute startup” problem

I recently attended an AI event at a Swiss university of applied sciences. There were many clever speakers and smart students. At the reception afterwards, I talked to a data scientist bachelor student. I asked him if he learned about entrepreneurship and commercialization. He said that there might be a short course about entrepreneurship later on. I also asked him if he is aware of any unicorn companies. He didn’t know the term unicorn or what a billion-dollar valuation is.

I have attended hundreds of startup events in recent years in Switzerland. They are all fun, colorful and - cute. Startups pitches are often too technical and lack (commercial) ambition. No one shoots for Mars or Moon. No one wants to create a massive commercial success story. There are also no role models. Amazing track-records are non-existent.

In Switzerland there are unfortunately no Steve Jobs giving commencement speeches.

We have no Elon Musk, nor a Sam Altman, nor a Jeff Bezos! We lack role models and track-records. We have no Steve Jobs giving a commencement speech at Stanford that gets viewed 43 million times on YouTube (another US success).

The hard truth is that the likelihood of an outsized commercial success in the US is significantly higher than in the Swiss ecosystem.

If you want to make it big as a founder go West!

Unless Switzerland manages to build financially successful track-records built by highly ambitious and commercially-driven entrepreneurs, we will never ever get close to Silicon Valley. All the marketing savviness in the world will not change that. Outstanding commercial and financial track-record is the only path to greatness!

This is the simple truth that everyone in Switzerland misunderstands.