Mike Baur's Thoughts On Why Swiss Startups Lead the World in Innovation
If you ask anyone who is familiar with the tech startup scene in Europe, they will likely talk about Zurich and other Swiss urban centers. These trendy cities in Switzerland are known for their modern ways and neutrality, but they are also some of the greatest areas on the globe for technology businesses. While many markets across the globe continue to experience tepid growth due to the events of the Great Recession, the Swiss tech industry is booming.
In Switzerland, tech startups seem to be popping up everywhere. These tiny companies are quite diverse; software design, green technology, and automation algorithms are some of the specialties of the leading startups. While consumers and the world at large ultimately benefit from the technology produced by these fresh firms, workers also gain plenty of opportunities for employment. To many Europeans, Switzerland is one of the best places in the world to find a job.
While Switzerland is rapidly growing into a hub for innovation and disruptive ideas, many locations across the globe fail to compete with large corporations. Why is Switzerland an oasis for innovation? There are many long and complicated answers to this question that require a deep understanding of Swiss governance, culture, and history, but a few facts about the Swiss tech scene should paint a clear picture.
Good Governance Supports Innovation
The founders of Switzerland understood that a strong economy cannot exist without a stable society. To build this society, the Swiss government invests a large portion of the national budget in infrastructure spending. From transportation to education facilities, Switzerland creates infrastructure that supports productivity for all members of society. Over time, this results in educated citizens who can work as good employees or test their ideas by launching a company. The representatives of the Swiss government understand that citizens who struggle to provide for their families are unlikely to be productive, so they value these expenditures that support average people.
Many countries have attempted to replicate Switzerland's trend of good governance, but they often fail due to misallocation of tax resources. This is a byproduct of corruption. Transparency International's annual corruption index ranks Switzerland as one of the least corrupt countries on the globe. This may explain why Swiss tax funds are truly used for infrastructure spending while other countries simply drain the national coffers. This low corruption ensures that entrepreneurs and average citizens have greater freedom and confidence in their government. The economist Deirdre McCloskey has shown that both of these conditions lead to innovation and prosperity.
Unlike many areas of the globe, Switzerland offers a broad social safety net to its citizens. This encourages risk-taking activities like entrepreneurship. Instead of settling with an uninspiring job for the sake of financial security, Swiss citizens can pursue their passions and think outside of the box. Many of these entrepreneurs will fail, but the few citizens that succeed often gift the world with fascinating technologies and job opportunities. The Swiss citizenry's ability to take risks without facing financial ruin may explain why Zurich and other major cities spawn many startups.
Swiss Innovation Is Not Hindered by Regulation
Switzerland has taken the advice of leading economists by limiting regulations to true market failures. By limiting regulation to extreme safety, health, and environmental matters, the government of Switzerland ensures that companies do not use their budgets on lobbying efforts. Regulations are often lobbied for by corporations to impose costs on competitors. When companies can compete via lobbying instead of innovation, the economy stagnates. Unemployment can also increase as funds are allocated to paying expensive lobbyists instead of average workers. Fortunately, Switzerland recognized this risk, and lobbying is limited to acceptable levels.
Since the Swiss government stays out of many business affairs, companies can only compete through quality, price, innovation, advertising, and traditional business practices. This ultimately results in more jobs, lower prices, and innovative prices.
Access to Cheap Capital Encourages Innovation
Due to good government practices, entrepreneurs, and a culture of inventiveness, Swiss cities have been known for businesses that challenge the status quo. This reputation attracts a high volume of domestic and global investors who hope to profit from the startups' success. The low-cost funds often allow startups to easily access the capital that is needed to craft ideas into tangible products. These factors have earned Switzerland the top spot on the Global Innovation Index.
Several finance and entrepreneurial mentoring firms have entered the fray to support startups in the Swiss tech industry. Swiss Startup Factory is one of the largest firms that supports small companies with disruptive ideas. This organization is led by Mike Baur, a Swiss finance professional with over 20 years of experience in banking and investing. Baur earned his MBA at the University of Rochester before completing his executive MBA at the University of Bern. Baur and Swiss Startup Factory are supporting IDUN Healthtech, a technology startup that aims to revolutionize the healthcare industry.
Bestmile also leads the tech startup trend. This company is perfecting a software platform that will monitor and control a fleet of autonomous cars. The peer-to-peer lending service Monetas is also being created by a top startup in Switzerland.
If Switzerland's tech startup trends continue, Zurich is set to become Europe's Silicon Valley. Now is a good time to start investing.
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