ETH Zurich produces more spin-out businesses than [+] any other university worldwideFlickr Vision
Where are Europe’s most exciting technology start-ups to be found? The answer is no longer necessarily London or Berlin, which have dominated the continent’s tech scene in recent years. Instead, Switzerland is staking its claim. Just ask Founderful the Swiss pre-seed fund, which will today announce it has raised an over-subscribed $140 million fund from investors looking for exposure to the growing number of technology-focused start-ups based in the country.
Founderful’s successful raise looks even more impressive in the context of a European venture capital industry that has struggled to persuade investors to part with their cash this year. The amount of money that venture capital firms felt able to offer start-ups fell to just $10 billion during the third quarter of the year according to Crunchbase, the lowest figure since the same period of 2020.
Indeed, policymakers are increasingly concerned. Former European Central Bank President Mario Draghi, has just published the European Competitiveness report, warning of a widening gap between support for early stage companies in Europe and their competitors in the US and China. Between 2013 and 2023, US-based venture capital funds raised $924 billion; European firms managed just $130 billion.
By contrast, Forbes first highlighted Switzerland’s credentials as Europe’s emerging tech start-up capital a year ago – and the country now appears to be building on those foundations. Founderful’s new $140 million fund reflects the enthusiasm of investors for the country’s young businesses, says Alex Stöckl, a partner in the firm. “It’s where many people now see the next big phase of innovation coming from,” Stöckl says.
One factor in Switzerland’s favour is the growing maturity of the tech sector – in the big consumer-facing verticals such as e-commerce, where new players want to take aim at the largest markets with the biggest populations, there are now well-established incumbents. The new generation of technology firms is therefore spread across deep-tech areas such as industrial automation, materials science, healthcare and more; such businesses can base themselves anywhere, rather than needing to be in the largest countries.
Switzerland can be that place, argues Founderful. It points to the quality of the country’s technical universities in Lausanne and Zurich; ETH, in the latter city, now produces more university spin-outs than any other university worldwide. This is one reason why Switzerland has topped the Global Innovation Index for 13 years running. The world’s largest technology companies have swooped; Google has 5,000 developers in the country, with Disney, Nvidia, Meta, Huawei and Intel all maintaining sizable Swiss R&D teams.
In addition, Stöckl says, success is breeding success. “Five years ago, we had just one unicorn business in the country,” he says, pointing to GetYourGuide, the travel and tourism company. “Now we have many more.” Examples include logistics business Scandit, Climeworks, the carbon capture company, internet security firm SonarSource, and the widely-followed sporting goods company On.
Founders and executives from such businesses now feature heavily in Founderful’s roster of investors. It also includes Severin Hacker, the Swiss-born founder of educational technology company Duolingo. “[Founderful’s] approach, combined with the unfolding potential of the Swiss tech ecosystem, probably makes it one of Europe’s most promising VC firms these days,” Hacker says.
Founderful certainly hopes its new fund will provide more names for Switzerland’s fast-growing list of unicorns. The fund has already made 17 investments and expects its portfolio to expand to around 40 over the next three to four years.
Existing holdings include Chiral Nano, which is developing new ways to produce silicon chips, Saeki Robotics, a 3D printing specialist in the manufacturing sector, and Axmed Health, which helps developing economies to access critical pharmaceuticals.
Stöckl says investors in the fund have shown faith in the potential of such business. “We’re deeply grateful to our limited partners, both existing and new, for sharing our conviction in the Swiss tech ecosystem,” he says. “It is a powerhouse that is only just starting to claim its place in the global tech industry.”
