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More than chocolate, cows, Heidi and après-ski, Switzerland has also become known as the most innovative country in the world, frequently topping international innovation ranking lists since 2011.
What has propelled this innovative spirit? Beyond having a stable economy and a penchant for neutrality, one thing Switzerland is running low on is natural resources. Having few minerals of commercial value pushed the country to seek alternative revenue sources. The country’s small size and lack of cultivable land further drives Switzerland to look to technological innovation to propel their economy forward.
Thanks to their innovation-focused higher education programs, push toward collaboration and willingness to adopt new innovation early on, Switzerland seems unlikely to let go of their top spot as most innovative country in the world.
When Governments, Private Companies and Universities Collaborate
One of the things that makes Switzerland so unique is the collaboration between the Swiss government, the local universities and the private enterprises.
The higher education in Switzerland routinely ranks among the best in the world, and universities in Switzerland were among the first to offer advanced degrees in innovation. The Swiss Federal Institute of Technology in Zurich and the EPFL in Lausanne routinely collaborate with the private sector to launch innovative new technologies, and together are responsible for the application of more than 200 patents every year.
The government also actively promotes collaboration on innovation, and in 2012 the Swiss Parliament founded Switzerland Innovation, an organization committed to promoting R&D collaborations between the universities and private companies. Today, Switzerland Innovation has five innovation parks throughout the country where companies and educational institutions come together to collaborate and push forward innovation. The innovation parks are funded entirely by private sector companies like Credit Suisse, UBS, Schindler, Novartis and more.
This unique ability to bring together government, educational institutions and private companies is a testament to the benefit of collaboration across industries and sectors. The stronghold Switzerland has on the top spot in innovation rankings is the proof that these collaborations work.
Financing the Entrepreneurial Spirit in Switzerland
While notable for game-changing innovation such as the world-wide-web, the CERN particle collider and more, the Swiss startup scene struggled in comparison for many years.
Mike Baur, co-founder and chairman of the Zurich-based Swiss Startup Factory, believes that the problem was the lack of the “startup DNA” the Swiss had and the fact that the innovative direction came from enterprises that have been around for decades rather than innovative startups.
In order to infuse a new generation of entrepreneurial spirit, it became clear that external investment would have to push the startup scene forward.
In 2012, Swiss startups raised $300 million from VCs, and that number more than doubled by 2015, when more than $670 million were invested in Swiss startups. By 2016, investment rose by an additional 35% and 151 financing rounds have pushed the Swiss startup scene close to the $1 billion mark over the past year, with investments in biotech and healthcare leading the way.
Today there are dozens of accelerators and incubators throughout Switzerland offering various financial investments options, including Kickstart which offers up to 25,000 Swiss Francs and does not take equity as a prerequisite, the Thomson Reuters Labs Incubator which offers 6-12 month programs for early stage startups in the FinTech, LegalTech and RegTech sectors, and many more.
Early Adoption of Blockchain and FinTech Innovation
While promoting Swiss startups and encouraging cross-sector collaboration, perhaps the most impactful thing about Switzerland is their adoption of new and innovative technologies – particularly in the financial industry.
As an established banking leader with a legacy for financial privacy, the 2008 movement that introduced blockchain technology and challenged the financial market was welcomed in Switzerland with open arms.
This acceptance has led to Zug, Switzerland becoming more commonly known as CryptoValley, where a variety of blockchain leaders such as Monetas, ShapeShift and Xapo have set up shop.
Zug has the 5th lowest tax rates in all of Switzerland, making it an appealing location for financial innovation, and perhaps explaining why Ethereum, the second largest cryptocurrency, was founded there.
Zug recently made headlines for their partnership with uPort and the launch of a pilot that will make them the first city to use blockchain technology to register residents IDs. The pilot will enable citizens to use their IDs to vote, prove residency and perform a variety of other government related services, making it the first to take a giant leap toward the creation of a blockchain based smart city.
While blockchain technology dominates the FinTech space, they are not the only ones pushing innovation forward. Large financial institutions also encourage innovation adoption, with leaders such as the Swiss Bank UBS running blockchain pilots to ensure compliance with the fast-approaching GDPR in Europe and the MiFID II regulation in the US.
Between government encouragement of innovation, the financial backing flowing to the tiny country and the growth of blockchain and cryptocurrencies, it’s unlikely that anyone will be able to move Switzerland from their top spot as the most innovative country in the world any time soon.
For more on corporate innovation around the world, check out More Than Vikings and Volcanoes: Spotlight on Innovation in Iceland
