There are plenty of things that seem great in youth but grow somehow disappointing with time: eating mud, being asked your age, staying up past midnight. The Swiss agtech scene might just be another.
Switzerland is buzzing with young start-ups, with the country ranked by the UN as the world’s most innovative for 15 years in a row. This includes agriculture, where pioneering companies like Ecorobotix and Voltiris have emerged to great acclaim in recent years.
But at the more mature end, things are a little more subdued. While the country is home to centuries-old food and agricultural giants like Nestlé and Syngenta, that frothing start-up scene is struggling to produce any new players genuinely capable of competing at the top table.
A science-first culture
Part of the reason, as is often the case, is that Switzerland’s strength is also its weakness. Swiss business leaders often talk of a ‘bottom-up’ approach, in which the majority of start-ups are founded by engineers coming out of world-class research institutes like the University of Zurich, the Swiss Federal Institute of Technology, and ETH Zurich – three of the top ten most innovative universities in Europe, according to Reuters.
They are often people from abroad, drawn to Switzerland by its heavy investment in research and development – it’s the world’s fourth-highest investor in R&D – and an often favourable policy environment for trialling new technologies.
As Christoph Besmer, US Trade Commissioner for Switzerland, points out, this means the Swiss approach is more patient and science-driven than somewhere like the US, being “less focused on hype cycles and more focused on durable, scalable solutions”.
But great engineers don’t necessarily make great founders. “These are people who are scientifically extremely advanced and accomplished, but who do not necessarily set off in life with huge business ambitions,” says Alexandre Meldem, head of international promotion at Deep Tech Nation, a non-profit helping to scale Switzerland’s most innovative young companies.
“It’s not part of the culture or the social fabric. We have this legacy mindset of building small businesses, and so these engineers lack examples and sources of inspiration.”
The constraints of a small market
Another obstacle to Swiss start-ups flourishing into industry giants is the country’s size. While its agriculture is widely recognised and is clearly a sector open to change – with recent government policies leading to organic adoption at almost twice the European average – it’s still a tiny country of around 9m people and 50,000 farms. That’s a vastly different launch pad from, say, the US, where a company has over 300m people and 2m farms on its doorstep.
“For these high-tech start-ups, they need to be able to achieve millions in revenue in a few years if they want to survive, and they’re not going to find that market here,” says Meldem. “You have to be able to compete internationally from day one, essentially.”
That’s not always easy, however. As Nicolas Weber, co-founder and CEO of Voltiris, a Swiss company turning greenhouses into renewable energy sources, says: “In the US, it’s much easier to scale. We have to go to Europe, which has different regulations in different countries.”
Weber, though, like many, is still effusive about what Switzerland has to offer in the early stages of a company’s journey. “If you’re building a technological company, [Switzerland] is probably among the best places worldwide in terms of the support you can get to scale, whether it is financial or non-financial,” he says.
A collaborative ecosystem
This is largely down to an ecosystem that provides extensive support to new companies through bodies like Innosuisse for coaching, or Swissnex for helping to scale abroad. More recently, the Swiss Nutrition and Food Valley has sprung up. This is a non-profit aiming to be a food-focused version of Silicon Valley, explains CEO Christina Senn-Jakobsen.
‘The Valley’, as it is known, has so far brought together 150 partners, including universities, government bodies, and big Swiss corporates including Nestlé, Tetra Pak, and Bühler. The idea is about introducing partners to work together, explains Senn-Jakobsen, whether that’s investors, equipment providers, or sometimes even Nestlé’s R&D experts. “The belief is that the transformation we’re seeking for the food system can only be done through collaboration.”
Funding gaps and foreign dependence
Ecorobotix is perhaps the most successful Swiss agtech company to emerge from this network – it told AgNavigator last year it was on track to hit €500m in sales within five years. But co-founder Aurélien Demaurex has raised frustrations over what he feels limits growth inside the country. “What is lacking in the ecosystem is more funding.”
Demaurex said that although Switzerland is renowned for its big banks and insurance houses, an unwillingness to invest in Swiss companies means most companies have to go abroad for funding, particularly at the later stages.
According to Swiss investment fund Haute Capital, nearly 96% of late-stage deep-tech financing in Switzerland is led by foreign investors, primarily in the US and EU. That’s a frustration for many, given Swiss pension funds hold around $1.4 trillion under management, according to government figures, and up to 5% of that can legally be invested in venture capital.
“It’s frankly kind of ridiculous,” says Meldem from Deep Tech Nation. “In reality, they invest about 1%, and of that the vast majority goes to the US.”
Again, Meldem suggests the reason is largely cultural. “Unlike the pension funds you might see in the States, they’re much smaller and more locally driven, meaning that the people leading them are highly incentivised to take safe bets.”
A turning point for Swiss agtech?
There are now efforts to change that. Deep Tech Nation has launched a foundation with backers including Swisscom, UBS, and Rolex, aiming to pump CHF5bn ($6.3bn) a year into Swiss tech companies. Similarly, Venture Kick, a philanthropic initiative, is looking to back 3,000 start-ups by 2035 with CHF50bn ($63bn) of follow-on investments.
Whether the money is Swiss or otherwise makes little difference to the companies themselves. But the Swiss economy is arguably the biggest victim due to the number of companies that fledge abroad to the home of their chief investor.
“We invest so much in our universities, our innovation, and help a lot with money to build the companies,” says Michael Sauter, lead of Project Switzerland. “But the returns of the successful companies are not going back to Switzerland.”
Through Project Switzerland, however, Sauter is at the forefront of efforts to turn the country into a more favourable hub for its high-growth companies by taking the strengths of its start-up ecosystem and applying them to bigger companies.
The project will connect the ten most promising Swiss scale-ups – including Voltiris – with the country’s “unicorn founders and serial entrepreneurs”, with the aim of turning three of them into global market leaders within ten years.
It is these sorts of efforts that mean many are hopeful Switzerland can improve and bring its young, promising companies to fruition. “We’re at the cusp of a very interesting period for Switzerland, where we have many initiatives built to help scaling, more late-stage capital coming in, and growing recognition on the international scene,” says Meldem.
“So the question is why hasn’t it happened yet? And the answer is: it’s coming, by all measures we can take.”
