At digitalswitzerland, we are looking more and more beyond our borders and developing new activities to enhance our international visibility and connectivity. Our aim is to increase awareness of the Swiss innovation ecosystem abroad and to connect and collaborate with other global innovation hubs.
Last week, I joined a panel at the Forum on Inspiring Innovation: Deep Tech organised by Bloomberg Government and Switzerland Global Enterprise. It was a great opportunity to discuss ecosystems, trends in deep technology and characteristics of the Swiss ecosystem.
New York, a vibrant ecosystem
San Francisco, Berlin and London usually come to mind when we think of technology and innovation ecosystems. New York is more associated with the “solid but old economy”. This impression might need some updating, let me explain why:
- Start-up activity in New York took off in the 1990s during the dot.com boom. A strong recovery followed the bust thanks to groups like NY Tech Meeting, Next NY and others who successfully positioned New York as a tech hub for creatives and entrepreneurs.
- New York’s Silicon Alley has seen a steady rise in its number of start-ups since 2003 and has joined the ranks of the Silicon Valley and Boston as one of the three leading technology centres in the US.
- From 2009 to 2013, New York City tech start-ups enjoyed a 200% increase in investment, and a 33% rise in the number of jobs created. Towards the end of 2017, venture capitalists invested more money in New York companies than in San Francisco and the Bay Area, knocking the Silicon Valley off its long-held top spot.
- For decades, New York’s technology sector has been overshadowed by its financial sector. Today, with its web of 6000-7000 active tech start-ups, employing over 150’000 people, New York is now also at the forefront of IT and consumer technologies.
- While San Francisco’s funding remains flat, NYC sees a steady growth, making it the most highly-funded region in the US in Q3 of 2017. The ecosystem has grown rapidly in the past 5 years going from $2.3 billion invested in tech in 2012 to $13 billion in 2017. New York City is the largest Venture Capital market in the world.
- In 2018 (from January to October), the New York area has already seen 871 deals totalling $10.3 billion; this already exceeds the total funding of 2017, which amounted to $9.8 billion.
- Among the main global tech hubs, firms are most likely to find capital in New York and the Silicon Valley, with a small advantage for New York start-ups, in particular in the 2nd, 4thand 5thfunding rounds.
Iynna Halilou, Global Programs Manager at Entrepreneurs Roundtable Accelerator NY believes “we will start seeing more tech-focused innovation focused on solving pressing social issues (e.g a broken mass transit system; housing crisis; access to capital for underprivileged communities, immigrants, asylum seekers, refugees etc.). It is not surprising that we see these solutions coming out of New York, the nature of this city, being so diverse, it has always been an example when it comes to leading change and embracing inclusiveness.”
New York is not only an impressive corporate centre but also one of the most promising and exciting tech hubs to watch in the coming years. My special appreciation goes to the Swiss Innovation Hub in New York for providing much of the data on this ecosystem.
Opportunities and challenges for Swiss start-ups
According to Switzerland Global Enterprise, there are about 18 Swiss start-ups active in New York City and 29 in the San Francisco Bay area. The actual number could in fact be twice as high. Swiss start-ups in New York raised an average of $11.03 million, with high variances across industries and stages of development. Swiss presence in the New York start-up environment is relatively recent.
A good start, although numbers are still quite low. So why should Swiss start-ups go to New York? Here are some reasons:
- The highest availability of funding (VC and CVC) worldwide
- The largest market in the world with an incredible density of great corporates within a few square miles
- An 8-hour flight from Geneva and Zurich makes it the best entry to the US market and “only” 6-hour time zone difference, an important factor for frequent travellers.
- An entrepreneurial mindset, accepting of past failures and open to risk taking
- A great international community, almost anyone can feel at home in New York
- An incredible diversity of industries in the tech ecosystems
According to Caroline Blaser from the Swiss Business Hub New York “New York has one of the world’s strongest financial ecosystems with a growing venture capital and technology scene. With 52 Fortune 500 companies headquartered here, the globally minded business environment offers great opportunities for start-ups to develop their business. In addition, companies find the time zone ideal making it easy to stay connected with their teams and stakeholders in Europe.”
Not everything is perfect in New York though; the tech and digital ecosystem also have some challenges:
- High competition and market entry barriers, non-American companies often underestimate the cultural shock. Getting advice before entering the market is key.
- High regulatory burdens, regulation for ICO, blockchain-based business models and drone aviation is definitely not as friendly as in Switzerland.
- New York is a bit “digital everything”. It is a diverse ecosystem but it may lose against some other hubs focused on specific topics and attracting global leaders, like the Crypto Valley, leading the worldwide blockchain revolution.
- Immigration is a hassle, especially for young and less established companies like start-ups and scaleups
- A lack of engineering talent, like in all other global technology hubs. The talent war is happening here too, with greater demand than supply, pushing salaries higher and higher.
How do we deepen collaboration between New York and Switzerland?
I’m convinced that both ecosystems, New York and Switzerland, can benefit from greater synergies. I was impressed by the quality and growth of the New York ecosystem. Switzerland also has strong assets and both hubs could generate higher output by working together. A few suggestions and examples:
- New York start-ups should consider Switzerland as a home base for their EMEA operations. Clear regulations, good quality of life, motivated and highly skilled workforce, low taxes, and situated at the heart of Europe.
- New York investors and start-ups should consider R&D in Switzerland in specific areas where we excel, like blockchain, robotics, advanced manufacturing and data analytics.
- Swiss start-ups could use New York as a base for their American operations. Closer than the Silicon Valley, great VC location, New Yorkers are already familiar with Switzerland and are showing keen interest to hear more.
- If we are to think global and conquer the world, we need many more start-ups present in New York. Our current 18 start-ups registered there is much too low. Many other players are working to build the Swiss presence in New York, such as Switzerland Global Enterprise, Innosuisse, Presence Suisse, GGBA, GZA or Venture Lab with the Venture Leaders.
Let’s continue exploring new ways of intensifying exchanges between New York and Switzerland. Both ecosystems will benefit from deepening this collaboration. If you have any suggestions on how we can work together in the future, like establishing an official corridor (MoU, etc), please contact me at email@example.com.