The Swiss city is home to many finance start-ups and demanding accelerators such as the F10.There, we favor word-of-mouth rather than marketing.
The canton of Zug was called “Crypto Valley”, its neighbor Zurich could be called “Fintech Valley”.The Swiss city, world center of finance, has become in a few years a hub for European fintech.In 2019, of the 360 million Swiss francs (338 million euros) raised by Swiss fintechs, 84.8% (318 million euros) were allocated to Zurich, according to the Swiss Venture Capital report produced by the media startupticker.ch and Seca, the Swiss association of private equity and corporate finance investors.By way of comparison, French fintechs raised around 600 million euros last year.
Although it is a leader, Zurich has not made a marketing argument to attract new companies in the sector.While his counterpart Zug multiplies communication campaigns around his Crypto Valley.“Zurich has traditionally been a business center, a global hub for asset management and family offices that has always operated by word of mouth,” said John Hucker, president of the Swiss Finance + Technology association.“The Swiss are very humble for certain things and do not put forward too much what they achieve”, says Azzedine Chaibrassou, French entrepreneur who has spent part of his career in Switzerland.
“There are a lot of start-ups in Zurich that come from spin-offs from universities, such as the Zurich Polytechnic, which is one of the largest engineering schools in the world,” he adds.
The Zurich Polytechnic attracts international talents who then set up their own businesses and benefit from numerous advantages.“There is political stability common to Switzerland, strong protection of intellectual property, very powerful consulting companies and quality of life”, points out David Lambert, responsible for development in Switzerland of the Angelsquare investor community .Without forgetting the tax advantages which are played for some at the level of the canton.“Zurich has long been very beneficial,” says David Lambert.The Swiss financial capital now has a higher than average income tax level (21.2%) but is set to rise to 18.2% following a referendum in late 2019.Tax cuts of up to 70% will also be possible through various instruments.Lots of pragmatism
Zurich also has fairly demanding accelerators and incubators, including one specializing in fintech: F10.This place is largely sponsored by SIX, the country’s stock exchange operator.
Its flagship incubation program attracts start-ups from several European countries.“Our promotion included between 30 and 40% of foreign companies,” recalls Azzedine Chaibrassou, who spent six months at F10 for his fintech Qard, specializing in lending to small e-tailers.
During its incubation period, Qard’s teams benefited from many tools.“It was very dense.We had a lot of masterclasses.Every month, we had a week of lessons either on speaking, looking for a business model … Everything that is necessary to build a good product”, says the leader.
A mentor is made available to each start-up once a week for strategic questions and a coach for more operational tasks.Qard was also able to easily meet national, regional private banks, large consultancy firms that also sponsor the place.And all for free.“Swiss banks are very pragmatic towards fintech and want to see results quickly”
Start-ups even receive grants of 15,000 Swiss francs (14,000 euros).But these benefits come at a price.“It is possible to be dismissed from the program if you do not pass certain levels”, testifies Azzedine Chaibrassou.The levels correspond to deliverables such as a product demo, the presentation of a business plan, a document describing the company’s strategy… A bit like at school.
“They are very demanding on the quality of deliverables.Sometimes, we wanted to focus on certain aspects of our box but we could not because we had to work on the deliverable.
But it is a lesser evil”, concedes Azzedine Chaibrassou.
As a global financial center, Zurich is obviously a privileged place to meet the big Swiss banks or the subsidiaries of foreign financial institutions.As in France, most have created programs for start-ups.“The Swiss financial industry is very motivated to set up cooperation with start-ups.But we must have a proven solution that allows them to meet their technological needs”, notes Thomas Schäubli, marketing manager of Apiax, a Swiss regtech based in Zurich.“They are very pragmatic and want to see results quickly,” added John Hucker.Swiss banks also do not hesitate to put tickets in the Swiss start-ups.
“Credit Suisse, Swisscom and ZKB ( Zurich cantonal bank, editor’s note ) are among the big investors in fintech, “said David Lambert.” Since there are not many VCs, start-ups are very happy to have banks that want to invest in them.Especially since these funds cannot afford to participate in rounds of more than 100 million Swiss francs ( 94 million euros, note ) “, he adds.
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Last but not least, Zurich has for several years established relationships with another global financial hub: Singapore.A great asset for fintechs who would like to quickly expand into the city-state, which is full of large national banks and titanic investment funds..
