The impact of Brexit in the Swiss Startup Ecosystem

Written By Cae Silva
22.07.2016

Published by Sarvesh Kumar.
Dr. Sarvesh Kumar, CFO of the Swiss Startup Factory analyses the possible impacts of the recent Brexit in the Swiss Statup Ecosystem.

BREXIT-PIC-EDIT

“Brexit’ is real”

In a historic referendum people of Britain decided to leave EU and confirmed that ‘Brexit’ is real. The impact of this decision is not yet clear and will only unravel with time. The market seems to have stabilized though no one is sure if it is a lull before the storm or the storm is over. I have little love for the EU. To be fair to the EU, the act of balancing 28 different competing interests of member states is not an easy task. However, my issue is with the EU’s Byzantine bureaucratic approach and lack of human touch. The majority of voters in referendum felt that they have a better future by leaving the club and being part of the club.

Everyone sees an event through a different lens and interpret it using their biases. In this blog, I look at ‘Brexit’ and its impact on bustling Swiss start-up ecosystem. The London entrepreneurial ecosystem is not that old. Before 2011, the hub was one of the wannabes Silicon Valley. Favourable policies, the inflow of talents and money and corporate partnerships have turned Britain and London in particular into an entrepreneurial hotspot. Today the British start-up ecosystem is churning out world beating businesses across multiple sectors at an astonishing regularity.

“Britain has been the preferred destination for businesses, individuals and investors from Asia to America, as Britain offered the best possibility to get exposure to rest of the Europe”

Start-ups being a high-risk game, the scalability potential of the business model attracts investors looking for an upside and also talented entrepreneurs. The UK market alone with a population of 60 million people does not offer the scalability to attract the capital that it is attracting now, however with unfettered access to over 500 million inhabitants living across the EU the equation changes. The attractiveness of Britain has also been boosted by its business-friendly image. Britain has been the preferred destination for businesses, individuals and investors from Asia to America, as Britain offered the best possibility to get exposure to rest of the Europe.

Does all this vanish with Brexit? Probably not, Britain will still provide plenty of scope for trade with rest of Europe and will still be an attractive destination for businesses to operate and for people to live. Though it will get harder and will be hugely dependent upon the success of British government to strike favourable bilateral treaties with different national governments. For a Britain-based start-up, selling in Germany will be different compared to France. Similarly hiring a talented individual from one of the EU countries might become a nightmare of paperwork and delays.

“Switzerland with its bustling start-up ecosystems, diversified economy, sound infrastructure, favourable tax policies and renowned universities could be a possible home for investors, start-ups and entrepreneurs exploring relocation options or destination for setting up their European base.”

Investors looking for exposure to Europe will evaluate other options like English speaking Ireland, thriving start-up ecosystems in Germany or Scandinavia. Switzerland with its bustling start-up ecosystems, diversified economy, sound infrastructure, favourable tax policies and renowned universities could be a possible home for investors, start-ups and entrepreneurs exploring relocation options or destination for setting up their European base. Off course, Swiss start-up hubs like Zurich will face a stiff challenge from other European hubs like Berlin, Paris, and Amsterdam. A lot will depend on the marketing efforts, aggressive courting and also stance on free movement of people by the Swiss government. This is a real opportunity for Swiss start-up ecosystem to lure investment and entrepreneurs. However, this is a long term game as nothing will change at least for the next two years.