Strengthening the Venture Capital Base to Unlock Switzerland’s Innovation Potential

Switzerland consistently ranks as one of the most innovative countries in the world. It has held the number one spot in the World Intellectual Property Organization’s Global Innovation Index for fourteen years in a row. The country also invests heavily in research and development, with spending reaching 3.4 percent of its GDP, which places Switzerland well above the OECD average. The country produces a remarkable number of scientific publications, high-tech exports and patent applications per capita. Yet despite these achievements, relatively few Swiss start-ups grow into companies of international scale. The gap between scientific strength and commercial expansion is most visible in the venture-capital market.

A comparison with Massachusetts

Massachusetts, a US state centred around Boston and home to universities such as MIT and Harvard as well as a dense network of research hospitals and technology firms, is one of the world’s most active innovation hubs. The state has a population of around 7 million, which is comparable to Switzerland’s 8.9 million, yet the scale of venture investment differs markedly. According to PitchBook and the National Venture Capital Association, start-ups in Massachusetts raised about USD 7.8 billion in 2024, which corresponds to roughly CHF 6.9 billion. Swiss start-ups attracted around CHF 2.4 billion in the same year. Adjusted for population, young companies in Massachusetts received about USD 1’115 per inhabitant, while Swiss companies received around CHF 270.
These financing levels shape the number of companies that reach scale. Since 2018 Switzerland has produced ten unicorns. A unicorn is a privately held start-up valued at one billion US dollars or more. Massachusetts created 64 during the same period. The difference does not reflect weaker research in Switzerland but rather structural dissimilarities in how scale-up financing is organised.

Switzerland in the European context

A look at Europe confirms this picture. According to Invest Europe, start-ups in France raised about EUR 9 billion in 2024 and those in Germany roughly EUR 8.5 billion. The United Kingdom remains Europe’s largest venture market with approximately GBP 20 billion. Switzerland’s CHF 2.4 billion places it behind these countries, even though its research performance is arguably stronger than most of its European peers.
The contrast with Switzerland’s innovation metrics is striking. In 2024 the country filed 9’966 patent applications at the European Patent Office. Its R&D intensity ranks among the highest in the OECD, and high-tech exports make up a substantial share of total exports. Switzerland has the scientific engine of a top technology economy, yet its venture-financing activity operates at a lower scale.

The importance of domestic investors

One of the most significant differences between Switzerland and leading hubs such as Massachusetts lies in the involvement of local investors. In Massachusetts around 85 percent of the largest financing rounds include domestic investors. In Switzerland the figure is closer to 40 percent, according to the Swiss Venture Capital Report and complementary analyses by Invest Europe and the Swiss Startup Radar.
Foreign investors are vital to Switzerland’s start-up landscape. They contribute experience, networks and global access. Their involvement is a strength in a small, internationally oriented economy. However, when domestic participation is limited, companies rely on foreign partners earlier in their development. This dependence introduces friction. Swiss scale-ups often pitch repeatedly in foreign financial centres, adapt their legal structures to unfamiliar standards or negotiate across several time zones. These processes lengthen fundraising cycles and delay expansion.
Historical data reinforce the importance of local capital. For every Swiss franc raised domestically, about 3.2 francs of foreign venture capital flowed into the Swiss market. Domestic investors therefore attract, rather than replace, international capital. Their presence strengthens, rather than restricts, Switzerland’s position in global markets.

A strong research system and a gap in scale-up finance

Switzerland’s research infrastructure is among the best in the world. ETH Zurich and EPFL consistently appear near the top of global university rankings. Together they generate between 60 and 70 spin-offs each year. Across the country, universities and research institutions produce roughly 350 to 400 start-ups annually. The life-science clusters in Basel, Zurich and the Lake Geneva region are internationally competitive. A large number of multinational companies operate research and development centres in Switzerland.
These fundamentals translate into strong scientific performance. Switzerland filed 9’966 patent applications at the European Patent Office in 2024. Researchers publish at some of the highest rates worldwide, and high-tech goods form an important component of national exports. R&D spending at 3.4 percent of GDP corresponds to about 43 percent of the US benchmark.
However, scientific excellence alone does not guarantee commercial growth. Scaling a start-up requires capital for regulatory approval, market entry, hiring and production capacity. Venture capital plays this role. When domestic supply is limited, companies face challenges in progressing from the research stage to the global market.

Financing dynamics beyond the early stages

Switzerland has a solid base in early-stage financing. Angel investors, foundations and family offices are active in seed and Series A rounds, and universities have established programmes that support early ventures. The challenge appears later. Series B and C rounds often require between CHF 20 million and CHF 100 million. These amounts demand coordinated capital from several investors, ideally located in the same market as the company.
Swiss pension funds collectively manage more than CHF 1’300 billion. Yet only a very small share is allocated to venture capital. Estimates suggest that the allocation is around 0.03 percent. To put this into perspective, Nordic pension funds invest between 1 and 3 percent in venture capital. Major US university endowments and pension funds often invest between 10 and 15 percent. The difference illustrates why large growth rounds are easier to complete in markets such as Massachusetts.
In the United States, institutional investors play a consistent role in venture markets. Their participation provides stability and allows companies to raise large rounds without relocating. This continuity supports faster growth.

International capital as complement, not substitute

International investors are valuable partners for Swiss scale-ups. They provide access to global networks, customers and technologies. In many cases they are the reason Swiss companies expand abroad successfully. However, international capital works best when it complements domestic funding. If Swiss investors participate more actively in larger rounds, scale-ups can progress further before seeking international partners. This strengthens the position of Switzerland as a place where companies can grow, not only originate.

The economic case for expanding domestic venture capital

The argument for strengthening Switzerland’s domestic venture base rests on several economic factors. First, the country’s high R&D intensity signals that the scientific pipeline can support a larger number of scale-ups. Second, pension funds hold assets large enough to diversify into venture capital without compromising their conservative approach. Third, a stronger domestic venture market would reinforce innovation clusters in biotech, medtech, quantum technologies and advanced materials.
A study by Schroders Capital suggests that, with a broader domestic investor base, annual venture-capital volumes could increase from about CHF 2.4 billion today to as much as CHF 11 billion. Such a level would correspond more closely to the country’s scientific potential.

Lessons from international hubs

Massachusetts provides a useful example. Its success rests not only on research excellence but also on decades of investment in the supporting infrastructure. Local investors, universities and public institutions have built a closely linked ecosystem. Companies that raise early capital locally often remain in the region, which reinforces the cluster over time.
Switzerland does not need to replicate this model directly. Its regulatory environment, scale and market structure differ. However, the principles are relevant. A strong domestic investor base supports the development of high-growth companies. It anchors value creation locally and attracts international partners.

Aligning capital formation with research excellence

Switzerland has the scientific capacity to support a much larger number of scale-up companies. Its universities, research centres and innovation clusters already operate at world-class level. By expanding the domestic venture-capital base, Switzerland can ensure that more of this talent remains in the country and grows into internationally successful enterprises.
The potential is visible in the data. The question that remains is how Switzerland will align capital formation with its research excellence so that more companies achieve global scale.