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Swiss Cleantech Business Incubator C a t a l y z i n g C l e a n t e c h E n t r e p r e n e u r s h i p
i n S w i t z e r l a n d
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 2 of 83
Swiss Cleantech Business Incubator
Catalyzing Cleantech Entrepreneurship in Switzerland
January 2011
Authors
Dominic Hofstetter, Lead Reto Largo
Emerald Technology Ventures Climate-KIC
[email protected] [email protected]
About Emerald
Emerald Technology Ventures is a global leader in clean technology venture
capital focused on energy, advanced materials, and water. Founded in 2000,
Emerald has managed three venture capital funds and two separate accounts
totaling over USD 440 million in assets. Investors include leading financial
institutions and multinational corporations. Emerald’s 18 investment
professionals work out of offices in Zurich and Toronto.
About Cleantech Switzerland
Cleantech Switzerland is the export platform dedicated to the Swiss cleantech
sector and has been developed by Osec, Switzerland's trade promotion
organization, on behalf of the Federal Government. It provides small and
medium-sized Swiss cleantech businesses with information, services, and
contacts and helps them access cleantech markets around the world.
About Climate-KIC
Climate-KIC is an initiative of the European Institute of Innovation and
Technology (EIT) aimed at driving innovation in the area of climate change
adaptation and mitigation through integrated and creative partnerships between
business, academic and public institutions. Launched in December 2009 just
one week after the 15th session of the UNFCCC Conference of Parties in
Copenhagen, Climate-KIC is now well established with coordination centers in
Paris, London, Zurich, Berlin, and Utrecht, and a regional center in Brussels.
Acknowledgments
The authors would like to thank everybody who has contributed to this report,
especially the entrepreneurs, policy makers, and incubation experts who have
kindly agreed to dedicate their time for interviews and data provision.
Disclaimer
The views and opinions expressed in this document are those of the authors
and do not necessarily reflect those of the contributors mentioned in the
Appendix, or the Swiss government, or Osec as represented by Cleantech
Switzerland.
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 3 of 83
Gina Domanig
Managing Partner
Emerald Technology Ventures
Dr. Uwe Krüger
President
Cleantech Switzerland
Foreword by Gina Domanig and Dr. Uwe Krüger
By Gina Domanig and Dr. Uwe Krüger
Switzerland enjoys a high standard of living, stable political institutions, top
universities, and a culture which values environmental protection and
technological innovation. Yet these elements alone are insufficient to ensure
that Swiss cleantech innovations reach commercialization, contribute to
economic growth, and position the country as a global cleantech leader as is
declared in the Masterplan Cleantech Switzerland issued by the Swiss
government on October 11, 2010. The Masterplan is an excellent start to
identify the ambitions, immediate action items, and some of the challenges that
lie ahead, yet it falls short in one important aspect: addressing the tremendous
opportunity in cleantech start-ups and venture capital.
Over the past decade, Emerald has managed over CHF 440 million, investing in
49 cleantech start-ups across the globe – but not a single one in Switzerland.
The dearth of viable domestic investment opportunities prompted Emerald to
partner with Cleantech Switzerland and Climate-KIC to conduct this study of
Switzerland’s innovation landscape. Our joint international expertise in
cleantech gives us unique insight into the functioning of thriving cleantech
ecosystems around the world.
Of the key elements characterizing these successful ecosystems, there are
three which, in our view, Switzerland lacks and therefore needs to attend to
immediately: First, a poor entrepreneurial culture and scarcity of high-ambition
entrepreneurs for cleantech start-ups; second, a lack of support for venture
capital from the institutional investment community, especially public pension
funds; and third, a small and sluggish domestic market for cleantech products
and services. This report addresses the first issue, the low level of
entrepreneurship, and provides potential solutions for how cleantech
entrepreneurship in Switzerland can be increased through more effective
business incubation.
We find that the lack of well-known, successful cleantech start-ups and
entrepreneurs, a risk-averse culture, and weak ties with the global cleantech
venture community hinder entrepreneurship and, thus, the ability to successfully
incubate R&D outputs to commercial successes. It is our view that a dedicated
cleantech incubation initiative, as practiced successfully in many other countries
in which we invest, would make a tremendous contribution to improving the
success of the Swiss cleantech ecosystem and thereby close the gap between
invention and commercialization.
While Emerald and Cleantech Switzerland are keen to contribute to the creation
of an incubator, it is not the role of a venture capital fund or an export platform
to launch or manage such an activity. We strongly urge policymakers
responsible for economic development at the federal, cantonal, and municipal
levels to join forces in creating a concerted incubation initiative of national
scope and international reach. Given the variety of cleantech technologies,
applications, and markets, a start-up must cast a broad international net to find
experienced managers, customers, and investors. Switzerland is too small for
dispersed, uncoordinated local cleantech incubation.
While federal authorities must champion such a cause, implementation must be
led by national and international cleantech and business incubation experts who
are free of political self-interests and willing to act as agents of a national
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 4 of 83
cleantech initiative. We hope that the Roundtable as suggested in the
Innovation Conference 2010 will consider this proposal as a basis to move
forward.
With this call to action, we are now passing on the torch that this report has lit.
Together with our teams at Emerald and Cleantech Switzerland, we look
forward to making, facilitating, and supporting many exciting cleantech
investments in Switzerland in the future and to make these companies the new
champions of export-driven growth of the Swiss economy.
Zurich, January 2011
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 5 of 83
Executive Summary
As global cleantech experts, we have observed Switzerland’s cleantech start-up
landscape for more than a decade and have long recognized a gap between the
high inventive capacity and low number of viable cleantech start-ups.
When an economy is weak at turning its inventions into promising new
companies, a commercialization gap exists. Increasing the effectiveness of
business incubation is one of the most promising solutions for closing this gap,
which is why Emerald, Cleantech Switzerland, and Climate-KIC have partnered
to explore the necessity and potential impact of a cleantech-focused business
incubation program in Switzerland. The results of this analysis are presented in
this report.
Switzerland’s Cleantech Innovation Ecosystem
Innovation is a process by which new knowledge and technologies are
transformed into profitable products and services for national and global
markets. The intensity of national innovative activity is correlated with higher
productivity growth rates and standards of living. In an age of exponential
technology development, large companies are less likely to develop radical or
disruptive technologies, and innovation and entrepreneurship have become the
primary drivers of economic growth.
Starting and building a company is a complex task that can be performed most
effectively within an ecosystem where the necessary elements for successful
innovation exist. The most important elements of an innovation ecosystem
include entrepreneurship, culture, funding, government and regulation, demand
for new technology, inventive capacity, and infrastructure. The most successful
innovation ecosystems in the world excel in all of these elements and are thus
able to produce a continuous stream of viable start-ups that make tremendous
contributions to economic growth in these regions.
Switzerland’s innovation ecosystem excels on many dimensions, as attested by
multiple international studies. The country’s inventive capacity is unrivaled by
any other innovation-based economy. It also offers high-quality infrastructure
Figure 1: The Swiss Innovation Ecosystem
Innovation Ecosystem
Culture
Entrepre-neurship
Funding
Invention
Infra-structure
Govt. & Regulation
Market Demand
Figure 1: The Swiss Innovation Ecosystem
Source: Authors’ own graph
Switzerland’s weaknesses
Switzerland’s strengths
Switzerland excels in many
elements constituting a successful
innovation ecosystem. The country’s
weak entrepreneurial culture and a
lack of early- and growth-stage
funding, however, lead to a dearth of
high-ambition start-ups with strong
growth intentions and international
orientation. As a result, Switzerland
trails many of its peers in the
amount of venture capital
investment, an important indicator
for a country’s potential for
economic growth through innovation
and entrepreneurship.
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 6 of 83
and a stable political environment. Yet Switzerland has a relatively weak
entrepreneurial culture, which translates into a low level of entrepreneurship
across all sectors. In particular, surveys show that Switzerland lacks “high-
ambition entrepreneurship”, namely technology-based companies with strong
growth intentions and international orientation. High-ambition start-ups have the
highest economic impact as they leverage a distinct competitive advantage to
tap into new markets, create jobs, and export products. They also attract the
funding necessary for impressive growth, typically in the form of venture capital.
The low level of venture capital investment in Switzerland is indicative of the
dearth of Swiss start-ups with such characteristics.
What is true for Switzerland’s innovation economy as a whole becomes
strikingly apparent in the cleantech sector. The business incubation programs
across Switzerland, most notably the national programs run by or affiliated with
KTI/CTI and the universities’ technology transfer offices, report little interest
from cleantech start-ups, suggesting a low level of entrepreneurial activity in this
sector. Not surprisingly, Switzerland trails most innovation-based economies in
the number of venture-backed cleantech companies. If the country wants to
play a leading role on the global cleantech stage, it must become better at
turning its cleantech inventions into high-ambition companies. More effective,
sector-focused business incubation is one solution in this endeavor.
Switzerland’s Cleantech Business Incubation Landscape
Business incubation is a dynamic process of business enterprise development
and an important part of any successful innovation ecosystem. Incubators
nurture young firms and help them survive and grow when they are most
vulnerable. They operate between invention (R&D) and commercialization and
are thus a crucial link in the development path of new companies. Start-ups
going through an incubation program have an 85% percent chance of survival
five years after graduation. Increasing the survival rate and growth of
businesses also generates positive spillover effects for the entire ecosystem
and can improve a region’s entrepreneurial culture. If a country exhibits a large
gap between its inventive capacity and level of entrepreneurship, as
Switzerland does, more effective business incubation is a promising approach
to close this gap.
Figure 2: Switzerland’s Cleantech Entrepreneurship
Cleantech Companies Going Through Incubation Organizations
# of Companies Supported
of which Cleantech
Cleantech Share
CTI Start-Up 180 4 2%
CTI Invest 140 7 5%
Venture Kick 125 8 6%
Venture Incubator 8 1 13%
glaTec 33 1 3%
Source: Websites of business incubation organizations
Number of VC-Backed Cleantech Firms
Per million population
Source: BNEF 0.04
0.2
0.2
0.4
0.6
0.6
0.8
1.3
1.3
1.4
1.6
1.6
1.8
1.9
1.9
2.2
3.5
3.6
China
Spain
Italy
France
Belgium
Germany
Austria
Switzerland
Netherlands
Denmark
United States
Ireland
Sweden
Canada
United Kingdom
Finland
Norway
Israel
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 7 of 83
Switzerland’s business incubation landscape centers around the national
innovation agency KTI/CTI and its sister organizations, but remains fragmented.
Today’s start-ups have access to a range of general incubation resources,
ranging from advisory and coaching to physical infrastructure, professional
service providers, universities, research institutes, and investors. However, the
success rate in cleantech is low, which has prompted us to conduct extensive
literature review and interviews with entrepreneurs, policy makers, investors,
and incubation experts to explore a range of questions about the current state
of business incubation in Switzerland. This research has led us to conclude that
the country’s cleantech incubation landscape lacks the following resources:
• A vibrant entrepreneurial talent pool of successful, experienced managers
and serial entrepreneurs who are willing to start companies or assume
managerial roles at start-ups;
• Sufficient access to laboratory equipment and pilot plants to test new
technologies;
• Coaching and mentoring by industry experts who understand the needs and
challenges of cleantech start-ups;
• Networking opportunities and platforms for effective experience sharing
among cleantech entrepreneurs and cleantech-experienced industry
advisors and strategic partners;
• Effective information aggregation and dissemination platforms to increase
the effectiveness with which entrepreneurs are connected with existing
incubation resources.
Recommendation
Based on our findings, we recommend that a dedicated national cleantech
business incubator (Swiss Cleantech Business Incubator, henceforth referred to
as SCBI) be established to more effectively transform inventions into high-
ambition start-ups which contribute to economic growth and prosperity.
Service Offering of Swiss Cleantech Business Incubator
SCBI should offer synergistic and missing services while leveraging existing
incubation resources. Synergistic services are those which all viable incubators
must provide but which are inherently costly to develop and retain. Synergies –
mostly economies of scale and network effects – are created when these
services are managed in a centralized manner.
Figure 3: Start-Up Development Path and Business Incubation
R&DProof of Concept
PrototypeDemon-stration
Commercial
Production
Diffusion & Adoption
Commercial Maturity
Figure 3: Start-Up Development Path and Business Incubation
Source: Authors’ own graph
Business Incubation
Switzerland’s weaknesses
Switzerland’s strengths
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 8 of 83
In particular, SCBI should provide the following services:
• A platform for networking among entrepreneurs and between entrepreneurs
and stakeholders, industry advisors, strategic partners, and seed investors;
• Effective coordination of existing incubation resources;
• Support for developing promising business models and access to relevant
multinational corporations to secure early adopters and build strategic
alliances;
• Access to a global network of venture capital and other capital sources,
including grants and other government support;
• Access to and support for recruiting and hiring management and board
talent;
• Help in adopting a greater international orientation;
• Information aggregation and dissemination.
In addition, the incubator should also engage in educational initiatives, foster
partnerships with internationally recognized business incubation programs, and
collaborate with domestic organizations to increase the overall level of
cleantech entrepreneurship in Switzerland, promote the development of a
cleantech cluster, and strengthen the country’s reputation in the cleantech
arena.
Implementation
Many important questions of implementation are beyond the scope of this study
and need to be addressed at a later stage. Multiple benchmarking studies have
identified best practices in running incubation schemes and can serve as
valuable guides in designing the cleantech incubator. Based on our experience,
we have arrived at a number of high-level recommendations for designing
SCBI.
Organizational Framework
SCBI can either be created as a new, stand-alone entity or as a separate
initiative within an existing incubation framework (e.g. KTI). In either case, the
incubator’s mission should be to leverage the resources and activities of
existing incubation schemes across the country while adding those crucial
resources which are currently missing. These missing resources can be
provided by a lean organization with a small professional management team. At
present, there is no need for large real estate infrastructure to run the incubator,
but such infrastructure can be added at a later stage if necessary.
Location
It is important to situate SCBI in an area where entrepreneurs have easy access
to vital resources and an environment in which they enjoy living and working.
Given the size of Switzerland’s economy, we strongly advocate a national
model where resources can be concentrated in a single location or, if
appropriate or required, in two regional hubs. In either case, concentrating
resources by limiting the number of locations is paramount to enabling frequent
interaction between entrepreneurs and facilitating the emergence of a cluster.
Switzerland does not have the level of entrepreneurship to support multiple,
geographically dispersed centers. Centralization maximizes effectiveness while
avoiding unnecessary duplication of resources.
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 9 of 83
Management
SCBI must be run by experienced management free of local political influence.
Ideally, these managers will have extensive expertise in cleantech, experience
in business incubation, and an existing network with investors and strategic
partners.
Incubator Funding & Investment Activity
While SCBI should seek as much private funding as possible, government
involvement is both advisable and required given the clear economic benefits of
business incubation (high efficiency of public investment) and the competitive
dynamics created by other governments’ aggressive cleantech support
schemes. If Switzerland wants to become a global leader in the cleantech
industry, Swiss policy makers must follow the lead of their peers abroad and
allocate financial resources to promote cleantech entrepreneurship.
The amount of funding required depends on whether SCBI will invest in its start-
ups. Direct investments require specific expertise and a robust investment
process, which are costly to develop or procure. In other countries, government
matching programs have proven to be highly effective and ideal for minimizing
inefficiencies inherent in public investment programs.
Sector Focus
Although sectoral specialization tends to make business incubators more
effective, the low level of entrepreneurship in Switzerland favors a broad focus
encompassing many different cleantech sub-sectors, at least in the early stages
of the incubator.
Impact
A new business incubator dedicated to cleantech has the potential to eradicate
many of the shortcomings of Switzerland’s cleantech innovation ecosystem,
thereby closing the commercialization gap. In particular, it will:
• Improve the commercial success of cleantech start-ups by increasing their
commercial focus, building appropriate business models, accessing
corporate partners, and penetrating international markets;
• Attract top talent to manage new start-ups, thus bringing critical skills,
experience, and networks to these companies and enabling them to grow
significantly;
• Attract foreign entrepreneurs to Switzerland to help kick-start the creation of
a critical mass of cleantech talent, provided that the incubator is equipped
with the right market-based incentives;
• Secure necessary capital for start-ups by understanding the criteria of
funders (e.g. venture capitalists), shaping the businesses accordingly, and
intensively networking with such investors;
• Make cleantech incubation resources more accessible and effective to
entrepreneurs by pooling and coordinating initiatives.
As such, SCBI has the potential to increase Switzerland’s level of
entrepreneurship, increase the likelihood of survival of new companies, and turn
existing start-ups into competitive, fast-growing companies attractive to foreign
investors. These companies will then become the new champions to spearhead
export-driven growth of the Swiss economy. Above all, the incubator will create
positive spillover effects within the entire innovation ecosystem, much like High-
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 10 of 83
Tech Gründerfonds in Germany, the Carbon Trust in the United Kingdom, and
the Environmental Business Cluster in California.
Next Steps
We recommend that a steering committee under the auspices of the federal
government be launched. Comprised of representatives of federal and cantonal
institutions, the committee should nominate a working group of successful serial
entrepreneurs, internationally recognized incubator managers, technology
transfer specialists, and experienced cleantech venture capitalists and angel
investors who shall convene and develop a plan for implementation of the
recommendations put forth in this report. In particular, the working group should
clarify the incubator’s objectives and find answers to the questions of funding,
management, political leadership, and collaboration.
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 11 of 83
Table of Contents
Foreword by Gina Domanig and Dr. Uwe Krüger 3
Executive Summary 5
Switzerland’s Cleantech Innovation Ecosystem ............................................................................... 5
Switzerland’s Cleantech Business Incubation Landscape ............................................................... 6
Recommendation ............................................................................................................................... 7
Service Offering of Swiss Cleantech Business Incubator ........................................................... 7
Implementation ............................................................................................................................. 8
Impact ........................................................................................................................................... 9
Next Steps........................................................................................................................................ 10
List of Acronyms 13
List of Figures 13
List of Tables 14
List of Boxes 14
Introduction 15
About Innovation Ecosystems 18
About Innovation .............................................................................................................................. 18
Defining Innovation ..................................................................................................................... 18
Importance of Innovation ............................................................................................................ 18
Elements of Innovation Ecosystems ............................................................................................... 19
Culture ......................................................................................................................................... 19
Government & Regulation .......................................................................................................... 20
Demand....................................................................................................................................... 20
Invention...................................................................................................................................... 20
Funding ....................................................................................................................................... 21
Infrastructure ............................................................................................................................... 21
Entrepreneurship ........................................................................................................................ 22
The Role of Business Incubation in Innovation Ecosystems ......................................................... 22
Defining Business Incubation ..................................................................................................... 22
Business Incubation’s Role in Innovation Ecosystems ............................................................. 23
The Rationale for Business Incubation ...................................................................................... 23
Cornerstones of Successful Innovation Ecosystems ..................................................................... 24
Case Study #1: Silicon Valley .................................................................................................... 24
Case Study #2: Cambridge, MA ................................................................................................ 25
Case Study #3: Israel ................................................................................................................. 25
Cleantech Innovation Ecosystems .................................................................................................. 26
Defining Cleantech ..................................................................................................................... 26
Idiosyncrasies of Cleantech Ecosystems .................................................................................. 27
The Case for Clean Energy Public Investment ......................................................................... 28
Alternative Policy Options for Accelerating Cleantech Deployment ......................................... 28
Switzerland’s Innovation Ecosystem 31
Status Quo: Switzerland’s Innovation Ecosystem .......................................................................... 31
Innovation Capacity & Competitiveness .................................................................................... 31
Entrepreneurial Culture .............................................................................................................. 32
Entrepreneurship in Switzerland ................................................................................................ 32
Entrepreneurial Finance ............................................................................................................. 33
Conclusion .................................................................................................................................. 35
Status Quo: Switzerland’s Cleantech Innovation Ecosystem ........................................................ 38
Switzerland’s Cleantech Economy............................................................................................. 38
Cleantech Invention .................................................................................................................... 38
Cleantech Entrepreneurship ...................................................................................................... 39
Cleantech Finance ...................................................................................................................... 40
Conclusion ....................................................................................................................................... 40
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 12 of 83
Introduction to Business Incubation 43
About Business Incubation .............................................................................................................. 43
Types of Business Incubators .................................................................................................... 43
Service Offerings of Business Incubators .................................................................................. 43
Business Models......................................................................................................................... 45
Cost Structure of Incubators and Role of Funding .................................................................... 45
Business Incubation Best Practice............................................................................................. 46
Case Studies .................................................................................................................................... 48
Case Study #1: Y-Combinator, TechStars, and Seedcamp ..................................................... 48
Case Study #2: High-Tech Gründerfonds and Carbon Trust.................................................... 49
Case Study #3: Environmental Business Cluster ...................................................................... 49
Case Study #4: Kinrot................................................................................................................. 50
Switzerland’s Business Incubation Landscape 51
Business Incubation in Switzerland ................................................................................................ 51
Case Studies .................................................................................................................................... 51
Case Study #1: KTI/CTI ............................................................................................................. 51
Case Study #2: Eclosion ............................................................................................................ 52
Case Study #3: glaTec ............................................................................................................... 52
Case Study #4: BlueArk ............................................................................................................. 52
The State of Switzerland’s Cleantech Incubation Landscape ........................................................ 53
Gap Analysis ............................................................................................................................... 53
Impact Analysis ........................................................................................................................... 57
Implementation Analysis ............................................................................................................ 59
Summary of Analysis 64
Innovation Ecosystem ..................................................................................................................... 64
Business Incubation......................................................................................................................... 64
Gap Analysis ............................................................................................................................... 64
Impact Analysis ........................................................................................................................... 65
Implementation Analysis ............................................................................................................ 65
Recommendations ........................................................................................................................... 66
Service Offering and Fit with Existing Incubation Landscape ................................................... 66
Next Steps........................................................................................................................................ 69
Appendix 70
A) Overview of Public Finance Mechanisms .................................................................................. 70
B) Cleantech Organizations and Initiatives in Switzerland............................................................. 71
General Incubation Organizations and Initiatives ...................................................................... 71
Entrepreneurial Finance Organizations ..................................................................................... 72
Business Plan Competitions ...................................................................................................... 73
List of Technoparks .................................................................................................................... 73
Privately-Funded Cleantech Incubation Organizations and Initiatives ..................................... 74
Government Initiatives in Cleantech .......................................................................................... 74
Regional Cleantech Initiatives .................................................................................................... 75
Industry Associations in Cleantech ............................................................................................ 75
Academic Cleantech Initiatives .................................................................................................. 76
Other Cleantech Efforts .............................................................................................................. 77
C) Cleantech Business Incubation Organizations Abroad ............................................................. 78
General Incubation Organizations and Initiatives ...................................................................... 78
Cleantech Incubation Organizations and Initiatives .................................................................. 78
D) List of Interviews & Contributions ............................................................................................... 79
Interviews .................................................................................................................................... 79
Other Contributors ...................................................................................................................... 79
Bibliography 80
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
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List of Acronyms
B2B / B2C Business-to-business, business-to-customer
CFI Commercial financial institutions
EIS European Innovation Scoreboard
FFGS Foundation For Global Sustainability
GDP Gross domestic product
GEM Global Entrepreneurship Survey
GHG Greenhouse gases
GUESSS Global University Entrepreneurial Spirit Students’ Survey
ICT Information and communication technology
IP Intellectual property
KTI/CTI Innovation promotion agency sponsored by the Swiss Federal Government
NBIA National Business Incubator Association
PFM Public finance mechanism
PPP Public-private partnership
R&D Research & Development
SEFI Sustainable Energy Finance Initiative
SME Small and medium enterprises
SNF National Science Foundation
UNEP United Nations Environment Programme
UNFCCC United Nations Framework Convention on Climate Change
VC Venture capital
WEF GCR The World Economic Forum’s Global Competitiveness Ranking
List of Figures
Figure 1 The Swiss Innovation Ecosystem 5
Figure 2 Switzerland’s Cleantech Entrepreneurship 6
Figure 3 Start-Up Development Path and Business Incubation 7
Figure 4 Elements of an Innovation Ecosystem 19
Figure 5 Technology Commercialization Path and Valley of Death 23
Figure 6 Cleantech Sub-Sectors as Defined by the Cleantech Group 26
Figure 7 Public Finance Mechanisms and the Technology Development Path 30
Figure 8 Venture Capital Investments as a Percentage of GDP in 2005 34
Figure 9 The Commercialization Gap 35
Figure 10 Comparison of Spin-Off’s Sectoral Distribution, ETH Zurich 37
Figure 11 ETH Zurich Spin-Offs, VC/Angel Backing and Exits from Spin-Offs 37
Figure 12 Switzerland’s Share of Total Global Patent Registrations 38
Figure 13 Venture-Backed Cleantech Companies by Country 40
Figure 14 Core Services of Business Incubators 44
Figure 15 Ease of Fundraising for Cleantech Start-Ups in Switzerland 55
Figure 16 Measures Improving ETH’s Technology Transfer Performance 56
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List of Tables
Table 1 The Performance of U.S. Business Incubators 5 Years after Graduation 24
Table 2 Switzerland’s Position in Global Innovation Rankings 32
Table 3 Cleantech Companies Going Through Incubation Organizations 39
Table 4 Summary of Key Incubator Performance Statistics & Benchmarks 48
List of Boxes
Box 1 The Role of University Spin-Offs 21
Box 2 Facts & Figures about Business Incubation 24
Box 3 ETH Zurich Spin-Offs 37
Box 4 Masterplan Cleantech Schweiz 39
Box 5 Business Incubation in the United States 45
Box 6 Start-Up Selection and Rotation 47
Box 7 Israel’s Technology Incubator Program 58
Box 8 Project “Catalyseur Cleantech de Suisse Occidentale (CCSO)” 68
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Introduction
Countries can achieve economic growth by essentially following three paths:
through the increase in factor inputs such as labor and capital; through trade
and comparative advantage; and through innovation and entrepreneurship (1).
In today’s fast-paced and increasingly specialized world, incremental
improvements, imitation, and adaptation are no longer sufficient. Innovation and
entrepreneurship have become the primary fuels of economic growth and the
focus of many governments’ economic development efforts (2).
Innovation and entrepreneurship, however, cannot simply be created by
governmental decree. Rather, they emerge as a result of the interplay between
different elements in what is called an innovation ecosystem. Innovation
ecosystems provide the grounds for thriving entrepreneurship. Governments
can contribute to the development of fertile ecosystems in multiple ways, for
instance by establishing a supportive regulatory framework and promoting
research and development (3). Yet ecosystems are complex and dynamic
habitats influenced by a multitude of tangible and intangible forces, most of
which cannot be controlled a priori.
So if innovation ecosystems are so hard to create, why bother at all? Because
the prospective benefits of a successful ecosystem to society as a whole and
the economy in particular are large – very large, as evidenced by the mother of
all innovation ecosystems, Silicon Valley, which made California the eighth
largest economy in the world (4).
One of the driving elements of innovation ecosystems is culture. Risk-averse
countries are less likely to produce a continuous stream of entrepreneurs than
risk-rewarding ones, which is one of the reasons why Europe has been trailing
the United States in entrepreneurial activity for a long time. The importance of
culture becomes apparent in Switzerland. While the country ranks among the
top five worldwide for competitiveness and innovative capacity, it is at best
mediocre in turning inventions into thriving companies. Culture is probably the
major driving force behind this gap, yet it is not the only one.
Another important element of innovation ecosystems is capital, mainly at the
seed and early-stage levels. The correlation between capital availability and
economic growth through innovation is well known. In order for a start-up to
attract capital, it needs to offer its investors the promise of a commensurate
return. Technology-based goods and services are potential sources of
competitive advantage and a good starting point. In the eyes of many investors,
however, the entrepreneurs managing these start-ups are equally important if
not more important. Managers must be competent and willing to enter into a
partnership with their investors to collaboratively pursue the common goal of
growing the business.
If a country lacks entrepreneurial culture, start-ups, capital, or talent, business
incubators may be able to help. Incubators are platforms for nurturing young
firms, helping them survive and grow during the start-up period when they are
most vulnerable (5). Incubators offer strategic and operational advice which
helps de-risk the start-up period. Through their connections and networks, they
provide valuable access to investors, prospective customers, and strategic
partners.
Business incubators do not make up an innovation ecosystem by themselves,
however. In fact, the main challenge in many regions of the world, especially in
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Europe, remains the lack of entrepreneurial activity. While it has been shown
that incubators can have a positive feedback on the entrepreneurial culture of a
country, they are unlikely to have a more fundamental impact on a nation’s
cultural mindset. Nevertheless, business incubators constitute an important
element in every successful innovation ecosystem, since they often fill a gap left
open by traditional service providers for whom a start-up company is too small
and too risky a business partner (3).
Historically, most business incubators have catered to start-ups in fast-growing
sectors like internet, software, biotech, and health care. In the recent past, a
new sector has appeared on their radar screens: cleantech. The surge in
entrepreneurial activity in the cleantech sectors has been driven by the real
threats of climate change and the actions of governments and their constituents
that created one of the largest economic opportunities of our time. If Switzerland
wants to tap into this economic opportunity and become a lead actor on the
global cleantech stage, it needs to augments its entrepreneurial activity in the
sector. Despite a strong presence of established industrial corporations
operating in cleantech, a long history of carbon-free power generation, a strong
sense for environmental protection among its citizens, and world-leading
research institutes, Switzerland produces very few start-ups seeking to
commercialize new clean technologies.
Is business incubation the solution for Switzerland? It is estimated that there are
more than 3,500 business incubators in the world, differing widely in objective,
structure, service offering, and funding. So what the world needs is not more
business incubators, but better ones (3). This is very much true for Switzerland,
too, especially in light of the current widespread enthusiasm for cleantech
among policy makers on all bureaucratic levels. Do we really need yet another
business incubator in Switzerland, and if so, how should it be structured and
what services should it provide? This report sheds light on these questions by
thoroughly analyzing the status quo of Switzerland’s cleantech innovation
ecosystem and incubation landscape. It makes recommendations for how to
move Switzerland towards the goal of becoming a leading player of international
reach, as stipulated in the federal government’s Masterplan Cleantech (6).
The first part of this document provides a broad introduction to innovation
ecosystems, especially their elements and most prominent success stories. It
presents the finding of our analysis of Switzerland’s ecosystem, both overall
and in terms of cleantech, and highlights strengths and weaknesses. The
second part takes a look at the nature and activities of business incubation and
assesses the status quo in Switzerland. This part also summarizes our findings
from literature review and personal interviews with entrepreneurs, incubation
experts, and investors. Part three concludes with a synthesis of our findings and
a set of recommendations for how to set up the Swiss Cleantech Business
Incubator (SCBI).
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PART I
INNOVATION
ECOSYSTEMS
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About Innovation Ecosystems
About Innovation
Defining Innovation
Innovation is a process by which value is created through public and private
organizations that transform new knowledge and technologies into profitable
products and services. A high rate of innovation contributes to more intellectual
capital, economic growth, job creation, wealth, and a higher standard of
living (2).
There are several different types of innovation: incremental innovation is about
improving performance attributes of existing products and services; disruptive
innovation creates new markets; and process innovations advance existing
manufacturing processes or business models. Innovation can be of non-
technical nature involving business process reengineering, training, cultural
change, reorganized information systems, and redeployment of assets (2).
Irrespective of terminology, all innovation goes beyond knowledge creation and
includes factors that drive the transformation of knowledge into useful products
and services (commercialization) (2). A product idea, technology, software
algorithm, patent, or new business model only becomes true innovation when it
is married to a commercialization capability so that it has a positive and material
real-world impact (7).
Importance of Innovation
The intensity of national innovative activity is correlated with higher rates of
productivity growth and standards of living (2). In the age of exponential
technology development and relentless globalization, large companies are less
likely to develop radical or disruptive technologies (1), and innovation and
entrepreneurship have become the primary drivers of economic growth (3).
Nearly half of the United States’ total factor productivity growth, for instance, is
accounted for by technological progress and the skills and experience of its
workforce (2).
Successful innovation results in new products and services, gives rise to new
markets, generates growth for enterprises, and creates customer value. It
improves existing products and processes, contributing to higher productivity,
lower costs, and increased profits and employment (2).
Innovation-based companies are able to compete more than just regionally and
can often attain success on a global stage. In so doing, they achieve a high
leverage effect for their regional economy. Their export impact is three times
that of established companies, meaning that they have much more growth
potential and are less cyclically tied to the regional economy (7).
Innovation also generates spillover and cascading effects as competing firms
absorb new innovations. The impact and visibility of successes encourages
others, enhancing the prestige and appreciation for entrepreneurial risk taking
(7). In addition, one company’s innovation output can become part of another
company’s input, creating a virtuous cycle with a powerful multiplier effect (2).
As innovations are adopted and diffused, the knowledge stock of a nation
accumulates, providing the foundation for market growth, long-term wealth
creation, and higher standards of living (2).
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Elements of Innovation Ecosystems
Innovation is created when an invention is paired with resources of
commercialization. The process of starting and building a company is a complex
task that can only take place in an ecosystem where the necessary elements for
this transition exist.
The importance of the business environment for supporting entrepreneurship is
often overlooked by officials, scholars, and business executives who visit
successful innovation ecosystems in order to replicate them in their own
jurisdictions (1). Although there is no formal definition of an innovation
ecosystem, it is commonly understood among experts that different elements
interact in a dynamic and complex way that is difficult to influence a priori.
Figure 4 depicts the most important elements of successful innovation
ecosystems. Each pod is necessary, important, and deserving of attention, but
none is sufficient on its own. In fact, too much focus on or investment in any
single element when the overall system is not in place can do damage to the
development of a sustainable ecosystem. Likewise, each element can be a
constraint on the overall system (7).
Culture
Creativity lies at the heart of every innovation and is therefore of great
importance for the innovative capacity of a country or region (8). In fact, culture
has been identified as the single most important driver of entrepreneurial
activity (7).
In regions with a strong culture of innovation, the entrepreneur is an admired
person and his/her successes are celebrated; innovation and risk-taking are
admired and respected; there is a “no risk, no reward” mentality; and failure is
understood to be part of the learning process (9). A culture that celebrates
entrepreneurship generates an environment in which start-up businesses can
thrive and in which the pipeline for future entrepreneurs tends to continuously
build (7).
Each region has its own cultural flavor that must be considered by government
officials when making efforts to strengthen innovation and entrepreneurship (7).
Figure 4: Elements of an Innovation Ecosystem
Innovation Ecosystem
Culture
Entrepre-neurship
Infra-structure
Invention
Funding
Govt. & Regulation
Market Demand
Figure 4: Elements of an Innovation Ecosystem
Source: Authors’ own graph
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At the same time, cultural values evolve, and it is commonly believed that
entrepreneurial success stories, training, and education can have positive
impacts on popular attitudes toward entrepreneurship.
Government & Regulation
Governments set the legal framework in which innovation ecosystems can
develop. They can take simple measures to promote innovation, such as
lowering the bureaucratic hurdles for incorporating companies, opening labor
markets and enabling labor mobility, and providing favorable tax structures and
accounting standards. Other regulatory decisions concern bankruptcy laws that
limit the liability of entrepreneurs and the protection of intellectual property.
On a strategic level, governments play a decisive role by providing effective and
high-quality schools and supporting public universities and research
laboratories. The economic case for public support of fundamental research
rests on the public goods nature of technological innovation: the gains from
innovative activity are in general difficult for firms to appropriate, as the benefits
tend to spill over to other firms and customers (10).
One of the most powerful ways in which governments can promote innovation
and technology development is by creating demand. This is especially true for
technologies that cannot compete on a cost-basis with incumbent technologies
as long as there is insufficient scale. In such situations, governments can create
demand by means of tax credits and subsidies to allow new technologies to
benefit from economies of scale and learning effects. This is especially true for
renewable energy technologies, and the solar and wind industries are cases in
point (10).
Finally, governments can also provide funding to companies directly, either
through research and development grants or business incubation efforts.
However, the way in which such support is organized and managed may be as
critical for generating real economic returns as the support itself (10).
Demand
While federal policy can play an important role in shaping initial demand, the
best guarantee of accelerated private investment in innovation is the
expectation of rapidly growing demand for products based on those new
technologies.
Rapidly growing demand plays two key roles in stimulating innovation. First and
foremost, it signals a sufficiently large and potentially rapidly growing market,
thereby greatly accelerating private-sector investment in innovation and the
rapid diffusion of new technologies. Second, and perhaps more subtly, strong
demand provides a valuable opportunity for immediate market feedback,
allowing start-up companies to be more responsive in their product
development efforts (10).
Invention
At the heart of many innovation-based companies is breakthrough research or
some derivative thereof (7). A large fraction of this research is conducted at
universities and national research labs, but many of those institutions do not
interact effectively with industry. Ideas and knowledge must pass between
university and industry, mutually reinforcing each other. For this to happen,
these institutions need access to competent technology transfer and business
incubation capacity.
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Funding
A successful innovation ecosystem offers its entrepreneurs access to ample
funding opportunities, covering the full range of financing options such as
equity, debt, and mezzanine. The presence and active involvement of angel
investors and venture capitalists is paramount.
A start-up company’s capital needs vary over its life cycle from inception to
growth and maturity. Chandra writes (11):
“Most countries have gaps in the capital market for early stage funding
when firms have little or no track record and/or collateral to seek funding
from banks. Lack of financing for new ventures will thwart the creation of
dynamic local economies built around a robust SME sector. Access to
financing is a crucial factor for innovation to occur. Gaps in financing,
particularly for early stage ventures, can be a major deterrent to new
business creation, often leading to a fledgling venture’s early demise.”
In understanding financing gaps, it is important to note that the risk profile of
early-stage technology investments is very different from that of leveraged
buyouts which involve significant real assets. In technology ventures, the
principal assets are ideas, human resources, and knowledge of technology and
markets. The rewards for success are potentially large, but a failed technology
venture has virtually no residual value. Funding must come from sophisticated
and experienced investors who understand these risk-reward dynamics (11).
Despite the fact that venture capital constitutes a relatively small fraction of total
R&D investment in developed economies, it is exceedingly effective. Some
experts suggest that venture capital is three to four times more potent in
stimulating patenting than traditional corporate R&D (10). In addition, venture-
backed companies have been found to be much more successful than
companies without venture capital (12), although the validity of this data is
weakened by a large selection bias created by venture capitalists’ thorough due
diligence.
Infrastructure
Infrastructure is a broad term spanning different levels and activities. The
traditional physical infrastructure assets like energy and transportation are
provided by all developed economies and are therefore mere hygiene factors.
Relatively more important are intangible infrastructure assets to which
entrepreneurs must have access.
Specialized service firms can be seen as such an intangible infrastructure
asset. Lawyers, accountants, head hunters, consultants, marketers, graphics
designers, and real estate developers are all in high demand in thriving
innovation ecosystems. By extension, the lack of these professional services
firms or inappropriate cost levels can impose real constraints upon fledgling
start-up companies.
Box 1: The Role of University Spin-Offs
Universities and research laboratories play an important role in shaping a country’s inventive
capacity. A recent study has shown that the average survival rate of university spin-offs is
70-90%, consistently higher than the average survival rate of non-university start-ups. The study
also found that these spin-offs create more direct jobs, more qualified jobs, and contribute more
to local economic development (12). Government support for academic research and
technology transfer is therefore considered effective economic development.
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Another intangible infrastructure asset is a highly-skilled workforce, which is
crucial in a knowledge-based economy. Laborers must be trained in schools
and universities and provided with a livable community. Labor mobility,
especially the ability to switch between firms in the same region, contributes to
the collective learning in an innovation ecosystem and can have powerful
effects on a region’s entrepreneurial performance.
Entrepreneurship
Finally, there are the entrepreneurs themselves and, more specifically, their
skills and networks. The key to a thriving innovation ecosystem is
entrepreneurs’ abilities to build new companies, often by expanding their
network of contacts and seeking advice from others (7). Entrepreneurs are the
change agents who commercialize disruptive invention, and many inventors –
typically scientists, technologists, and visionaries – need them to create
meaningful new ventures (13).
A rich and functioning network is a hallmark of successful ecosystems.
Entrepreneurs, especially first-time entrepreneurs, must have immediate access
to teachers, mentors, coaches, and supporting professionals, as well as a
network of customers and companies with whom they can be in frequent
contact (14). But even among entrepreneurs, frequent contact is crucial, as
entrepreneurs can benefit from one another (14). This open business
environment should also extend to other firms and local institutions and can be
fostered by seminars and conferences. Industry associations and joint research
programs can serve as platforms for this type of knowledge exchange.
Competition among entrepreneurs has been found to have a positive effect on
the ecosystem’s overall performance in promoting innovation. The combination
of appropriate antitrust law, intellectual property rights, and standards can
create a market for technology and extensive entry, thereby fostering
competition (10).
The Role of Business Incubation in Innovation Ecosystems
Defining Business Incubation
Business incubation is a dynamic process of business enterprise development.
Incubators nurture young firms, helping them survive and grow during the start-
up period when they are most vulnerable (15).
Incubators differ from research and technology parks in their dedication to start-
up and early-stage companies. Research and technology parks, on the other
hand, tend to be large-scale projects which house everything from corporations,
government institutions, and university labs to very small companies. Most
research and technology parks do not offer business assistance services, which
are the hallmark of a business incubation program. However, business
incubators sometimes choose to locate within an existing technology park and
use its physical infrastructure (16).
The word incubator covers a wide range of activities, services, approaches, and
objectives. Different incubator types have different missions (5). Most
incubators provide strategic and operational advice, access to industry experts
and networks, and relationships with potential customers and strategic partners.
Oftentimes, they also offer physical office and laboratory space and technical
and administrative assistance. These incubation services and resources are
typically developed, orchestrated, and provided by a management team.
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Unlike many business assistance programs, most business incubators do not
serve any and all companies. Entrepreneurs who wish to enter a business
incubation program must typically apply for admission and subject themselves
to an evaluation process (16). Once accepted, the collective nature of
incubators creates a learning environment for entrepreneurs to meet and share
experience and lessons for best practice.
The principal goal of any incubator is to increase the likelihood that a start-up
will succeed, mainly by means of shortening the time and reducing the cost of
establishing and growing the business (17). Incubators thereby de-risk the start-
up and make it more attractive for venture capitalists.
Business Incubation’s Role in Innovation Ecosystems
Business incubators are main actors in all successful innovation ecosystems.
The role of incubators can be best understood when looking at the space they
occupy within the technology development process as depicted in Figure 5:
Business incubation operates in the early stages of start-up development, in
what is sometimes called the valley of death in reference to the vulnerability and
high failure rate of companies. The valley of death is an especially crucial stage
in a company’s development and one that calls for careful planning and
mentoring. Incubators make sure that entrepreneurs have the resources
needed to push their projects to the next stage, ideally to commercial
production.
Incubation is targeted toward companies that are either near completion of or
have already completed their R&D and now want to build a prototype and
develop a strategy for product commercialization. Start-ups usually stay with
incubators until they grow too large to be supported by the incubator’s facility or
obtain funding that allows them to move into their own premises. This is usually
the case once a company has reached commercial production, subject to the
research intensity of the business or technology. Surveys have shown that
incubator clients spend an average of 33 months in a program (18).
The Rationale for Business Incubation
Business incubators support start-ups in their most vulnerable stage. This
focused help has been shown to drastically increase the chances of survival. A
study by the National Association of Business Incubators in the United States
has shown that 87% of companies launched in incubators remained in business
after five years, while only 20% of all new start-ups reached the five-year
mark (19). In Europe, the 900-odd business incubators make a significant
contribution to job and wealth creation and generate some 40,000 new jobs
(net) each year (15).
Increasing the survival rate of businesses also generates positive spillover
effects and can improve the entrepreneurial culture of a region. The growth of
Figure 5: Technology Commercialization Path and Valley of Death
Research & Development
Proof of Concept
PrototypeDemon-stration
Commercial Production
Diffusion & Adoption
Commercial Maturity
Figure 5: Technology Commercialization Path and Valley of Death
Source: Authors’ own graph
Valley of Death = Business Incubator Scope
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new technology-based firms has been reported to spark an increase in projects
for incubators, creating a virtuous circle.
Incubators also help attract angel financing and venture capital. This is highly
desirable, as studies have shown that venture financing is three to four times
more effective in stimulating patenting than traditional R&D. By helping
companies protect intellectual property, structure their business in a way
favored by venture capitalists, and develop the right business models,
incubators de-risk start-ups and make them much more attractive for VC
investment.
Cornerstones of Successful Innovation Ecosystems
There is no panacea for creating innovation ecosystems. Theory does provide
some clues about the relative importance of the different elements, but only
practice reveals what works and what does not in a given region.
Much can be learned from successful innovation ecosystems that already exist
around the world. Each ecosystem excels through a unique combination of and
interaction among its elements. While the following case studies provide many
useful insights into the formation and functioning of ecosystems, they remain
inherently difficult to replicate.
Case Study #1: Silicon Valley
Silicon Valley in California is by far the most successful and famous innovation
ecosystem in the world. Its universities, most notably Stanford University and
the University of California at Berkeley, are top-notch, and its entrepreneurial
culture is truly unique. Silicon Valley is also home to the world’s largest and
most reputed venture capitalists who often ask portfolio companies to move
within proximity of their offices and thereby create a virtuous circle for the
region.
Box 2: Facts & Figures about Business Incubation
In 1998, the National Business Incubation Association (NBIA) in the United States conducted a survey among its members (5).
The survey found that, five years after graduation from the incubation program, 87% of firms were still in business and each job
created by an incubator client created 0.5 indirect jobs in the economy. Also, there was an overwhelming trend for incubator
clients to remain in the vicinity of the incubator once they graduate, making them an effective tool for regional economic
development.
Table 1: The Performance of U.S. Business Incubators 5 Years after Graduation
Mixed Incubator
Technology Incubator
Survival rate of graduates 87% 90%
Number of tenants 15 13
Graduates remaining in the community 97% 97%
Employment created by graduates 196 430
Source: Rudy Aernoudt (5)
So why are businesses that go through an incubation program more successful on average? First and foremost, it is important
to correct the statistics for any selection bias created by the admissions requirements most incubators have. Such pre-screening
separates the wheat from the chaff at entry and creates a sample bias. Once in the program, however, start-ups can take
advantage of many valuable resources to which outside companies do not necessarily have access: mentorship by senior
advisors with industry experience; access to office and lab space at often reduced rates; networks; and relationships with
potential clients, partners, investors, and other entrepreneurs. Start-ups also benefit from an aura of legitimacy and credibility
among vendors and customers, which reduces the requirements of their stakeholders to conduct due diligence on them (19). In
combination, these factors provide incubator clients with an important head start relative to their competition.
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Apart from these obvious and well-known features, Silicon Valley has a number
of properties that are truly unique. First, unlike any other innovation ecosystem,
it embraces youth and diversity. Many of the Valley’s venture-backed
companies are started and led by immigrants and very young entrepreneurs.
Second, labor mobility is extraordinarily high. In California, non-compete
clauses in employment contracts are invalid, freeing employees to start
competing companies or move to competitors. This highly mobile work force
enables a “brain circulation” that contributes to a uniquely entrepreneurial
environment (9). The function boundaries between firms are porous, as are the
boundaries between firms themselves and between firms and local institutes
such as trade associations and universities (1). This mobility has allowed the
valley to reinvent itself multiple times over the past 30 years (1).
Case Study #2: Cambridge, MA
Cambridge, in the U.S. state of Massachusetts, is home to two world class
institutions around which an innovation ecosystem has evolved: Harvard
University and the Massachusetts Institute of Technology (MIT).
MIT estimates that, as a direct consequence of its own research and
commercialization efforts, more than 5,000 companies have been built,
employing more than 1 million people and generating USD 250 billion in sales
each year. “MIT’s entrepreneurship legacy” includes companies like IBM, Texas
Instruments, Hewlett-Packard, Genentech, and Intel (20). While top-notch
faculty and students and a strong technology transfer office are seen as
important factors in this success, the most salient drivers of MIT’s strength are
believed to be its entrepreneurial culture, embedded in the school’s motto, as
well as the way these values are materialized through the powerful ecosystem
that has built up around the university.
Other cornerstones of Cambridge’s innovation ecosystem include a strong
venture network, a large technology business cluster, an abundance of
technical and business mentors, and many accessible research facilities. These
factors have allowed Cambridge to become a leading global hub for biotech and
cleantech entrepreneurship.
Case Study #3: Israel
In terms of population, Israel is roughly the same size as Switzerland, yet it has
the highest density of start-up companies in the world. Some 3,850 new
ventures are currently operating, a rate of one for every 1,844 Israelis. In 2008,
the country attracted more than $2 billion in venture capital, as much as the UK
and slightly more than Germany and France combined. In 2009, some 63 Israeli
companies were listed on the NASDAQ, more than from any other foreign
country (21).
Israel is also a leader in cleantech, with 3.6 venture-backed cleantech
companies per million inhabitants. The respective comparative values for the
United Kingdom, United States, and Switzerland are 1.9, 1.6, and 1.3 (22).
Some of this dynamism “can be attributed to a number of unique cultural
characteristics, ranging from a tolerance for constructive failures to an anti-
hierarchical ethos and penchant for bottom-up debate, jury-rigging, and
responsibility taking (21).” In the past, Israel has also undergone significant
socio-cultural and ideological changes with respect to entrepreneurship: “Social
norms now stress individualism, materialism, and independence. […] The
entrepreneur has become Israel’s newest culture hero and role model […] (23).”
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The mandatory service in the Israeli military is believed to make people experts
in adaptive problem solving (21). In fact, “there is broad-based agreement that
military R&D nourished the emergence of Israel’s technology-based industries
and propelled civilian technology-based firms to their present status (23).”
But Israel’s secret goes beyond culture and includes the active shaping of its
innovation ecosystem, e.g. through the world’s highest spending on R&D as a
percentage of the economy, a focus on the commercialization of academic
discoveries by its universities, a liberal immigration policy, and a highly
successful federal incubation program. This has created an entrepreneurial
cluster which now brings together universities, large corporations, start-ups, and
investors for the creation of globally successful technology firms (21).
Cleantech Innovation Ecosystems
Defining Cleantech
Cleantech is a broad term encompassing many different sectors concerned with
environmental and resource issues. The Cleantech Group defines cleantech as
sectors providing “a diverse set of products, services, and processes, all
intended to provide superior performance at lower costs while greatly reducing
or eliminating negative ecological impact and improving the productive and
responsible use of natural resources (24).”
For the Cleantech Group, cleantech is distinct from greentech or envirotech,
terms popularized in the 1970s and 1980s: “While greentech, or envirotech, has
represented ‘end-of-pipe’ technology of the past (for instance, smokestack
scrubbers) with limited opportunity for attractive returns, cleantech addresses
the roots of ecological problems with new science, emphasizing natural
approaches such as biomimicry and biology (24).”
The cleantech industry can be broadly categorized into eleven segments as
depicted in Figure 6. This classification shows the broad nature of the term
cleantech. The breadth of sub-sectors can sometimes present challenges to
policy makers seeking to promote cleantech. Most policy options are only
Figure 6: Cleantech Sub-Sectors as Defined by the Cleantech Group
Figure 6: Cleantech Sub-Sectors as Defined by the Cleantech Group
Source: Adapted from Cleantech Group LLC (24)
• Wind
• Solar • Hydro/Marine
• Biofuels
• Geothermal • Other
Energy
Generation
• Fuel Cells
• Advanced Batteries
• Hybrid Systems
Energy
Storage
• Management
• Transmission
Energy
Infrastructure
• Lighting
• Buildings • Glass
• Other
Energy
Efficiency
• Vehicles
• Logistics • Structures
• Fuels
Transportation
• Water Treatment
• Water Conservation
• Wastewater Treatment
Water &
Wastewater
• Emissions Control
• Monitoring and Compliance
• Trading and Offsets
Air & Environment
• Nanotech
• Biotech • Chemical
• Other
Materials
• Advanced Packaging
• Monitoring and Control
• Smart Production
Manufacturing & Industrial
• Natural Pesticides
• Land Management
• Aquaculture
Agriculture
• Recycling
• Waste Treatment
Recycling & Waste
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suitable for a single sector (or a few sectors at best), as energy companies work
in a vastly different environment compared to water treatment firms, for
example. This diversity also presents challenges for designing cleantech
incubation services, as explained below.
Idiosyncrasies of Cleantech Ecosystems
The cleantech sector is enormous and hugely complex, ranging from demand-
side technologies that increase energy efficiency in buildings, transport, and
industry to supply-side technologies associated with electric power generation
and transportation fuels (10). Unlike traditional innovation sectors (biotech,
internet, life sciences), whose innovations typically focus on hitherto unmet
needs, many cleantech innovations cannot be easily differentiated at the point
of delivery. For example, biofuels are just another liquid fuel, and electricity is
the same no matter how it is generated (10).
In comparison to other sectors, cleantech entrepreneurs face a number of
challenges that make it harder to be successful for both entrepreneurs and
investors (17) (13):
• Knowledge Intensity: Cleantech entrepreneurs often need a multi-
dimensional knowledge of science and engineering disciplines to understand
the core scientific drivers of a market as well as the technology behind their
product or service offering.
• Time to Market: Cleantech entrepreneurs typically operate with a much
longer timeframe. The time required for a cleantech company to get traction
is much longer than that of companies in most other sectors, which is
especially challenging in a world where venture capitalists seek to exit
investments within five to seven years. Examples for sectors with long lead
times are biofuels and marine energy.
• Capital Intensity: The bigger scope and scale of cleantech
entrepreneurship make it capital intensive. Investors have to make
significant initial bets and then be ready to follow up with subsequent
investments.
• Structural Issues: Cleantech entrepreneurs, especially those in the energy
generation sector, often have to deal with the very parties they are trying to
disrupt. They frequently do not have multiple routes to market, because
almost always they will have to deal with the existing hierarchy controlled by
conservative organizations (e.g., utilities) that have a vested interest in
preserving the status quo.
• Regulatory Uncertainty: Many cleantech companies rely heavily on
subsidies or grants and assume that these will continue into the future. In
addition, many companies bet on the imposition or continuation of carbon
prices. This creates tremendous uncertainty that can significantly inhibit
investment flow into cleantech start-ups.
• Human Resources: Due to the relative youth of many cleantech sectors,
there is a paucity of engineers and managers with extensive experience in
building cleantech companies. The sciences are no longer among the
preferred subjects for students, and the cleantech industry is not mature
enough for experienced entrepreneurs and managers to recycle their
knowledge back into new ventures. At the same time, and unlike in ICT,
investors prefer managers with considerable industry experience and a
proven track record.
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For these reasons, cleantech ecosystems are different from those of traditional
innovation sectors. In particular, the challenges associated with energy
investing are most intensely felt at the funding level, and business incubators
can play an important role in de-risking businesses and shortening
commercialization cycles, making fledgling companies more attractive for
venture capital.
The Case for Clean Energy Public Investment
There is a growing interest across governments in using green spending
programs as economic stimulus and job creation programs, sparking substantial
controversy about the desirability and effectiveness of such initiatives. A report
by the United Nations Environment Programme (UNEP) and the Sustainable
Energy Finance Initiative (SEFI) sheds light on some of these issues and finds
the following (25):
• Government investments in green programs stimulate economic
growth and create jobs: The evidence shows that government investment
in clean energy and energy efficiency programs increases GDP, income,
and jobs, reduces pollution and GHG emissions, saves energy, reduces
energy costs, and reduces energy price fluctuations. The correlation
between energy efficiency and economic prosperity has been found to be
highly positive. In the United States, the green investment programs of the
state of California have created nearly 450,000 new jobs (net) over the past
three decades.
• Green stimulus spending creates more jobs per unit of currency than
most other programs: The evidence shows that green spending is more
effective in creating jobs as is equivalent spending on more traditional
sectors. Investments in energy efficiency programs are especially beneficial
and cost effective and often have negative net economic costs.
Other conclusions drawn by the report include:
• Green stimulus programs generate three to four times as many jobs per unit
of currency as do tax cuts;
• Conventional energy subsidies are the most serious barrier to the growth of
green energy;
• The portfolio of clean energy incentives must be coordinated,
complementary, consistent, and predictable;
• Policy-makers must realize that any delay in action can lead to irreversible
negative outcomes;
• Even with large incentives, it will take many years for clean energy to make
significant inroads, and an accelerated policy shift to green energy must be
initiated immediately.
For all of these reasons, public investment in cleantech seems to make
economic sense, which partly explains the recent activism displayed by many
governments around the world, most notably Germany and the United States.
Alternative Policy Options for Accelerating Cleantech
Deployment
Another study conducted by UNEP and SEFI concludes that an “evolving mix of
policy and support instruments are needed to help [clean] technologies
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progress down the [technology innovation] pathway, including regulations and
codes, fiscal incentives, public finance mechanisms (PFMs), market
mechanisms, voluntary agreements, and information dissemination (26).”
While the report states that “the most important role of government should be
creating the enabling policy framework”, it concludes that public finance
mechanisms are an essential tool to unlock the private sector’s investment in
clean energy and enable the deployment of capital at the level needed for
effective climate change mitigation (26).
In August 2007, the Secretariat of the UNFCCC published a technical paper
which estimated that $200-210 billion in additional investment will be required
annually by 2030 to meet global greenhouse gas emissions reduction
targets (26). According to Bloomberg New Energy Finance, a total of $115
billion was invested globally in clean energy in 2009, down from $155 billion in
2008 (27). While these amounts are in the same ballpark as the required level,
they came predominantly from the private sector (94% in 2007), which is not
expected to be able to maintain such a high share without more public
support (26).
Governments have at their disposal a series of PFMs to deploy such capital.
PFMs “seek to mobilize and leverage commercial financing, build commercially
sustainable markets, and increase capacity to deliver clean energy and other
GHG mitigation project (26).” The most important PFMs are listed hereafter, and
a detailed description of each can be found in Appendix A:
• Credit lines to local commercial financial institutions (CFIs) for providing
both senior and mezzanine debt to projects;
• Guarantees to share with local CFIs the commercial credit risks of lending
to projects and companies;
• Debt financing of projects by entities other than CFIs;
• Private equity funds investing risk capital in companies and projects;
• Venture capital funds investing risk capital in technology innovations;
• Carbon finance facilities that monetize the advanced sale of emissions
reductions to finance project investment costs;
• Grants to share project development costs;
• Loan softening programs to mobilize domestic sources of capital;
• Inducement prizes to stimulate R&D or technology development; and
• Technical assistance to build the capacity of all actors along the financing
chain.
All of these PFMs vary in structure and focus and thus need to be selected with
the aim of achieving a specific strategic goal and deployed in a coordinated
effort. In particular, each PFM is especially suited to enable the development
and deployment of technology in a certain stage along the technology
innovation pathway (see Figure 7).
While investment is needed along all stages of the technology innovation
pathway, the funding gap is especially severe in the demonstration and initial
deployment stages, when the technology is being deployed commercially but
has not achieved the volumes and cost reductions necessary for full
competitiveness with conventional technologies. In these stages, it is often hard
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to secure capital because of business and technology risks, high initial
production costs, and a wide range of market barriers. The report concludes:
“Such funding gaps create a valley of death that prevents many
promising technologies from making it to market. Public funding and
related interventions are therefore needed to bring down market barriers,
bridge gaps, and share risks with the private sector (26).”
This highlights the importance of pre-seed, seed, and venture capital, as well as
the government’s role in helping overcome potential market failures. One tool at
governments’ disposal is public venture capital, which can be effective for
removing funding shortages. It can also support companies that take longer to
get returns and would not attract private investment but have a net benefit to
society (also see (28)).
The study continues to conclude that access to finance is necessary but not
sufficient. Instead, finance must be paired with technical assistance programs.
Many finance programs fail because the capital is not disbursed effectively or at
all, due to a lack of due diligence or sufficient demand. “Successful PFMs
actively reach back into the project development cycle to find and prepare
projects for investment (26).” This is the role business incubation can play.
Figure 7: Public Finance Mechanisms and the Technology Development Path
Figure 7: Public Finance Mechanisms and the Technology Development Path
Source: UNEP/SEFI (26)
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Switzerland’s Innovation Ecosystem
Status Quo: Switzerland’s Innovation Ecosystem
At first sight, many elements that make for a thriving innovation ecosystem
seem to be already in place in Switzerland: business-friendly regulation, top-
notch universities and research institutes, substantial demand for new
technology from large corporations, a developed financial sector, and high-
quality infrastructure. And in fact, independent studies confirm that Switzerland
is a fabulous place for doing business.
Unfortunately, this asset does not translate into high entrepreneurial activity. As
explained hereafter, Switzerland trails many of its peers in turning invention into
commercially viable businesses.
Innovation Capacity & Competitiveness
Switzerland ranks highly in the foremost global innovation and competitiveness
surveys. The World Economic Forum’s Global Competitiveness Report
(GCR) 2010-2011, for instance, ranks Switzerland the most competitive among
139 world economies (29). The country is praised for its “excellent capacity for
innovation and a very sophisticated business culture”. Switzerland ranks 4th for
its business sophistication and 2nd
for its innovation capacity as captured by its
high rate of patenting.
The GCR highlights Switzerland’s scientific research institutions, which are
“among the world’s best”, and the strong collaboration between the academic
and business sectors. High private-sector R&D spending, strong intellectual
property protection, government support of innovation through its procurement
processes, highly effective and transparent public institutions, independent
judiciary and rule of law, accountability of the public sector, excellent
infrastructure (6th), well-functioning goods (4
th) and financial (8
th) markets, and
the second most efficient labor market were also cited as Switzerland’s
strongsuits, along with a highly stable macroeconomic environment (5th).
A similar picture is painted by the European Innovation Scoreboard (EIS),
which measures the innovation performance of European countries (30). In the
2009 EIS, Switzerland ranked 1st among all countries under study. Switzerland
dominated its peers in the metrics patents per capita and trademarks/designs
per capita. However, Switzerland scored far behind the European average in
the metric economic effects (mainly employment in high-tech industries and
new-to-market sales) and in linkages and entrepreneurship, a measure of
entrepreneurial output.
Finally, the Economist’s Innovation Index, which ranks countries based on
their patent activity and overall quality of innovation ecosystem, ranked
Switzerland 2nd
behind Japan, with 505,000 patents per million inhabitants
issued between 2004 and 2008 (31).
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Table 2: Switzerland’s Position in Global Innovation Rankings
Rank/Source EIS1 WEF
2 Economist
3 INSEAD
4
1 Switzerland Switzerland Japan Iceland
2 Sweden Sweden Switzerland Sweden
3 Finland Singapore Finland Hong Kong
4 Germany United States United States Switzerland
5 United Kingdom Germany Sweden Denmark
Source: Adapted from The Boston Consulting Group (32), updated with latest rankings 1) European Innovation Scoreboard (EIS) 2009 2) World Economic Forum, Global Competitiveness Index 2010-2011 3) Economist Intelligence Unit, Innovation Index 2009 4) INSEAD Global Innovation Index Report 2009-2010
Entrepreneurial Culture
Anecdotal evidence suggests that Swiss are more risk-averse when it comes to
business decisions, but measuring such cultural aspects is no easy task.
Nevertheless, a glimpse into Switzerland’s entrepreneurial culture is provided
by the Global University Spirit Students’ Survey (GUESSS) 2009, which
reports a low level of entrepreneurial intentions among Swiss students (33). The
survey found that only 10.2% of Swiss students intended to become
professionally independent after graduation, while 83% prefer employment.
Professional independence, however, is not equal to starting a company, which
only 1.8% of all respondents intended to do.
The study concludes that Switzerland’s students have below-average
entrepreneurial intentions compared to other GUESSS countries. The same
conclusion applies to actual entrepreneurial activity (writing business plans,
seeking capital, incorporating a company), where Switzerland again trails its
international peers. Switzerland’s incorporation rate is 1.3%, compared to 2.7%
internationally (33).
Entrepreneurship in Switzerland
Despite Switzerland’s high international competitiveness and outstanding
invention capacity, a lack of entrepreneurial culture directly translates into a low
level of innovation commercialization.
The Global Entrepreneurship Monitor (GEM) 2009 report compares and
contrasts entrepreneurial activity among 54 economies, 20 of which are
considered to be innovation-based (34). The survey found that Swiss people’s
attitude toward entrepreneurship is quite positive, yet that there is little intention
to become entrepreneurially active.
The Boston Consulting Group looked at the birth and death rates of business
enterprises in different countries and concluded that Switzerland has low rates
in both instances (32). While a low death rate might seem desirable at first
sight, it is important to note that a certain failure rate is necessary for a healthy
ecosystem. In fact, failure is and should be seen as a necessary part of the
entrepreneurial learning process, and in the most successful innovation
ecosystems failure is accepted as an opportunity for the entrepreneur to do
better the next time.
It is not only the level of entrepreneurship that distinguishes Switzerland from
other countries, but also the type of start-ups that emerge. For instance, Swiss
ventures are mainly active in the service sector, and within the service sector
they cater predominantly to businesses (B2B) instead of consumers (B2C) (33).
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Conversely, Switzerland ranks low and trails many of its peers in ‘high-ambition
entrepreneurship’, namely on three important dimensions (34):
• The number of new businesses with strong growth intentions for revenue
and job creation (14th)
• The level of entrepreneurial activity based on innovation like inventions,
technological advances, or business model innovations (13th)
• The extent of international orientation in terms of customers, suppliers,
and strategic partners abroad (14th)
Unfortunately, these types of businesses – innovation based, growth-oriented,
internationally-focused – are the ones that contribute the most to economic
development and wealth creation. They are also those companies in which
venture capitalists seek to invest.
Entrepreneurial Finance
Not surprisingly given the low level of fit-for-investment entrepreneurship,
Switzerland lags far behind other countries in entrepreneurial finance. The
WEF’s Global Competitiveness Index 2010-2011 ranks Switzerland 20th for
venture capital availability, 22nd
for ease of access to loans, and 22nd
for
financing through local equity markets (29).
The problem seems to be especially pronounced for funding sources that are of
special relevance to start-up companies, namely proof-of-concept, pre-seed and
seed financing, and early-stage venture capital.
As is the case in most innovation-based countries, seed-capital for new
ventures in Switzerland is mostly provided by the founders and their family and
friends. Switzerland’s level of informal capital as a share of GDP is comparable
to that of most countries but behind that of countries like Italy, Belgium, and
Slovenia (34). Nonetheless, one study by the FFGS suggests that start-ups
seem to have difficulties raising pre-seed and seed financing, although the
reason for this difficulty remain unclear (35).
The situation is worse in venture capital. With only 0.046% of GDP invested in
new ventures, Switzerland ranks 17th, ahead of countries like Germany and
Austria but trailing countries like France, Norway, Netherlands, Spain, Finland,
Ireland, and Sweden (see Figure 8) (34).
The key question, of course, is whether the problem has its root in the lack of
funding sources (i.e., a shortage of money available for funding), a lack of viable
projects, or some other reason (e.g., administrative hurdles or insufficiently
qualified management). Anecdotal evidence suggests that the number of
projects that could get funded may not be the problem. One recent study found
that ETH Zurich created almost double the number of spin-offs than the large
universities in the United Kingdom such as Oxford and Cambridge. However,
these ETH Zurich spin-offs received considerably less venture capital than their
peers in England, especially in the fields of biotech and IT (also see Box 3) (12).
The broader scope of professional incubation services could be one reason why
foreign university spin-offs perform better. Angel and venture capital investors
are looking for companies that meet a specific set of criteria. Among these
criteria are a certain legal and capital structure and a management team willing
to give up equity in return for venture investment and yield their positions to
more experienced executives if the situation requires. Swiss entrepreneurs
often prefer grants or debt financing over equity funding even at seed or early
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stages. Incubators can help these companies find a structure that positions
them well for institutional funding.
Another reason for low venture investment could be the lack of exit options.
Unlike other innovation leaders, Switzerland does not have a separate
exchange with a streamlined admission process for small growth stock such as
the London Stock Exchange’s AIM. However, given the international orientation
of the venture capital industry and the strong integration of the world’s financial
markets, it is unlikely that the absence of such a market is a major inhibitor of
venture investment in Switzerland.
Finally, cumbersome bureaucratic processes have been brought forward as
possible explanations (32). The most striking example is the one of closing a
business, which can take up to three years and, for the Boston Consulting
Group, “underscores the lack of acceptance of business failure in the Swiss
culture (32).” There is certainly much room for improvement, yet bureaucracy is
unlikely to be a major hurdle to entrepreneurial activity and venture financing.
Closing a business or transferring property is not something venture capitalists
consider when making an investment, and 20 days to start a company seems
not long enough to prompt entrepreneurs to incorporate in another country.
These factors suggest that the major reason for Switzerland’s low venture
capital activity is the low level of the right kind of entrepreneurial activity, namely
innovation-based ventures with growth-intentions and international orientation.
Figure 8: Venture Capital Investments as a Percentage of GDP in 2005
Figure 8: Venture Capital Investment as a Percentage of GDP in 2005
Source: The Boston Consulting Group (32)
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Conclusion
It can be said with confidence that while Switzerland’s overall innovation
ecosystem is in good shape, it does not produce a high level of
entrepreneurship. In fact, there is a large gap between Switzerland’s inventive
capacity and its ability to turn new inventions into viable businesses, as
depicted by Figure 9:
Finding the reasons for this commercialization gap is no easy task, and there
exists only a limited literature on the topic. One often-cited possible factor is
culture, and both GUESSS 2009 and GEM 2009 find that Switzerland’s culture
does not encourage entrepreneurial risk taking. GEM 2009 also cites low media
attention and high opportunity cost as potential blockers of a more
entrepreneurial mindset (34).
Niels Bosma, Research Director at the Global Entrepreneurship Monitor
Consortium, conjectures that the particular sectoral structure in Switzerland
might cause a lot of high-ambition entrepreneurship to take place within
established corporations. In that sense, the low level of entrepreneurship
observed could be a result of the particular strength of the Swiss economy,
influenced by structural circumstances that make employment in Switzerland
more desirable than entrepreneurship (36).
Irrespective of the exact driving forces, the general statement can be made that
a weak entrepreneurial culture leads to a low level of entrepreneurship, which in
turn leads to a low level of entrepreneurial finance. While Switzerland has a
great overall innovation ecosystem and an extraordinarily high innovative
capacity, its low entrepreneurial culture results in a small number of start-ups. In
addition, of these start-ups, a comparatively low percentage is innovation-
based, growth-oriented, and internationally-focused. As a result, venture activity
in Switzerland is low.
Figure 9: The Commercialization Gap
Figure 9: The Commercialization Gap
Source: The Boston Consulting Group (32), referencing the European Innovation Scoreboard 2007
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The commercialization gap is a peculiarity of the Swiss innovation ecosystem
and creates a number of repercussions for policy makers. In developed
countries with high entrepreneurial activity, business incubators focus on
helping entrepreneurs be more successful. In developing countries with low
inventive capacity, economic development is often focused on augmenting R&D
and generating more inventions. Switzerland needs to find a better way of
marrying abundant invention with business while making sure that new start-ups
are of the right kind.
Many ideas have been proposed to strengthen Switzerland’s entrepreneurial
activity. Most of them focus on a transformation of existing incubation
resources. It has been suggested, for instance, that CTI become independent
from the government, decrease bureaucratic processes, take greater risk in its
investments, increase its budget, and merge with the National Science
Foundation (SNF). Other often-mentioned measures to augment Switzerland’s
level of entrepreneurship include:
• Promote an entrepreneurial culture
• Reduce administrative hurdles for doing business
• Strengthen existing tools for technology transfer
• Strengthen the homegrown workforce in science, engineering, and
technology
• Facilitate immigration of highly qualified professionals, in particular serial
entrepreneurs
• Provide a regulatory environment that supports innovation in established
companies
• Foster national efforts to promote Switzerland as the best place for business
and innovation
While all of these measures should be applauded, further research is needed to
quantify how they would increase the level of entrepreneurship in Switzerland.
Such quantification is beyond the scope of this report.
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Box 3: ETH Zurich Spin-Offs
A 2008 study reflects on the performance of ETH Zurich spin-offs and compares them to non-university-affiliated start-ups in
Switzerland and to spin-offs from universities in the United Kingdom. Compared to the average Swiss start-up, ETH Zurich spin-
offs have been found to have much higher survival rates, to attract more venture capital and angel financing, and to provide
higher returns on equity.
Compared to UK universities and for the period under study, ETH Zurich created a higher number of spin-offs per annum than
even the large universities of Cambridge and Oxford. More importantly, ETH Zurich spin-offs have been shown to have higher
survival rates while providing similar returns on equity but creating slightly fewer jobs. The largest difference is in the number of
venture or angel backed spin-offs, where ETH Zurich trails Oxford and Cambridge by a wide margin.
The question “this low proportion of VC/Angel backing raises is whether the spin-offs lack access to sufficient VC/Angel equity
funding or whether a large proportion of them do not possess the characteristics that would make them interesting for VC/Angel
investment (12).” While the report remains ambiguous on this issue, differences in sector focus has been identified as one
possible explanation: While the spin-offs at Oxford and Cambridge are concentrated in traditional VC sectors like life science
(46%) and IT (39%), which have historically attracted the most venture capital, the companies that sprung out of ETH Zurich
were much more diverse and only half of them could be attributed to traditional VC sectors.
Yet even among the traditional VC sectors, ETH spin-offs show below-average backing, so sectoral focus alone cannot be the
sole reason. The study suggests that the spin-off process itself might be responsible for the low backing rate. UK universities
make pre-seed and seed investments (through University Challenge Funds), provide state-of-the-art technology
commercialization services (especially management search), and invest heavily in managing relations with the investor
community. ETH, in return, has historically focused on developing IP licensing agreements with the spin-offs (as opposed to
taking equity stakes) and facilitating relations with infrastructure providers and research funding (through CTI). Only recently has
ETH started to enlarge its consulting services and take small equity stakes.
Figure 10: Comparison of Spin-Off’s Sectoral Distribution, UK Universities vs. ETH Zurich
Source: Oskarsson and Schläpfer (2008) (12)
Figure 11: ETH Zurich Spin-Offs, VC/Angel Backing and Exits from VC-Backed Spin-Offs Only
Source: Oskarsson and Schläpfer (2008) (12)
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Status Quo: Switzerland’s Cleantech Innovation Ecosystem
The main conclusion drawn for the general innovation ecosystem in Switzerland
also applies to the country’s cleantech landscape: ample innovation and a
generally favorable business climate, yet little entrepreneurship.
Switzerland’s Cleantech Economy
The study “Cleantech Schweiz” by Ernst Basler + Partners and NET AG,
published by CTI, examines the state of Switzerland’s cleantech economy (37).
According to the report, 155,000 to 160,000 people (4.5% of the workforce) are
currently employed in the cleantech sector, accounting for CHF 18-20 billion of
total economic output (3.0-3.5% of GDP).
The report concludes that cleantech companies find very favorable conditions in
Switzerland, including a liberal labor market, high level of education, high
productivity and income level, low taxes, and a stable macroeconomic and
political environment. The report also points out, however, that there is little
active public support for cleantech companies in general, especially for creating
domestic demand for their products (market pull):
“Im Vergleich mit konkurrierenden Ländern in Europa werden die
Massnahmen zur aktiven Förderung als zu wenig weit entwickelt
empfunden (37).“
The study also notes that most economic growth in the cleantech sector comes
from existing cleantech companies or from established companies that shift
resources from non-cleantech activities into the sector.
Cleantech Invention
Switzerland creates much of its cleantech invention through EPFL and ETH
Zurich, the technical universities of applied sciences, three leading research
institutes (EAWAG, EMPA, PSI), and high corporate R&D spending. It is said
that the close collaboration between research institutes and large corporations
is highly beneficial for the country’s inventive capacity, as is the broad spectrum
of high-quality applied research (37).
The Swiss Federal Institute of Intellectual Property is currently conducting a
Figure 12: Switzerland’s Share of Total Global Patent Registrations
Figure 12: Switzerland’s Share of Total Global Patent Registrations
Source: Masterplan Cleantech Schweiz (6), referencing Fraunhofer ISI
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study on the number of cleantech patents registered in the recent past. Initial
data presented in the report Masterplan Cleantech Schweiz reveals that 8,000
cleantech patents (15% of total patents) have been registered between 1991
and 2007. Between 2000 and 2007, cleantech patent activity has slowed down,
and Switzerland’s share of global cleantech patents has decreased. The study
concludes that while Switzerland’s knowledge base in cleantech continues to
grow, its growth rate is now lower than that of the all industries in
aggregate (see Figure 12) (6).
Cleantech Entrepreneurship
The commercialization gap noted earlier also applies to cleantech: despite
relatively high inventive capacity, there are very few cleantech start-ups. The
“Cleantech Schweiz” finds that the number of new cleantech businesses is
“below average” (37):
„Die Unternehmensgründungen im Zusammenhang mit Cleantech-
Anwendungen sind unterdurchschnittlich. Die Anzahl Spin-offs als
Ausgründungen von Hochschulen ist tief (37).“
A look at the work of incubation organizations as presented in Table 3 confirms
this view:
Table 3: Cleantech Companies Going Through Incubation Organizations
# of Companies Supported
Number of Cleantech Companies
Cleantech Share
CTI Start-Up 180 4 2%
CTI Invest 140 7 5%
Venture Kick 125 8 6%
Venture Incubator 8 1 13%
glaTec 33 1 3%
High-Tech Gründerfonds 150 11 7%
Sources www.ctistartup.ch, www.cti-invest.ch, www.venturekick.ch, www.ventureincubator.ch, www.glatec.ch, www.htgf.de
Box 4: Masterplan Cleantech Schweiz
On November 4, 2010 Doris Leuthard, Head of the Federal Department of the Environment,
Transport, Energy, and Communications, presented the Masterplan Cleantech Schweiz, the
federal government’s national cleantech strategy (6). The Masterplan is a tool for both economic
development and the improvement of the country’s carbon footprint. It formulates a vision for
Switzerland’s role on the global cleantech stage and develops a set of recommendations for
policy makers on the federal, cantonal, and municipal levels.
According to the plan, Switzerland should seek to reduce its resource consumption to a
sustainable level and become a leader in cleantech innovation with international reach.
Leadership in cleantech research, technology transfer, and manufacture are the intermediate
steps for achieving this vision and will create a brand that equates cleantech with Swiss quality.
The stated goal of improving knowledge and technology transfer is particularly important in the
context of business incubation. The report identifies a clear need for improving technology
transfer capabilities and establishes this as one of its main goals:
“Bis 2020 sind die Rahmenbedingungen in Forschung, Wissens- und
Technologietransfer sowie Bildung für eine hohe Innovationsleistung im Cleantech-
Bereich nachweisbar verbessert, sodass die Schweizer Unternehmen das Wissen der
Hochschulen wirksam für ihre Cleantech-Innovationen nutzen können (6).“
While the Masterplan acknowledges the need for improved technology transfer, its action plan
does not explicitly mention business incubation as a potentially effective tool in this endeavor. It
does, however, propose measures that may result in policy frameworks capable of facilitating
the support of business incubators. Nonetheless, the report fails to acknowledge the importance
of cleantech start-up companies in this transition.
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These numbers make it clear that cleantech entrepreneurship in Switzerland is
low, both in general and as a fraction of all university spin-offs.
Cleantech Finance
As a result of the low level of cleantech entrepreneurship, there has been
relatively little cleantech venture capital activity in Switzerland to date.
Bloomberg New Energy Finance has compared the number of venture-backed
cleantech companies in select countries and found that Switzerland ranks 11th,
trailing most of its peers in this metric (see Figure 13) (22).
This finding is in line with Switzerland’s overall low level of venture funding and
supported by anecdotal evidence: neither Emerald Technology Ventures nor
Good Energies, both based in Switzerland and among the largest dedicated
cleantech venture capital funds in the world, have made a single investment in a
Swiss cleantech company (38) (39).
For established companies, the situation seems to be less dramatic, since these
firms have many more financing options available. Yet one study suggests that
the capital market in Switzerland is too restrictive (i.e., risk-averse) when it
comes to financing cleantech companies (37).
Conclusion
Switzerland’s overall innovation ecosystem is outstanding, yet there is little
entrepreneurial activity. What is true for the economy as a whole also applies to
cleantech: while the country has a sizeable cleantech industry, there is very little
start-up activity. This commercialization gap is a peculiarity that other
economies, most notably Israel and the Silicon Valley, do not face.
Many measures have been proposed to augment cleantech entrepreneurship in
the fields of research and innovation, knowledge and technology transfer,
education, networking, and domestic demand. “Cleantech Schweiz” sees an
improvement in innovation support as one of the most important solutions:
Figure 13: Venture-Backed Cleantech Companies by Country
0
0
0.01
0.02
0.04
0.2
0.2
0.4
0.6
0.6
0.8
1.3
1.3
1.4
1.6
1.6
1.8
1.9
1.9
2.2
3.5
3.6
Luxembourg
Greece
India
Japan
China
Spain
Italy
France
Belgium
Germany
Austria
Switzerland
Netherlands
Denmark
United States
Ireland
Sweden
Canada
United Kingdom
Finland
Norway
Israel
Figure 13: Venture-Backed Cleantech Companies per Country
Source: Bloomberg New Energy Finance (22)
Number per Million Population
Notes:
• As at Q3 2009
• Shows the number of portfolio/former portfolio
companies by region per million population
• Based on select regions - does not represent total
global portfolio companies
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“Der Innovationsprozess und die Innovationsforderung spielen eine
zentrale Rolle fuer eine Verbesserung der Situation der Cleantech-
Unternehmen in der Schweiz (37).“
And:
„Die Analyse der schweizerischen Cleantech-Landschaft enthält deutliche
Hinweise darauf, dass gezielte Massnahmen die Innovationskraft,
Exportfähigkeit und Entwicklungsdynamik der Unternehmen positiv
beeinflussen. [...] Will die Schweiz bei Cleantech zur Spitzengruppe der
Innovation Leaders zaehlen und am Wachstum der globalen Cleantech-
Märkte partizipieren, müssen für Unternehmensgründung und -
entwicklung geeignete Rahmenbedingungen geschaffen werden (37).“
In particular, the study mentions better coaching and strategic support for
cleantech entrepreneurs as one necessity if Switzerland wants to belong to the
group of innovation leaders in cleantech. Coaching and strategic support falls
into the core competence of business incubators, which this reports continues
to explore next.
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PART II
BUSINESS
INCUBATION
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Introduction to Business Incubation
About Business Incubation
Business incubation is the process of supporting start-up companies with a
number of services and resources to increase the likelihood of their survival and
accelerate their growth.
Types of Business Incubators
Business incubators differ widely on many dimensions:
• Incubation Models: The five main incubator models are technology
incubators, specialized high-tech incubators, university-based incubators,
community-based incubators, and private/corporate incubators (11).
• Sector Focus: Incubators can either cater to multiple sectors or focus on
any one in particular, including high-tech, biotech, life sciences (medtech,
diagnostics, pharmaceuticals), information and communications technology
(ICT), or non-profit. More than half of all incubation programs have been
found to serve multiple industries, while technology incubators constitute
roughly 40% (18). Some cleantech-focused incubators have emerged in the
recent past, but they are still outnumbered by incubators focused on more
traditional VC industries.
• Service Offering: Incubators provide a wide range of services, as described
in more detail below.
• Physical Presence: While most incubators consider office and laboratory
space as part of their core offering, others are entirely virtual and serve
mainly as information aggregators and networking platforms.
• Funding and Income: Some 21% of incubators have been found to be
government funded, while another 20% are sponsored by academic
institutions (18). Some charge their clients rent in the case of physical space
or fees for certain services. A combination of public and private financing is
not rare. Incubators sometimes take a small equity stake in their clients in
return for the incubation services provided.
Service Offerings of Business Incubators
The services offered by incubators typically depend on the client base as well
as the resources available to the incubator and can include consulting services,
infrastructure, networking, and access to capital (11).
Consulting Services
Strategic and operational advice is probably the core function of a business
incubator. Helping companies select target markets, define the product offering,
determine market entry, design manufacturing set-ups, and resolve other issues
relating to business planning is how incubators add most value.
Consulting services typically also include support for intellectual property
management (e.g., devising an IP management strategy and providing
patenting advice), regulatory compliance, personnel search (management
teams and advisory board members), and technical due diligence, team
development, and project management (17).
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Business incubators either provide these services through in-house resources
or their network of industry experts and professional services providers.
Because it is increasingly difficult for incubators to differentiate themselves
through physical infrastructure, many incubators have started to place heavy
emphasis on consulting services (15).
Physical Space for Offices and Laboratories and Administrative Support
The provision of physical space used to be a central aspect of business
incubation. Companies often have the opportunity to rent office or lab space,
typically at subsidized rates. With the internet economy, virtual incubators have
evolved for which physical presence of companies does not play a decisive role.
Nonetheless, technology incubators oftentimes still do provide physical space.
Co-location of incubation resources and clients does offer a number of
advantages, including better and more efficient coordination between
entrepreneurs and incubator staff, lower costs for shared facilities such as
conference and training rooms and telecommunications infrastructure, and
peer-to-peer learning among entrepreneurs (40).
European incubators have around 5,800 square meters of space for tenants on
average, which is considered sufficient to accommodate 18 firms at any one
time (15).
Incubators sometimes provide administrative services like telephony and
internet as well as conferencing, design, print, copy, and trustee services. In
conjunction with physical office and lab space, these services are usually the
core competency of technoparks.
Incubators often manage close relationships with professional service providers
such as accountants, lawyers, trustees, and human resource counselors,
whose services are often available at discounted rates.
Networking
Establishing links to strategic partners for business development, investors for
financing, industry experts for advice, and other entrepreneurs for sharing of
best practices is a key activity of any business incubator. The best run
incubators have management teams with vast networks that give their clients
access to people and organizations other start-ups would not get. In the more
Figure 14: Core Services of Business Incubators
Consulting Services
• Strategic advice
• Business planning• Product development• Talent recruiting
Infrastructure
• Physical office space
• Laboratory space• Administrative support
Networking
• Corporations, universities, research labs, mentors, industry experts, strategic partners
Access to Capital
• Angels, VCs, corporate investors, banks
• Demo days
Business InbubationActivities
Figure 14: Core Services of Business Incubators
Source: Author’s own figure
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recent past, incubators have started to place even more emphasis on
networking, as they have realized its strategic importance (11). The
Environmental Business Cluster in San Jose claims that its network spans
some 35,000 industry professionals, academics, and investors.
Access to Capital
Related to networking is access to capital, which is typically provided through
the incubator’s relationships with investors. Knowing the investor landscape and
each individual investor’s preferences is key to enable start-ups a targeted and
efficient fundraising process. Incubators are well connected with the investors in
their industry, and these relationships are often initiated by the investors
themselves who see in incubators a potential source of dealflow.
Incubators also provide a set of advisory services around fundraising, such as
financial advice (e.g., for finding the best legal and capital structure) and
assistance in navigating governments’ incentive schemes.
Business Models
Business incubators can adopt one or a combination of three basic business
models (17):
• Fee-for-service model, in which incubator clients pay for the services used,
e.g. rent for office space and a flat fee for advisory services;
• Partnership model, in which the incubator gets a small equity stake of
typically 5-8% in its clients, hoping that these stakes will return cash when
the companies are sold or go public;
• Non-profit model, in which services for clients are free and the incubator is
entirely funded through public or private sources.
The NBIA survey found that nearly 30% of all incubation programs in the United
States are for-profit ventures, but only about 25% are run in the partnership
model (11). Partnership models can be problematic for incubators who depend
on being perceived as honest brokers among the investor community (12).
Taking equity stakes also requires a robust investment process and resources
for monitoring and exiting investments.
Cost Structure of Incubators and Role of Funding
According to a recent study among European business incubators, operating
costs average around EUR 500,000 per annum per incubator. The highest
share of cost relates to staff (41%) followed by client services (24%),
maintenance of buildings and equipment (22%), and other costs such as utilities
(13%). Whilst many incubators are able to recoup a significant proportion of
these costs (averaging around 40%) from tenants, the element of public subsidy
remains high in most cases. At present, some three-quarters (77%) of
European incubators operate on a not-for-profit basis (15).
Box 5: Business Incubation in the United States
The United States has the oldest and largest incubation system with approximately 1,000
incubators spread across the country. These incubators have about 16 tenants on average, with
the average incubation period spanning 3 years. About 25% of the incubators are technology
incubators, with half of those being university-affiliated. Most of the technology incubators were
created between 1984 and 1994 and are supported by public funds. This is especially true for
technology incubators, which receive subsidies that equal up to 85% of their operating
budget (18).
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The source of funding in many situations has a great impact on an incubator’s
strategic focus and tenant selection (11). Government agencies are a primary
source of financing for many incubators, and funding is often available at a
regional and national level. In Europe, public funding accounts for a high
proportion of the set-up costs and around 37% of operating revenue (15). Other
sources of income include contributions from tenants and sponsorship from
corporations, individuals, and other organizations interested in economic
development.
Government support can come in many forms, including cash contributions,
competitive and matching grants, tax incentives in the form of tax credits to
businesses investing in incubators, and low-interest loans (11).
Incubators should try to diversify their income sources in order to avoid
becoming dependent on any single contributor. Predominant government
funding bears the risk of turning the incubator into an economic development
tool, often acting as a not-for-profit organization. Yet incubators need to
rigorously select their clients based on merit, a process that can easily collide
with a government’s economic development plans (11).
Business Incubation Best Practice
The report “Benchmarking of Business Incubators”, published by the European
Commission’s Enterprise Directorate-General, surveyed the European business
incubation landscape and outlined the best practices for establishing and
running a business incubator (15). Here is a list of best-practices sampled from
the Commission’s report as well as other sources (as indicated):
• Business incubators should be designed to support and be part of a broader
strategic framework – either territorially orientated or focused on particular
policy priorities (e.g., development of clusters), or a combination of these
factors.
• A commensurate level of resources and political support is crucial for the
success of incubators (3).
• Central to an incubator’s success is the quality of its management, which
should be comprised of experienced individuals combining strong technical
and scientific skills with entrepreneurial experience. Such management must
be appropriately compensated (17).
• The biggest precondition for success is a sufficient supply of business ideas
and potential entrepreneurs in the region in question.
• Proximity to good-quality houses, hotels, restaurants, and an international
airport are as important as proximity to universities and research
facilities (5). Attractive locations are those that allow entrepreneurs and
investors to live, work, network, and promote themselves (15).
• Incubators should stay connected to their alumni firms and ask them to
provide advice to current tenants (5).
• Links between incubators are important, especially in the case of sector-
specific incubators (5).
• Incubators take time. It is estimated that establishing and scaling an
incubator to its targeted occupancy can easily exceed two years (19).
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• A well-connected board of directors, ideally representing different
stakeholder groups, adds a valuable level of governance which can increase
an incubator’s likelihood of achieving its mission.
• Incubators should strive to achieve a set of well-defined goals and
benchmark themselves against best practice standards.
• Incubators should work closely with the press and ensure broad coverage at
launch. As soon as the first companies graduate, the incubator’s
management should showcase them at conferences and through targeted
public relations initiatives so as to create awareness and increase support
among the greater public and to attract new incubator clients (7).
• Incubators should be selective and require companies to go through a
process of admission (41).
• Building an effective board of directors committed to the incubator’s mission
and to maximizing management’s role in developing successful companies
is an important element of incubator governance.
• Prioritizing management time to place the greatest emphasis on client
assistance, including proactive advising and guidance, results in greater
success and wealth creation for the companies.
• Incubators should maintain a management information system and collect
statistics and other information necessary for ongoing program
evaluation (42).
A successful incubator has a sufficient number of tenants, an optimal rotation
rate, a high survival rate of graduates, and a positive impact on the
entrepreneurial culture of a region (5). The most common causes for incubator
failure are lack of sustained funding, lack of qualified tenants, and
inexperienced management teams (19).
Box 6: Start-Up Selection and Rotation
Incubators must walk the fine line between high occupancy rate (to cover their operating cost
and achieve their mission) and quality of start-ups. Industry consensus acknowledges selective
client admission as crucial to ensure a high probability of survival. An incubator whose start-ups
often fail during the incubation process or shortly after graduation will hardly be able to attract
entrepreneurs, meet its financial objectives, and have a positive feedback on the region’s
entrepreneurial culture. Yet this is not to say that any failure is undesirable – failure is a natural
part of business incubation, and it is precisely the lack of this recognition that is a major driver of
Europe’s relatively poor entrepreneurial culture.
Likewise, clear exit criteria will ensure a certain turnover of client companies, which is desirable.
Surveys show that most incubators limit the maximal occupancy to between 3 and 5 years. In
many cases, however, clients move to other premises or out of the program because their
needs have changed. Stepping up the cost for incubator services (e.g., rent) with every year a
company stays in the program provides an incentive for incubator clients to move out of the
program quickly and make room for new start-ups.
The optimal incubation period, however, also depends on the nature of the start-up. Biotech and
certain cleantech companies with high R&D, for instance, may take longer to get ready to hatch,
while service companies typically gain traction much faster.
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Table 4 summarizes a few key statistics about incubators as presented in the
report “Benchmarking of Business Incubators” (15):
Table 4: Summary of Key Incubator Performance Statistics & Suggested Benchmarks
Setting Up and Operating Average Benchmark
Average capital investment cost EUR 3.7 million n/a
Average operating costs EUR 480,000 p.a. n/a
% of revenue from public subsidies 37% 25%
Incubator space 3,000 m2 2,000 – 4,000 m
2
Number of incubator tenants 27 firms 20-30 firms
Incubator Functions Average Benchmark
Incubator occupancy rates 85% 85%
Length of tenancy 35 months 36 months
Number of management staff 2.3 managers 1:10 – 1:20
% of managers’ time advising clients 39% 50%
Evaluating Services and Impacts Average Benchmark
Survival rates of tenant firms 85% 85%
Average growth in client turnover 20% p.a. 25%
Average jobs per tenant company 6.2 jobs per firm n/a
New graduate jobs per incubator p.a. 41 jobs n/a
Cost per job (gross) EUR 4,400 EUR 4,000 – 8,000
Source: Center for Strategy and Evaluation Services (CSES) (15)
Case Studies
As explained above, business incubators vary greatly along many dimensions,
and each incubator’s service offering is tailored to the specific demands of the
market it serves. Such diversity makes it hard to distill the essence of
successful business incubation – it is all highly circumstantial. Much like with
innovation ecosystems, however, there is an opportunity to learn from
successful incubators.
Case Study #1: Y-Combinator, TechStars, and Seedcamp
Silicon Valley-based Y Combinator is a combination of venture capital firm and
business incubator. Specialized in software and web services, the company
runs two programs each year in which entrepreneurs receive intense coaching
to progress from concept to company. Y Combinator pays $5,000 per team
member and $5,000 per company for a 2-10% equity stake. At the end of each
three-month cycle, the companies graduate with the hopes of continuing their
development, and Y Combinator facilitates introductions to angel investors. The
company has supported more than 172 start-ups since 2005.
Similar to Y Combinator, TechStars is an early-stage venture incubator that
funds its companies with up to $18,000 for a 6% equity stake. Entrepreneurs
receive advice on product and strategy, office space, legal services, and the
opportunity to pitch their idea to investors at the demo day which concludes
each three-month program. There are about 10 companies per class, and 70%
of them go on to raise angel or venture funding.
The same model was copied by Seedcamp in Europe. Seedcamp manages
relationships with over 400 mentors from a network of “company builders” and
acts as a micro and seed fund for start-ups with standard investments of
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EUR 30-50,000. Seedcamp Week takes place in September every year and
concludes with a demo day for investors, after which the most successful start-
ups get to stay in London for another three months.
Other related business incubators include Launchbox Digital, DreamIt
Ventures, and Excelerate Labs, all located in the United States.
Case Study #2: High-Tech Gründerfonds and Carbon Trust
Bonn-based High-Tech Gründerfonds is a public-private partnership investing
out of a EUR 272 million seed-capital fund sponsored by the German
government and a number of corporate partners, including BASF, Siemens,
Bosch, Deutsche Telekom, Daimler, Zeiss, and kfw Mittelstandsbank. The fund
makes seed-investments in the sectors of automation and electronics,
cleantech, enabling technologies, information and communication technologies,
life science, nanotech, and consumer goods. High-Tech Gründerfonds has
made 190 investments to date and its current portfolio includes 11 cleantech
companies.
With its focus on seed financing, High-Tech Gründerfonds closes the gap
between self-funding and venture capital. In addition, it provides its
entrepreneurs with a platform to network with external coaches (with which it
retains umbrella agreements, thereby lowering costs for its portfolio
companies), other portfolio companies, corporations, research institutes, and
investors for follow-on investments. The fund does not, however, offer physical
incubation space.
The Carbon Trust is a not-for-profit organization whose mission is to accelerate
the United Kingdom’s move to a low-carbon economy. The organization
provides a diverse set of services, including advice on how to measure and
reduce corporations’ carbon footprint, commercialize low-carbon technology,
and implement climate change legislation.
The investment arm of the Carbon Trust, CT Investments, co-invests between
GBP 250,000 and 3 million in cleantech companies in the UK. Carbon Trust’s
in-house financial, technical, sectoral, and policy expertise can be leveraged for
the benefits of the portfolio companies. CT Investments runs two funds, one for
seed investments (GBP 0.5 – 1.5 million) and one for venture capital
investments (GBP 0.5 – 10 million).
The Carbon Trust also offers incubation services that cleantech start-ups do not
readily find at existing incubators:
• Strategic Advice: For up to GBP 70,000, start-ups can hire strategic
consultants from the fields of technology transfer, academia, and technology
commercialization.
• Grants: Start-ups can apply for grants for up to GBP 500,000. They are not
required to pay back the grant, yet the Carbon Trust receives a call option on
a co-investment in case the company raises venture capital later on.
• Networking: The Carbon Trust organizes networking events for its
cleantech clients and offers a 4-day Investor Readiness workshop.
Case Study #3: Environmental Business Cluster
The Environmental Business Cluster in San Jose, CA is a full-fledged
business incubator dedicated to the cleantech industry. Started 16 years ago
when cleantech was not yet in fashion, the EBC has served over 180
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companies in providing coaching and mentoring, physical laboratory space, and
access to a vast network of more than 35,000 experts all over the world. With its
service offering and reputation, EBC has been able to attract companies from
all over the United States (some in a virtual incubation relationship) and even a
few from Germany and Japan.
EBC is run by Prescience International, a management consulting firm
focused on technology commercialization. Prescience also runs the San Jose
BioCenter and has experience setting up and running incubation programs all
over the world.
Case Study #4: Kinrot
Kinrot Ventures was founded in 1993 as part of the Israeli Technology Incubator
Program and today claims to be the leading seed investor in water and clean-
tech related technologies worldwide. The incubator is led by a professional
team with experience in water investments and capable of giving substantial
support to entrepreneurs. The current portfolio consists of 13 cleantech
companies (43).
Kinrot is backed by an advisory board made up of leading academics and
industry leaders and has strategic partnerships with Mekorot (Israel’s National
Water Corporation), the Water and Energy Technology (WET) Incubator in
California and the L.A. City Water and Energy Department, the largest utility in
the United States. With this level of support, Kinrot is able to provide
entrepreneurs with a fertile environment for growth and success in the national
and international markets.
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Switzerland’s Business Incubation
Landscape
This section presents the results of our analysis of Switzerland’s business
incubation landscape. It begins with a short general description of business
incubation in Switzerland and a few case studies. It then presents the findings
from our literature reviews and interviews in a question/answer format to make it
more legible.
Business Incubation in Switzerland
At first sight, Switzerland’s business incubation landscape seems small and
manageable and appropriate for the size of the Swiss economy and its level of
entrepreneurship. Digging deeper, however, one begins to realize that there are
multiple layers of business incubation resources to which start-ups have
access, ranging from local economic development agencies
(Standortförderung) to technology transfer offices at universities, business plan
competitions, angel networks, technoparks, coaching and mentoring
organizations, educational institutions, and full-fledged business incubators with
physical office and laboratory space. Appendix B provides a non-exhaustive list
of business incubation organizations in Switzerland. A more comprehensive
overview is provided by Beglé (44).
For most entrepreneurs in Switzerland, one of the first doors to knock on is
KTI/CTI, the government-funded innovation agency. The agency’s officers and
coaches are well connected and can refer entrepreneurs to business plan
competitions, funding schemes, advisory services, technoparks, and other
incubation resources.
Case Studies
Case Study #1: KTI/CTI
CTI is the Federal Innovation Promotion Agency aimed at fostering
knowledge and technology transfer between companies and universities. With
an annual budget of CHF 100 million, CTI promotes market-oriented R&D
programs carried out by joint ventures between Swiss universities and
corporations and fosters the creation and expansion of scientifically-based
companies.
The initiative CTI Entrepreneurship is geared toward promoting
entrepreneurial spirit. One of the most visible programs within this initiative is
Venturelab, which provides customized training programs to help increase
students’ awareness for entrepreneurship. Venturelab also provides coaching
services for high-tech start-ups, jointly with multiple partners, mainly universities
and engineering schools and their technology transfer offices.
Another initiative is CTI Start-Up, which connects entrepreneurs with coaches
and industry experts. Of the 180 ventures supported by the initiative, 85% are
still in business, and 4 are active in the cleantech space.
As an extension of CTI Start-Up, CTI Invest is a public/private partnership
introducing companies with the CTI Start-Up label to a network of angel and
venture capital investors in Switzerland and Europe. To date, a total of 7
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companies (out of roughly 140) funded through CTI Invest are active in
cleantech.
KTI/CTI is clearly the cornerstone of the Swiss incubation landscape, and as
such its actions can have tremendous impact on the start-up scene. Some
experts have criticized the organization’s risk aversion: Of the more than 200
start-ups that have received the CTI Start-Up label since 1996, 85% are still in
business (37). While this success ratio is in line with the average business
incubator, it seems high for a government-funded economic development
agency whose primary objective should be to correct a market failure (37). In
the case of business incubation, market failures are more likely to occur
upstream, where the technology risk is highest. By extension, KTI/CTI should
have a lower success rate, indicating that they are taking greater risk in backing
companies.
Case Study #2: Eclosion
Geneva-based Eclosion is a full-fledged business incubator focused on life
science and run as a public-private partnership with the Canton of Geneva. The
Canton covers the cost of a 1,000 m2 laboratory, while the operating costs are
covered through a seed-fund set up with outside investors, including Index
Ventures and Sofinnova Partners.
Eclosion’s value proposition is unique in that the incubator helps entrepreneurs
much higher upstream than most conventional incubators. Scientists need only
make a new discovery and Eclosion will help them determine if there is potential
for commercialization. In so doing, Eclosion assumes some managerial
functions in order to allow the scientists to focus on their research. When a
company is incorporated, Eclosion takes a small equity stake and often brings
in experienced life science managers from outside to run the company.
Eclosion supports its entrepreneurs from discovery in the lab all the way
through the technology commercialization path. This service offering has
allowed it to attract intellectual property from Italy, France, and even California.
Case Study #3: glaTec
glaTec is an EMPA-affiliated business incubator focused on material sciences
and financed by contributions from EMPA, the City of Dübendorf, the City of
Zürich, and Glow, a regional economic development agency. While the core
offering of glaTec focuses on patent strategy, most of the coaching services are
brought in through CTI Start-Up. The incubator is selective in admitting
companies as it wants to ensure a high success rate.
Case Study #4: BlueArk
BlueArk is the latest offspring of The Ark Foundation, an economic development
initiative in the Canton of Valais. Located in Visp, BlueArk targets the renewable
energy sector, mainly hydropower. Incubation services include business
coaching, networking, fundraising assistance, and physical infrastructure
(200 m2).
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The State of Switzerland’s Cleantech Incubation Landscape
In this section we present our findings from literature review, interviews, and
other informal sources. The interviews were structured to explore three main
topics:
• Gap Analysis: Does Switzerland need a cleantech business incubator?
What is currently missing in the cleantech business incubation landscape?
• Impact Assessment: How would a cleantech business incubator augment
entrepreneurship in Switzerland? How would it make existing start-ups more
successful?
• Implementation: How should a cleantech incubator be structured to
maximize its effectiveness?
Regarding implementation, it is important to note that this study does not
attempt to make detailed recommendations about what types of organizations
and people should be involved in launching, managing, and funding a potential
cleantech incubator. Questions of implementation addressed in this report
concern best practice only, and all findings will have to be revisited when
developing the incubator’s business plan.
While the conversations with entrepreneurs, policy makers, investors, and
incubation experts have provided us with many helpful insights into the Swiss
incubation landscape, we realize that our survey is a collection of individual
opinions and far from empirical in both its methodology and sample. Wherever
possible, however, we have tried to collect empirical data to support our
analysis.
Gap Analysis
1) Are there sufficient coaching and management resources?
Entrepreneurs and incubation experts alike have stated that start-ups currently
have multiple options to gain access to coaches and mentors for generic
business consulting. In particular, CTI Start-Up’s pool of coaches and
professional service providers offers a good selection for entrepreneurs to
choose from.
The same general conclusion seems to be true for cleantech. Basler + Partner
et al. write in their study „Cleantech Schweiz“:
„Die Gespräche mit den Unternehmen und Experten deuten darauf hin,
dass zum Thema Coaching bereits ein gutes und breites Angebot
besteht, nicht zuletzt mit dem KTI Start-up-Programm (37).“
Based on our experience, however, we believe that there is a lack of
experienced industry experts who know how to build and grow cleantech
companies and whose consulting capacity extends beyond generic questions of
business planning. Cleantech entrepreneurs currently do not have ready and
efficient access to a global network of subject-matter experts, presumably
because it is too costly for local or industry-agnostic business incubators to
establish and retain such a network. We believe that it is precisely such a
specialized coaching resource that adds most value, since many entrepreneurs
do not seek basic help in starting and running their businesses but often need
support for a specific and clearly defined problem.
In business incubation, coaching and mentoring have to be seen as different
from management. In Switzerland, there is a lack of experienced managers and
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serial entrepreneurs that can either provide management capacity to new start-
ups or assume management responsibility in these companies. Venture
capitalists are looking for seasoned leaders with proven track records, and the
dearth of such managers and entrepreneurs is a barrier for attracting more
venture capital.
2) Is there sufficient physical incubation space?
SwissParks, the Association of Swiss Technology Parks and Business
Incubators, has 24 members spread across Switzerland. Business parks
provide valuable physical office and sometimes laboratory space and
administrative services for their clients.
While technoparks offer ample office space, some of the entrepreneurs we
interviewed expressed their dissatisfaction with the availability of laboratory
space and the sometimes highly bureaucratic processes in obtaining access. A
need has been expressed for more readily and easily accessible laboratory
space, ideally co-located with offices, as well as pilot plants to test technologies.
3) Are existing networking platforms comprehensive and effective?
Networking opportunities for technology entrepreneurs in general (not just
cleantech) have been reported as few and far in between. While some
programming is provided (most notably by CTI Invest) and welcomed by start-
ups, there is no real start-up cluster that allows entrepreneurs to meet on a
regular basis to share experiences and best practices. Some entrepreneurs we
have interviews expressed a strong desire for such programming.
For any entrepreneur, a network can be categorized in many different ways.
Four of the most important networking groups include entrepreneurs, industry-
experienced advisors, strategic partners and customers, and investors. The
networking platform for cleantech entrepreneurs is not fully developed yet, and
there is a special need for experienced industry advisors and strategic partners.
4) Is there a funding gap?
We have raised this question multiple times throughout this report. In well-
functioning markets, conventional market forces ensure that financing is
available to viable businesses which offer commensurate financial returns for
the risk they pose to investors. While we have not found much evidence for a
market failure preventing capital flow, our interviews show that opinions about
the existence of a funding gap differ widely but are tilted in favor of the
existence of a gap. The core question, however, is whether there is a lack of
funding sources, a lack of fundable projects, or reluctance on the part of the
entrepreneurs to relinquish equity.
Basler + Partner et al. have asked 13 cleantech companies, all of which have
launched in the past five years, to comment on the ease of fundraising (see
Figure 15) (37). 8 out of 13 respondents found it “very easy” or “rather easy” to
access venture capital. This survey does not suggest the presence of a funding
gap, although the validity of this conclusion is severely inhibited by the small
sample size.
The ETH Zurich spin-off study found that 47% of its respondents wanted to see
“an increase in proof-of-concept funding, giving much credit to the funding gap
theory […]. A smaller fraction (20%) would like ETH to take more equity stakes
in its spin-offs and only 17% wanted ETH to generate more VC/Angel interest in
the spin-offs, possibly confirming some of the founders’ reservations against
giving away control mentioned earlier (12).”
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This last point is important. Anecdotal evidence from our interviews suggests
that Swiss entrepreneurs are indeed more reluctant to give up equity in return
for funding, preferring non-refundable grants or debt financing even at early
stages. These preferences stand in clear contrast to those of the entrepreneurs
in the most successful innovation ecosystems, where start-ups are much more
willing to engage in the venture process.
Nonetheless, start-ups have difficulty securing funding in the proof-of-concept
and pre-seed stages when it is too early for venture capitalists to invest and
when angel investors would need a lot of domain expertise to feel comfortable
taking on such high technology risk. In other countries, proof-of-concept and
pre-seed funding is often provided by government agencies (e.g., the Carbon
Trust in the United Kingdom and High-Tech Gründerfonds in Germany) and in
the form of grants (most notably in the United States). It is against this
background that KTI/CTI is perceived as too restrictive and its processes as too
bureaucratic.
The question of whether or not it is sound economic policy to provide such
seed-funding using taxpayer’s money is a political one. In the view of most
economists, for the government to make private investments there needs to be
a market failure, such as systematic misinterpretation of risk on behalf of private
investors. Yet even if such a market failure exists, it remains questionable if the
government is indeed able to allocate risk capital effectively and efficiently (37).
So to us it remains unclear whether a funding gap actually exists or whether the
difficulties in raising seed-capital stem from the poor quality of start-ups versus
entrepreneurs’ reluctance to give up equity. According to Swiss venture
capitalists, the problem is indeed an insufficient number of businesses with
viable technologies and/or competent management.
More research is needed to deal with these questions, and we propose that the
establishment of a seed-fund be investigated as part of a separate study.
Figure 15: Ease of Fundraising for Cleantech Start-Ups in Switzerland
Figure 15: Ease of Fundraising for Cleantech Start-Ups in Switzerland
Source: Ernst Basler + Partner (37)
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5) Which incubation services are currently missing, irrespective of
industry?
We have already answered this question in part: cleantech-specific coaching,
mentoring, and networking; greater access to laboratory equipment and pilot
plants; and potentially proof-of-concept and seed-funding.
However, there is evidence that better information aggregation and
dissemination would help connect entrepreneurs with existing resources. The
GUESSS 2009 survey finds that a platform for general information related to
starting a company is the most important incubation element for students,
followed by start-up coaching, university-sponsored seed-funding, and
incubators (33). When asking about the actual use of existing resources,
however, the study found that only about 8% of all students actually use them.
So there seems to be a discrepancy about students’ assessment of the
importance of these resources and their actual use (34).
One of the reasons for this discrepancy could be the lack of information about
the existence of those resources. The bulk of students are not informed about
funding or incubation opportunities inside and outside their universities. The
GUESSS authors conclude that increasing the level of information might be one
of the simplest levers to increase entrepreneurial activity. It is also important to
note that, once these resources are accessed, students are usually content with
the quality of service received (34).
The ETH Spin-Off Study (12) surveyed spin-offs with the question “through
which of the following measures could ETH [Zurich] further improve its
technology transfer performance?” The results are shown in Figure 16.
Figure 16: Measures Improving ETH’s Technology Transfer Performance
Figure 16: Measures Improving ETH’s Technology Transfer Performance
Source: Oskarsson and Schläpfer (12)
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Impact Analysis
6) Will a cleantech business incubator be able to augment
entrepreneurship and bridge the commercialization gap?
The main purpose of business incubators is to increase the likelihood of survival
of their clients. This implies that incubators deal primarily with existing
entrepreneurs but leaves open the question whether business incubators can
increase the level of entrepreneurship (i.e., the number of entrepreneurs with
the intention of launching a business).
We have not been able to find empirical evidence for a causal relationship
between the amount of incubation resources and the level of entrepreneurship.
Most academic literature concerned with business incubation impact focuses on
survival rates and best practice in an environment with a given level of dealflow.
One study finds that the success of incubators is dependent on the quality of
the surrounding entrepreneurship infrastructure, and that top incubators operate
in areas where significant efforts have been made to improve this
infrastructure (45).
Another study finds a correlation of 0.69 between R&D transfer capabilities and
the business start-up rate, where R&D transfer capabilities can be seen as a
proxy for the amount and quality of business incubation (23). There are two
difficulties in interpreting this result, however. First, a positive correlation does
not provide information about the direction of the causality. Second, R&D
transfer capabilities were measured through questionnaires, where participants
were asked about the perceived amount and quality of R&D in their country.
Finally, another report states that “as American evidence proves, the growth of
new technology-based firms leads to an increase in entrepreneurial activity. […]
Both incubators and business angel networks are a tool for bridging the
entrepreneurial gap and can contribute to the development of a virtuous circle
[…] (5).” These statements allow for the conclusion that to the extent incubators
are able to accelerate and increase their clients’ growth, they can increase the
number of start-ups. Upon closer examination, however, we found that the
evidence underlying these statements is rather flimsy.
Due to the absence of empirical studies, we tried to obtain anecdotal evidence
from studying specific cases. A report on Atlanta’s ATDC incubator, for
instance, finds the following (45):
“The Atlanta business community widely regards the launch of the ATDC
incubator as starting-point of the region’s highly successful information-
and technology cluster. This is not limited to the fact that ATDC has
hatched a large number of viable companies but also the fact that ATDC
has been a dominant force in improving the entrepreneurship
infrastructure by educating lawyers, accountants, investors and other
private advisors to support the regional entrepreneurs (45).”
Another valuable case study is presented by Israel, which has operated a highly
successful technology incubation program since 1991 (see Box 7). The 1999
Global Entrepreneurship Monitor report on Israel found that the “existing
[incubation] programs do promote new firm creation but not to the extent
demanded by their declared goals or by the level of service meant to be
supplied (23).”
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Perhaps the strongest anecdotal evidence for the positive impact an incubator
can make on a country’s level of entrepreneurship is provided by Germany’s
High-Tech Gründerfonds (HTGF). By 2005, the year HTGF was launched, the
number of seed investments in Germany had reached a historical low of 20
deals, down from 272 in 2000. Over the next three years, HTGF revitalized the
market for seed funding, and the number of seed deals grew almost ten-fold by
2008 (68 in 2006, 128 in 2007, and 192 in 2008). Whereas HTGF’s market
share was 76% in 2006, it subsequently decreased over time to about 40%,
which is evidence that the fund played the role of an “icebreaker” creating a
fairway for other investors to follow (46) (47).
In sum, while it is difficult to make the conclusive statement that business
incubation does systematically increase the level of entrepreneurship, it is well
known that Incubators have positive spillover effects with the potential to
increase start-up activity. Anecdotal evidence, most notably the cases of Israel
and High-Tech Gründerfonds, suggests that increasing entrepreneurship is
indeed within the realm of an incubator.
7) Will a cleantech business incubator help existing cleantech start-ups
be more successful?
As shown by the gap analysis, there are some resources currently missing from
Switzerland’s cleantech business incubation landscape. Providing these
resources will help cleantech start-ups be more successful; for instance,
cleantech-experiences advisors or investors can help start-ups adopt a greater
international orientation or make them fit for venture capital. The NBIA survey
has shown that 77% of all incubator clients thought that their participation in an
incubator program had accelerated the development of their business, while
55% indicated that the program increased their success in raising funds (17).
Box 7: Israel’s Technology Incubator Program
In 1991, Israel’s Ministry of Industry, Trade and Labor launched the Technology Incubator
Program in an attempt to give “fledgling entrepreneurs an opportunity to develop their
innovative technological ideas and set up new businesses […] (61).”
The program is set up as a government support scheme for non-profit and for-profit technology
incubators and provides between USD 350,000 and USD 600,000 in grants and soft loans to
qualifying projects. An entrepreneur who wishes to take advantage of this support applies to
one of the 24 technology incubators. The incubator screens the application and applies to the
Technology Incubator Program for funding for successful applicants. Upon approval by the
Program, the grants are made available for a maximum of 2-3 years based on the specifics of
the project.
The 24 incubators house around 200 projects at any given time. By the end of 2006, 1,000
projects had matured and left the incubators, attracting a combined $1.5 billion in private
investment. The Ministry comments on the importance of the program as follows:
“The technological incubators have become massive repositories of potential ideas for
new high-tech venture companies in the future. It is well known that the incubator
program is the NO. 1 manufacturer of startups in Israel today, establishing over 70 new
startups each year. The program has positioned itself as an important source of deal-
flow for the venture capital industry that is searching constantly for new technologies in
which to invest in (61).”
To determine whether the Technology Incubator Program has increased Israel’s entrepreneurial
base would require data ranging back to the 1980s. Such data is not available. More recent
data, such as that presented in the GEM Israel 2007 report, shows stagnating or slightly
declining entrepreneurial activity (62). Interpreting these results, however, is tricky due to some
idiosyncratic events that took place in Israel over the past ten years (e.g., the 2006 war with
Lebanon). One must be careful trying to deduce general lessons from Israel’s unique and
irreproducible circumstances.
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8) Will a cleantech business incubator be able to attract start-ups from
abroad to locate in Switzerland?
Empirical evidence answering this question is not available. In fact, “there have
been no studies, to date, on why some founders move when starting. Programs
to attract entrepreneurs at the time of start-up may have promise, but, at least to
date, there is not much evidence of entrepreneurs being mobile at this stage of
their careers (48).”
The anecdotal evidence is ambiguous at best. Entrepreneurs have expressed
some level of willingness to relocate their start-up if an incubation resource is so
valuable that it would materially augment the start-up’s prospects. In fact,
Eclosion and Environmental Business Cluster were both able to attract
entrepreneurs from far away.
On the other hand, entrepreneurs often have deep roots in the vicinity of their
location, especially when they have spun out of a university and might still be
using university resources. In such instances, relocation of the start-up would
come at considerable social and economic cost which must be recovered by
superior incubation resources.
9) If a cleantech incubator with physical infrastructure is set up, will it
reach sufficient utilization?
The low level of cleantech entrepreneurship in Switzerland makes it improbable
that an incubator with physical infrastructure of average size (3,000 m2) would
be able to achieve the 85% average occupancy rate. This situation can change
over time, however, and such infrastructure can be added at a later stage in
case of sufficient demand.
10) How does education and training of students impact
entrepreneurship?
It has been shown that training and educating students on topics of
entrepreneurship has a positive effect on a country’s entrepreneurial
activity (49). Interestingly, inspiration has been found to have the highest effect
on increasing subjective norms and intentions towards self-employment among
students (49). A cleantech incubator could therefore make a valuable
contribution by partnering with existing organizations such as Climate-KIC and
devising a program tailored to the needs of Swiss students with the goal of
increasing entrepreneurial intentions.
Implementation Analysis
11) How should the incubator be set-up and run?
Many volumes have been written about general best practices in running a
business incubator. As far as implementation goes, this report is only concerned
with a few basic principles as they pertain to the case at hand.
The respondents to our survey have recommended the following guidelines be
observed when setting up an incubator:
• It is important that start-ups can operate in close proximity the resources
they perceive as critical to their success;
• Incubator management must consist of experienced and well-connected
people free of self-interest;
• The incubator should, as much as possible, make use of existing incubation
resources;
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• The incubator’s management should be allowed to run the organization
independent from political influence.
More information on best practices can be found in the European Commission’s
report “Benchmarking of Business Incubators” (15).
12) Should the incubator be run as a separate organization or as a new
initiative of an existing incubator?
Given the many existing cleantech incubation resources, it seems most efficient
to pool only synergistic services but outsource infrastructure and other services
where location is important. In particular, some resources – like CTI Start-Up’s
coaching platform – need not be replicated but just enhanced with cleantech-
specific services.
13) Who should fund the incubator?
To the extent that private agents are better at allocating capital than
governments, incubators should seek as much private funding as possible.
However, the recent economic turmoil has made it harder for cleantech
investors to raise new funds, and we expect the same to be true for business
incubators. In addition, governments around the world have begun to deploy
massive amounts of money for investments in the cleantech industry (most
notably the United States, Ireland, and Israel), and the German government has
contributed a considerable part of the EUR 200 million that constitutes High-
Tech Gründerfonds’ money pool. It will be extremely difficult for any privately led
incubation initiative to raise these levels of money, even if adjusted for
Switzerland’s scale. So if Switzerland wants to become a significant player on
the global cleantech stage, the government must commit financial resources to
promote cleantech entrepreneurship.
In 2008, a working group chaired by David Mott from Oxford Capital Partners
prepared a report to the Shadow Cabinet of the United Kingdom about the
launch of a cleantech business incubator (17). In this report, the group weighed
the benefits and drawbacks of government funding and found that the role of
government funding should be to leverage private sector investment. The report
proposed a ration of 4:1, meaning that each pound (GBP) from private sources
should be matched by four pounds from the government.
We demonstrated earlier that public investment in cleantech makes economic
sense. Climate change has been described as the “the greatest and widest-
ranging market failure ever seen (50)” and therefore calls for strong government
intervention to level the playing field for different energy sources and to allow
renewable energy technologies to develop their full cost-reduction potential
through learning and economies of scale. The Stern Review has called for three
policy measures: (i) carbon pricing, (ii) removal of barriers to behavioral change,
and (iii) technology policy. Supporting business incubation falls under category
(iii) and the report states that “there are good economic reasons to promote new
technology directly” and that “policies to support the market for early-stage
technologies will be critical (50).” Business incubators have also been found to
be a more cost-effective economic development tool than conventional
programs to attract firms to local regions (51).
There is thus a strong role for the government in supporting a cleantech-
focused business incubator. To minimize market distortions and spending
inefficiencies caused by political agendas, self-selection issues, and moral
hazard, we advocate for the least intrusive support scheme and a strong
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involvement of private agents, possibly in a public-private partnership. In
practice, matching funds have proved to be successful.
14) Should the incubator make pre-seed and seed investments? If so, on
behalf of whom?
Making investments has repercussions for the set-up and organization of the
incubator. Evaluation, portfolio management, and reporting require incubators to
either establish or procure a whole range of services. In addition, there would
need to be adequate governance to minimize moral hazard and ensure that
only viable businesses receive support.
Making investments is also a question of financial resources, and it is unclear if
these resources are currently available. We defer the definite answer to this
question to anybody concerned with implementing the recommendations of this
report.
15) What types of organizations and initiatives should be part of a
cleantech business incubator?
The ultimate goal for any innovation ecosystem is for a cluster to emerge where
entrepreneurs can find all the resources they need to grow their businesses.
Given Switzerland’s size, a coordinated and concerted effort has the highest
chances of being successful. To that end, we recommend making all interested
stakeholders part of the cleantech incubation landscape and seeking active
participation among universities, research institutes, technoparks, angel and
venture capital investors, incubators, and advisors, provided that such
coordination can be achieved efficiently.
At the same time, some organizations – like KTI/CTI – already have platforms
with well-established processes. Therefore, we do not rule out the possibility
that the best way for a cleantech incubator to start is to be housed within an
existing incubation organization, but we defer any such judgment to further
analysis.
Finally, it must not be forgotten that competition is beneficial in almost every
industry as it forces industry players to become a cost leader, value leader, or
exit the industry. Competition in the Swiss cleantech business incubation
landscape need not be bad, either. We caution, however, that competition or
geographic dispersion could easily lead to a waste of otherwise scarce
resources. As stated earlier, Switzerland does not need more incubators, it
needs better ones. In case local political agendas result in a large number of
geographically dispersed incubators, we highly recommend that each incubator
focus on a specific sector so as to be able to build up real, value-adding
expertise.
16) How important is regional diversity?
There seem to be two answers to this question: a practical one and a political
one. The practical answer is that “wide geographical dispersal negatively affects
[incubators’] performance, since it contrasts with the general tendency of high-
tech industries to agglomerate (52).” This is especially true for countries with
low levels of entrepreneurship, and it follows that it would be rather impractical
to have decentralized incubation resources in Switzerland. If the country wants
to create a cleantech cluster with the potential to attract foreign start-ups, it
must focus its efforts and create a hub in a single location or, if appropriate, in
two regional hubs. Moreover, absent a cluster or university affiliation, there
seems to be little reason for a start-up to locate outside metropolitan areas
except for the entrepreneur’s personal preferences.
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The political reality, however, is such that there is much will and often a
considerable amount of resources on a cantonal and sometimes even municipal
level. It is clear, however, that regional support will only be made available for
initiatives whose benefits accrue to the constituents of the funder. Decision
makers will therefore have to weigh the benefits of regional concentration
against the availability of political support.
If political agendas result in many different, localized incubators, then we again
recommend that these incubators specialize in certain sectors.
17) How important is sectoral specialization?
Cleantech is a broad sector spanning many different scientific disciplines and
serving a wide range of markets. Offering incubation services to all cleantech
sub-sectors therefore presents considerable challenges.
The literature is ambiguous on whether sectoral focus makes systematic sense
or not. A study that benchmarked different incubators against one another found
that a higher degree of specialization correlated with an incubator’s
success (45). However, the study also admitted that “one could argue that a
high level of specialization will hamper performance as it becomes increasingly
difficult to compile a critical mass (45).”
The merits of specialization are intuitive: companies in the material science
sector have fundamentally different needs from renewable energy or water
firms, and covering all of these needs within a single incubator requires
significant resources. Incubator managers often have expertise in only a few
sectors and may find it hard to add the value needed to help accelerate a
company’s route to market (17).
Some argue that it is precisely the diversity of sectors that makes incubators
such great places for cross-sectoral learning. The people managing start-ups
are entrepreneurs first and foremost, and there is much value to be extracted
from each other’s experiences. In addition, firms often face a set of common
challenges, including regulatory uncertainty, difficulty in fundraising, and access
to government officials that sometimes reside in the same department, to name
just a few.
Practice shows that both models can succeed. The Environmental Business
Cluster is an example of an incubator serving all cleantech spaces, while glaTec
and has taken an exclusive focus on material sciences firms. In the end, the
resources available to operate the incubator will partly dictate how specialized it
can be.
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PART III
SUMMARY &
RECOMMENDATIONS
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Summary of Analysis
Synthesizing the preceding analysis of Switzerland’s innovation ecosystem and
incubation landscape as well as the responses from our interviews, we have
arrived at the following conclusions:
Innovation Ecosystem
• Switzerland’s general inventive capacity is among the highest in the world
and its overall ecosystem is strong overall but week in terms of
entrepreneurship and the commercialization of new inventions.
• The general level and quality of entrepreneurship is low, and this
commercialization gap seems to be a peculiarity other economies do not
face.
• As a result of the low level of entrepreneurship, the amount of
entrepreneurial funding (especially venture capital) is low, both overall and in
the cleantech sector.
• Switzerland’s cleantech innovation ecosystem is fairly well-developed,
except for some important and clearly defined incubation resources that are
currently missing and need to be supplied.
• Switzerland’s cleantech entrepreneurship is low, as evidenced by the small
numbers of cleantech start-ups that have applied for support through
national incubation programs and the few cleantech start-ups that have
emerged from universities.
• The state of Switzerland’s business incubation landscape is fair, with some
important resources currently missing.
Business Incubation
Gap Analysis
1. General coaching and mentoring resources are adequate, but there is a
need for additional industry experts to specifically coach and manage
cleantech start-ups.
2. Physical office space is abundant, yet entrepreneurs would benefit from
improved access to laboratory equipment.
3. More networking opportunities are needed, especially for sharing
experiences and best practices among technology entrepreneurs. Existing
networking platforms should be enlarged with cleantech-experienced
industry advisors and strategic partners.
4. Entrepreneurs have difficulty securing proof-of-concept and pre-seed
funding, yet it is unclear whether this is due to a lack of funding, the poor
quality of start-ups, a lack of experience on the part of the entrepreneurs, or
entrepreneurs’ reluctance to relinquish equity.
5. An information aggregation and dissemination platform is needed to more
effectively connect entrepreneurs with existing incubation resources.
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Impact Analysis
6. There is no empirical evidence for a direct causal relationship between
business incubation and the level of entrepreneurship. It is commonly
acknowledged, however, that incubators often create positive spillover
effects within an innovation ecosystem. In addition, numerous case studies
show that incubators can indeed have a positive impact on the overall level
of start-up activity.
7. A number of additional incubation resources have been identified that have
the potential to materially augment a start-ups probability for growth and
success.
8. While attracting foreign entrepreneurs to locate in Switzerland is
challenging, an incubator has the potential to do so if it is equipped with the
resources to provide adequate incentives.
9. The current level of cleantech entrepreneurship makes it improbable for a
physical incubator of average size to achieve a sufficient utilization rate.
10. Education and training on topics of entrepreneurship have been shown to
have a positive impact on students’ entrepreneurial intentions.
Implementation Analysis
11. A cleantech-focused incubator could provide most of the currently missing
incubation resources in a lean organization with permanent management
and physical presence, yet without offering office or laboratory infrastructure
to clients. Such infrastructure can easily be added at a later stage in case of
sufficient demand.
12. Any cleantech incubation effort should, whenever possible, leverage
existing resources to achieve maximum capital efficiency and incubation
effectiveness.
13. Incubators should seek as much private funding as possible, yet
government involvement is both advisable and required given the economic
benefits of business incubation and market failures in the energy sector.
14. Making seed investments through the incubator requires that a whole range
of resources be established or procured. The decision to do so requires
more analysis and better knowledge of the available financial resources.
15. Cleantech incubation should occur in a coordinated and participatory
manner, incorporating all stakeholders of the innovation ecosystem. While
competition is not necessarily bad for the incubation landscape in the long
term, it could easily lead to high opportunity costs and a waste of scarce
resources.
16. A centralized incubator serving all Swiss cleantech start-ups would achieve
the highest effectiveness while enabling the emergence of a cluster.
Political self-interests favoring locally dispersed outfits must be challenged.
17. Sectoral specialization has many benefits but also some drawbacks. Both
models have succeeded in practice but it remains unclear which would be
the optimal model for Switzerland. The low level of entrepreneurship might
favor a broad focus, at least in the early stages of the incubator.
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Recommendations
In line with the above conclusions, we recommend that a new cleantech-
focused business incubator be set up as described hereafter.
We reiterate that this report is, by design, not primarily concerned with
questions of implementation. The following recommendations do occasionally
include suggestions for how to establish and manage the incubator, but only
insofar as they relate to high-level principles or best practices.
Service Offering and Fit with Existing Incubation Landscape
A new cleantech business incubator (henceforth referred to as “Swiss
Cleantech Business Incubator” or “SCBI”) should be launched to offer
synergistic and missing services while leveraging existing incubation resources
where available. Synergistic services are defined as those which all incubators
must provide but which are inherently costly to establish and retain, such that
synergies (economies of scale and network effects) are created when they are
managed in a centralized manner.
SCBI can either be set up as a new, stand-alone entity or as a separate
initiative within an existing incubation framework. We advocate the leanest,
most cost-effective implementation. If there is an existing organization that
would provide a good fit in terms of mission and synergies, we recommend that
SCBI be launched within such an organization.
In either case, SCBI’s mission should be to complement the resources and
activities of existing incubation schemes across the country. In particular, it
should focus on those resources which are either perceived to be insufficient in
the present-day incubation landscape or believed to augment cleantech
entrepreneurship in Switzerland.
Information Aggregation and Dissemination
SCBI should offer a platform which aggregates and makes easily accessible
any information about cleantech business incubation in Switzerland, including
information about funding schemes, business plan competitions, coaches and
mentors, angel investors and venture capitalists, office and lab space, and
professional service providers. Many of these resources are already available
on platforms like www.gruenden.ch or www.cleantech-alps.com so that SCBI’s
platform need only aggregate such content and tailor its presentation to the
needs of the cleantech industry.
Coordination and Facilitation of Existing Incubation Resources
As the country’s foremost information aggregator for cleantech start-ups, SCBI
should play a coordinative role between existing incubation organizations.
Knowing the service offerings of different incubators and the availability and
procedures for other resources will make SCBI the first point of contact for start-
ups.
Physical infrastructure, for example, is a resource that is already offered by
many incubators. However, many entrepreneurs have expressed dissatisfaction
over the availability of this infrastructure or the bureaucratic processes involved
in obtaining access. SCBI should work with providers of infrastructure and
entrepreneurs to mitigate these problems. Where infrastructure is missing, SCBI
could arrange for financing that allows for expansion of existing facilities.
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Networking
Our analysis has shown that solid network structures for cleantech start-ups are
missing in Switzerland and that entrepreneurs will greatly benefit if these are put
in place. Due to the low number of existing technology and cleantech start-ups
in Switzerland, networking is a prime example of a synergistic service which is
best managed in a coordinated fashion and by an organization with a national
scope.
SCBI’s networking efforts should focus on cleantech entrepreneurs,
stakeholders (prospective clients, strategic partners, suppliers and
manufacturers), advisors and experts, management and board talent, and angel
and venture investors.
Networking is also a prime example of how existing platforms can be leveraged:
• CTI Start-Up already has relationships with a large number of coaches and
professional service providers. More importantly, it also has processes in
place for hiring and compensating these people.
• The Environmental Business Cluster in San Jose has established
connections to angel investors all over the world who are comfortable taking
on early-stage technology risk in the cleantech sector.
• CTI Invest organizes many events throughout the year and has contacts
with corporations and professional service providers.
• Climate-KIC has access to some of the leading European universities and
corporations active in the cleantech space.
SCBI should seek to partner with these types of organizations instead of
constructing a network from scratch.
Access to Capital
Issues about the potential existence of a funding gap have already been
discussed. Irrespective of that question, SCBI should strengthen the
relationships with the investor community in Europe and elsewhere, mainly in
the United States. The potential funding gap for seed projects could be
narrowed by a strong network of angel investors willing to support cleantech
start-ups.
Support for Recruiting and Hiring Management and Board Talent
Cleantech venture capital firms point to the often inadequate management
capacity in Swiss cleantech start-ups. CleanCubator should help start-ups
identify management gaps, develop job specifications, and provide active
support for recruiting and hiring new talents through its national and
international networks.
Support for Exports and Greater International Orientation
Switzerland lacks start-ups with an international orientation. In collaboration with
Cleantech Switzerland, SCBI should help augment the international orientation
of start-ups, thereby increasing start-ups’ attractiveness to venture capitalists.
It is important to note that cleantech companies are essentially “born global” in
that they are knowledge-based businesses keen to trade and collaborate
internationally from their inception. Especially when a domestic market is small,
cleantech companies must start focusing on international business opportunities
early on, be it for revenue generation, manufacturing, or R&D. SCBI should help
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Swiss cleantech companies adopt this mindset and guide them in pursuing
international opportunities.
The same need is felt by Beglé, who writes:
“[…] Il nous faut essayer, en Suisse aussi, d’accélérer le mouvement et
l’aptitude de nos start-up à s’internationaliser. […] Notons encore qu’il est
indispensable, ici, de se positionner sur le marché international, le seul
marché intérieur étant souvent trop étroit pour assurer une rentabilité
adéquate (44).”
Box 8 provides more information on the proposal set forth by Beglé.
Increase Level of Entrepreneurship
SCBI should actively seek to increase the level of cleantech entrepreneurship in
Switzerland. Together with educational initiatives like Climate-KIC, SCBI’s
management team can help educate students in Switzerland and abroad about
entrepreneurship in general and the Swiss incubation landscape in particular. It
should also partner with pan-European incubators like Seedcamp or participate
in conferences and fairs to actively recruit cleantech start-ups and relocate them
to Switzerland.
Development of a Cleantech Cluster
In partnership with industry associations like swisscleantech or trade
organizations like Cleantech Switzerland, CleanCubator should actively work
toward building a cleantech cluster in Switzerland. As part of the government’s
“Masterplan Cleantech”, it should contribute to the creation of a cleantech brand
for Switzerland.
Box 8: Project “Catalyseur Cleantech de Suisse Occidentale (CCSO)”
In his report “Mandat pour la mise sur pied d’un pôle d’excellence Cleantech à Genève et en
Suisse Occidentale”, Claude Beglé lays out his vision for developing a cleantech cluster in
Geneva and Western Switzerland (44).
Beglé’s recommendations center on the launch of a business incubator, the establishment of a
public policy center, collaboration with other countries, efforts to induce multinational
corporations to establish R&D centers in the region, and a range of initiatives to increase the
investment flow in the cleantech sector. The Geneva metropolitan area was chosen for its
international orientation, reputation, “l’esprit d’innovation”, and academic institutions, among
other factors.
Launching a business incubator represents the first step toward realizing this vision. The
incubator should build a bridge between innovation and commercialization and focus on smart
grid, energy efficiency, cleantech manufacturing, recycling, transportation, renewable energy,
and water treatment. The report recommends that the incubator initially focus on 10 to 20 start-
ups, selected based on merit, and try to realize a few “Quick Wins” early on to establish
credibility and augment its reputation.
The report estimates that the incubator will need initial funds of CHF 2.5 million. In a first phase,
CHF 1 million should come from the Canton of Geneva and the remainder from the municipality
in which the incubator will be located, the Federal Government, corporations, and private
investors. In a second phase, the incubator should either seek to continue as a public-private
partnership primarily financed by public funds, or attract more private capital so that a long-term
ratio of 40% public and 60% private funding can be achieved. The report does not confine the
role of the Canton of Geneva to funding, but rather envisions that it actively promote some of
the technologies that come out of the incubator.
As for managing the incubator, Beglé recommends leveraging existing incubation resources in
the region. He acknowledges that existing organizations have valuable assets which can and
should be leveraged, and to that extent this new incubator should be perceived as a partner
rather than a competitor.
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Next Steps
We recommend that a steering committee under the auspices of the federal
government be launched. This steering committee should be comprised of
representatives of federal and cantonal economic development agencies,
business incubation organizations, and the cleantech industry.
The steering committee should then nominate a working group comprised of
successful serial entrepreneurs, internationally recognized incubator managers,
technology transfer specialists from universities, experienced and successful
cleantech venture capitalists and angel investors, and other stakeholders. This
working group should convene and develop a plan for implementation of the
recommendations put forth in this report. This plan should clarify the incubator’s
objectives and answer questions of scope, funding, management, political
ownership, and collaboration.
Whether or not these steps should be taken as part of the Masterplan
Cleantech Schweiz depends on how the benefits of entering such a formal
political process compare to the cost of delay and inefficiency in implementing
this report’s recommendations. As stated earlier, we believe coordination is
paramount and in the best interest of all stakeholders, and we acknowledge that
coordination in Switzerland’s federalistic system will take time. At the same time
we caution against protraction and advocate a swift and efficient execution. As
Switzerland’s peers begin to position themselves as innovation leaders, time is
of the essence.
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Appendix
A) Overview of Public Finance Mechanisms
Source: UNEP/SEFI (27)
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B) Cleantech Organizations and Initiatives in Switzerland
General Incubation Organizations and Initiatives
KTI/CTI: CTI Start-Up, Venturelab, CTI Invest
CTI is the Federal Innovation Promotion Agency aimed at fostering knowledge
and technology transfer between companies and universities. With an annual
budget of CHF 100 million, CTI promotes market-oriented R&D programs
carried out by joint ventures between Swiss universities and corporations and
fosters the creation and expansion of scientifically-based companies.
The initiative CTI Entrepreneurship is geared toward promoting entrepreneurial
spirit. One of the most visible programs within this initiative is Venturelab, which
provides customized training programs to help increase students’ awareness of
entrepreneurship. Venturelab also provides coaching services for high-tech
start-ups, in conjunction with multiple partners, mainly universities and
engineering schools and their technology transfer offices.
Another initiative is CTI Start-Up, which connects entrepreneurs with coaches
and industry experts. Of the 180 ventures supported by the initiative, 85% are
still in business, and 4 are active in the cleantech space.
As an extension of CTI Start-Up, CTI Invest is a public/private partnership
introducing companies with the CTI Start-Up label to a network of angel and
venture capital investors in Switzerland and Europe. To date, a total of 7
companies (out of roughly 140) funded through CTI Invest are active in
cleantech.
Startzentrum – Kompetenzzentrum für Jungunternehmer
The Startzentrum in Zurich offers office space, advice, administrative services,
workshops, and help with financing to new businesses.
Eclosion
Based in Geneva, Eclosion is a business incubator focused on life science
(pharma, biotech, medtech). The organization invests up to CHF 2 million and
provides office space as well as strategic and operational advice to companies
in start-up and seed stages.
glaTec
A business incubator for material science and environmental technology located
at EMPA. The organization provides strategic and operational advice, office
space, and a platform for networking among research labs and industry
partners. The incubator currently supports 8 start-ups, one of which is in
cleantech.
IFJ Institute fur Jungunternehmen
Headquartered in St. Gallen, IFJ is a consulting organization for Swiss start-up
companies. It offers workshops, help with presentations at conferences and
fairs, networking events, and software tools. IFJ is a partner of KTI’s
Venturelab, for which it runs a number of workshops, and is a founding member
of Venture Kick.
Genilem
Genilem is a non-profit organization providing three years of advice and
services to SMEs.
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Other Incubation-Like Programs
• Eidgenössische Stiftung zur Förderung schweizerischer Volkswirtschaft
durch wissenschaftliche Forschung
• Start Up Day, Start Messe
• Fongit Incubator
• Platinn
• CimArk
• Business Tools AG
• Bio-Top Life Science Incubator
• GROW Waedenswil
• Creapole
• The Ark – Stiftung fuer Innovation im Wallis
• Alp ICT – Lake Geneva ICT Cluster
• Fondation pour l’invention technologique
• FONGIT – Fondation Genevoise pour l’innovation technologique
• EPFL – Management of Technology
• Stiftung fuer Technologische Innovation STI
• CCSO Centre Directeur
• FUTUR
• PCU
• NewTechClub
• Neode
Entrepreneurial Finance Organizations
Brains-to-Venture
St. Gallen-based Brains-to-Venture is an investment advisor to angel investors
who want to provide capital and know-how to fledgling companies. B2V has
invested money from its clients into 28 (2 Swiss) ICT companies, 6 (none)
industrial ventures, 7 (1) services companies, and 2 (1) life sciences ventures.
Venture Incubator AG
VI Partners is a Swiss venture capital firm that supports university spin-offs as
well as other promising start-up companies with capital, coaching, consulting
and networks. Venture Incubator was established by McKinsey & Company and
the Swiss Federal Institute of Technology in Zürich (ETHZ), and started
operations in 2001. It now manages an investment fund of CHF 101 million, and
its investors represent 10 blue-chip enterprises from industry and finance.
The portfolio currently consists of 12 life science/medtech companies, 5
IT/communications companies, and 5 automation/sensors/materials companies.
Other Entrepreneurial Finance Organizations
• Business Angels Schweiz (angel network)
• Start Angels Network (angel network)
• Emerald Technology Ventures (venture capital)
• Good Energies (venture capital)
• Index Ventures (venture capital)
• New Venturetec (venture capital)
• www.startfinance.ch
• MSM Investorenvereinigung
• Club Valaisan des Business Angels
• Finergence
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Business Plan Competitions
Venture Kick
Venture Kick is a privately-funded, national initiative providing à fonds perdu
seed capital (no equity) to new ventures. Applicants compete against each
other in three different stages for a total of CHF 130,000. Entrepreneurs must
be affiliated with a Swiss university and are required to locate their business in
Switzerland if they receive funding.
Since its inception in 2007, Venture Kick has invested more than CHF 4.5
million. Out of the 125 ventures funded to date, 8 were classified as
“environmental science”.
Venture
The venture business plan competition takes place every two years and
combines a competition, learning events and contact form in one. It is an
initiative of the ETH Zurich, CTI and McKinsey.
Other Competitions
• Heuberger Winterthur Jungunternehmerpreis
• KPMG Tomorrow’s Market Award (KPMG, EPFL)
• KPMG’s Inspiration Grant (KPMG, ETHZ, EPFL)
• W.A. de Vigier Foundation
• Swiss Economic Award (Swiss Economic Forum)
• Liechtenstein Rheintal Business Plan Competition
• Trophee PERL
• Swiss Technology Award
• Innovation Prize Freiburg
• ZKB Pioneer Prize
• Prix Start-Up en Technologie
• Prix Coup de Pouce (Fondation Liechti)
List of Technoparks
• Tebo – Technologiezentrum an der Empa St. Gallen
• Start! Gründungszentrum, Frauenfeld
• Its – Industrie- und Technozentrum Schaffhausen
• Technopark Winterthur
• glaTec – Technologiezentrum an der Empa Dübendorf
• Bio-Technopark Schlieren-Zürich
• Technopark Zürich
• StartZantrum Zürich
• Grow Wädenswil
• BusinessPark Zug
• Entrepreneur Tower, Chur
• Start-Up Centro Promozione, Lugano
• TZW Technologiezentrum Witterswil
• Creapole, Delémont
• Gründerzentrum Kanton Solothurn, Solothurn
• TEAG Technologiepark Immobilien AG, Bern
• innoBE AG, Bern
• Fri UP, Fribourg
• Y-Parc, Yverdon-les-Bains
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• Bio Pôle, Lausanne
• Parc Scientific de l’EPFL, Lausanne
• The Ark, Sion
Privately-Funded Cleantech Incubation Organizations and
Initiatives
Climate-KIC
Climate-KIC is an initiative of the European Institute of Innovation and
Technology (EIT) to drive innovation in the area of climate change adaptation
and mitigation through integrated partnerships between business, academic
and public institutions. In addition to four research areas in which those
institutions collaborate, Climate-KIC organizes the Summer School: a research
and networking event for students at European universities who will study the
science and implications of climate change and develop solutions. The Summer
School concludes with a business plan competition.
Sustainability-Focused Business Plan Competitions
There are a number of competitions that focus on sustainability-related
businesses. These competitions offer cash prizes and do not provide typical
incubation services:
• Green IT Innovation Award (WWF and others)
• Sustainability Prize (Zurich Cantonal Bank)
• Prix Evenir (Erdöl-Vereinigung)
• Umweltpreis Schweiz (Pro Aqua-Pro Vita Foundation)
Other Sustainability and Cleantech Competitions
• TechCrunch Europe Awards – Best Cleantech/Environmental Startup
• Green Challenge (Dutch Postcode Lottery)
• California Cleantech Open
Government Initiatives in Cleantech
Go4Cleantech
This is the Federal Government’s platform for all cleantech initiatives of its
departments.
Cleantech Switzerland
Cleantech Switzerland is the export platform dedicated to the Swiss Cleantech
sector and has been developed by Osec, Switzerland's trade promotion
organization, on behalf of the Federal Government. It provides small and
medium-sized Swiss cleantech businesses with information, services, and
contacts and helps them access Cleantech markets around the world.
BAFU – Bundesamt für Umwelt
The Federal Office for the Environment (BAFU) is the federal government’s
center of environmental expertise and is part of the Federal Department of the
Environment, Transport, Energy and Communication. Through its subsidiary,
the Swiss Agency for the Environment, Forests and Landscape (BUWAL), the
BAFU also provides R&D grants for pilot and demonstration facilities of new
clean technologies.
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Other Governmental Initiatives
• Federal Energy Research Commission (CORE), UVEK
• Swissnex, Osec’s international outposts
Regional Cleantech Initiatives
CleantechAlps
CleantechAlps is a networking platform (cluster) for the cleantech community in
Western Switzerland. The objective is to promote Western Switzerland as a
“European center of excellence for clean technologies in order to encourage the
development of its companies and research organizations”. The platform is
sponsored by CDEP-SO (Conference of the Departments of the Public
Economies of Western Switzerland) and jointly chaired by the cantons of Valais
and Fribourg.
Zurich Green Region
Metropolitankonferenz Zürich is a regional initiative led by cantonal and
municipal representatives of the metropolitan area of Zurich. The organization’s
purpose is to foster collaboration among jurisdictions, gain political clout on the
national stage, and drive economic development. One of its projects is “Zurich
Green Region”, which seeks to promote Zurich as a cleantech hub and
encourage the start-up and incorporation of cleantech companies in the
metropolitan area of Zurich. The project is led by the economic development
department of the City of Zurich.
Other Regional and Local Initiatives
• Cleantech Fribourg – promoting cleantech in Fribourg
• iNet Basel – aims to promote innovation in Canton Basel-Stadt
• Sustainability Hub Zurich, FFGS
• Swiss Cleantech Innovation Park in Duebendorf, FFGS
• ait – Association Vaudoise pour la promotion des innovation et technologies
Industry Associations in Cleantech
Swiss Cleantech
Swiss Cleantech is an industry association founded in 2009 by the Foundation
for Global Sustainability (FFGS). The organization represents the political
interests of its members in order to promote cleantech in Switzerland. Ancillary
services include promoting exports, providing a news service, and organizing
networking events.
Swiss Association for Environmental Technology (SVUT)
SVUT currently comprises over 110 companies and experts in all fields of
environmental technology, predominantly belonging to the economic sector of
SMEs. SVUT offers its member-companies and interested parties, as well as
local authorities and other organizations, information with extensive back-up
and provides an institutionalized, accepted platform for dialogue.
Other Industry Associations
• Economiesuisse – Gruppe Energie & Umwelt
• Swissmem Fachgruppe Umwelttechnik
• Schweizerischer Verband fuer Umweltfachleute (SIA)
• Swissengineering STV, Fachgruppe Umwelttechnik & Energie
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• Biogasforum
• Verband Schweizer Abwasser- und Gewaesserschutzfachleute VSA
• Geothermie.ch
• Swissolar
• Schweizerischer Wasserwirtschaftsverband
• Verband der Betreiber Schweizerischer Abfallbehandlungsanlagen
• Verband der Kompostier- und Vergaerwerke
• Agentur fuer Erneuerbare Energien und Energieeffizienz
• Hydropole – hydrogen association
• Swiss Eole – wind energy association
• Pro Pellets – wood pellet association
Academic Cleantech Initiatives
The Federal Office for the Environment (BAFU) has created a database with all
research initiatives currently underway at Swiss universities and research
institutions. The database can be accessed on BAFU’s website.
Brenet – Building and Renewable Energies Network of Technology
Brenet is a national “center of competence” and research network of
sustainability and renewable energy issues related to buildings. Its members
include representatives from Swiss universities and research labs.
Other Academic Initiatives and Technology Transfer Offices
• Center for Energy Policy and Economics (CEPE), ETH Zurich
• Institute for Ecopreneurship, University of Applied Sciences North Western
Switzerland
• Umtec – Institute for Environmental and Process Engineering, HSR
• Alliance
• SPF Solartechnik, Prüfung, Forschung, Hochschule für Technik Rapperswil
• Fachstelle für Erneuerbare Energien, ZHAW Zürcher Hochschule für
Angewandte Wissenschaften, Wädenswil
• Energy Science Center, ETH Zürich (externer Link, neues Fenster)
• Photovoltaics and thin film electronics laboratory, EPF Lausanne
• Laboratory of Photonics and Interfaces - LPI, EPF Lausanne
• ETH Transfer
• Industrial Relations Office, EPFL
• Swiss Technology Transfer Association
• BFE-OFEN
• Bureau Transfer de Technologies Neuchatel, University of Neuchatel
• CERN
• Clayton Biotechnologies
• Ideark
• IDIAP
• Innovationszentrum FHSG, University of Applied Sciences of Eastern
Switzerland
• ITZ – Innovationstransfer Zentralschweiz, Lucerne University of Applied
Sciences
• Pact, University of Lausanne
• Technologie Berner Fachhochschule
• Technologietransfer FITT
• Ticinotransfer
• TT-Fribour
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• UNIGE-CISA
• WTT Basel, University of Basel
Other Cleantech Efforts
Sustainable Engineering Network Switzerland
SENS is an R&D consortium focused on eco-design, eco-efficiency, noise, air
quality, water quality and wastewater treatment, soil management, and
recycling. The management and advisory boards are comprised of
representatives of the major Swiss engineering universities and national
research labs.
EcoNet
EcoNet is a national consortium of corporations, non-profit organizations,
universities, and administrative bodies, seeking to create awareness, provide
networking, and initiate projects.
Energie-Cluster.ch
This interdisciplinary platform seeks to promote cleantech in Switzerland by
providing networking and education services.
Other Initiatives
• Energiestadt.ch – a label for energy efficient cities
• Energie-Agentur der Wirtschaft – a service platform for corporations
• Foundation for Global Sustainability (FFGS)
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C) Cleantech Business Incubation Organizations Abroad
General Incubation Organizations and Initiatives
There is a myriad of business incubation services all around the world and
enumerating them is beyond the scope of this report. Valuable sources of
information are provided by the National Business Incubation Association for
the United States (www.nbia.org) and European BIC Network for Europe
(www.ebn.be).
Cleantech Incubation Organizations and Initiatives
NUPHARO Park
NUPHARO is a cleantech incubation and demonstration project in the Czech
Republic that is currently looking for funding to match the EU Prosperity Fund’s
EUR 10 million commitment.
Other Cleantech Incubators
• Clean Energy Incubator at the University of Texas at Austin (Austin, TX)
• Environmental Business Cluster (San Jose, SA)
• BizTech (Huntsville, LA)
• Blue Hill Partners, LLC (Philadelphia, PA)
• Clean Energy Innovation Center (Denver, CO)
• CleanStart / McClellan Technology Incubator (McClellan, CA)
• Energy & Environmental Technology Applications Center (Albany, NY)
• National Environmental Technology Incubator (Wilberforce, OH)
• Northwest Energy Technology Collaborative (Seattle, WA)
• Rensselaer Incubator Program (Troy, NY)
• Entretec, Caltech (Pasadena, CA)
• The Sustainable Business Incubator
• The China Environment Fund
• The Carbon Trust
• Sustainable Development Technology Canada (SDTC)
• Massachusetts Sustainable Energy Economic Development (SEED)
Initiative
• Connecticut Clean Energy Fund
• Center for Energy * Greenhouse Technologies in Victoria, Australia
• California Clean Energy Fund
• Australian CVC Renewable Energy Equity Fund
Cleantech Angel Organizations
• CalCEF Clean Energy Angel Fund (United States)
• CANN Cleantech Angel Network of Networks (United States)
• Cleantech Business Angels (France)
• The Cleantech Innovators (Germany)
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D) List of Interviews & Contributions
Interviews
Name Organization Role Date of Interview
Bonaccio, Dr. Silvio ETH Transfer Head of ETH Transfer 07.10.2010
Brandkamp, Dr. Michael High-Tech Gründerfonds Hauptgeschäftsführer 27.10.2010
Corvini, Dr. Philippe Institut für Ecopreneurship, Fachhochschule Nordwestschweiz
Institutsleiter 28.09.2010
Fratto, Kristen Environmental Business Cluster Director, New Ventures 29.09.2010
Gebald, Christoph Climeworks Geschäftsführer 23.09.2010
Glauser, Markus Venture Incubator Head Investment Committee 07.10.2010
Grichnik, Prof. Dr. Dietmer HSG Head of HSG Business Incubator 27.09.2010
Grunt, Manfred Bundesamt für Berufsbildung und Technologie BBT
Sekretär Steuergruppe Masterplan Cleantech
19.10.2010
Hamburger, Marc StartZentrum CEO 20.09.2010
Jenni, Mario glaTec / Biotech Center Schlieren Geschäftsführer 23.09.2010
Jud, Daniel Oekosolve Geschäftsführer 23.09.2010
Krüsi, Monika CTI Start-Up Coach 21.09.2010
Magid, Deborah IBM Head of Global Entrepreneurship and SmartCamp Initiatives
21.09.2010
Martin-Garcia, Jesus Eclosion Life Science Incubator CEO 24.09.2010
Marxt, Prof. Dr. Christian Hochschule Liechtenstein Professor 24.09.2010
Nutter, Rachel Carbon Trust Former Head of CT Business Incubator 29.09.2010
Plan, Eric Cleantech Alps / Cimark Div. 29.09.2010
Schillig, Beat Institut für Jungunternehmen IFJ Geschäftsführender Partner 22.10.2010
Soederberg, Martin Independent / Mandat Claude Beglé Independent 28.10.2010
Stein, Peter greenTEG Head of Marketing & Sales 22.09.2010
Vuilleumier, Jean-Pierre CTI Invest CEO 27.09.2010
Other Contributors
Name Organization Role
Beglinger, Nick swisscleantech CEO
Reutimann, Herbert Unitectra Geschäftsführer
Studer, Sonja Swissmem Ressortleiterin Energie
Troye, Tobias Bloomberg New Energy Finance Regional Manager
Swiss Cleantech Business Incubator – Catalyzing Cleantech Entrepreneurship in Switzerland
© Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 80 of 83
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