29 June 2004
Hiving off non-core businesses can offer opportunities not only to budding entrepreneurs, but also to the companies disposing of the relevant units. This is demonstrated by the Swisscom Venture Fund, which has given 17 new companies throughout Switzerland a helping hand towards independence in the first five years since its inception.
Since 1999, Swisscom has operated a Venture Fund which is open to all Swisscom Group employees. It helps employees to become self-employed and provides support for setting up new companies. The main task of the Venture Fund is to provide professional support in the form of advice and financial loans to Swisscom employees interested in taking over business units as a new company (management buyouts).
Swisscom set up the Swisscom Venture Fund with a view to maintaining existing infrastructures, know-how and innovative projects that the company no longer viewed as part of its core activities. Its success is reflected in the statistics: Over the first five years of its existence the Swisscom Venture Fund has supported 17 spin-offs, allowing some 300 full-time jobs for 400 employees to transferred to the new companies.
Every year, the Swisscom Venture Fund reviews dozens of applications, examining the submitted business ideas for their feasibility on the open market. So far, it has got it right: All the spin-offs are still out there offering their services. And they are spread across every region of Switzerland, from Lake Geneva to eastern Switzerland and from Basle to the Ticino.
Management is also making use of this professional in-house service. Whenever product ranges are to be streamlined or reorganisation programmes conducted, the service is asked to examine the possibility of transferring individual units to new start-ups. For example, eight firms were spun off from Swisscom Systems in 2003.
Products and services that are no longer seen as part of the core business; new developments that have more of a chance in a niche market; services that can be performed more efficiently by a small company; technical developments that do not fit the portfolio: they are all are worth continuing. If they are transferred to independent companies, the investments and know-how are not lost to Swiss industry. Entrepreneurs and founders of these new companies can make a new living for themselves outside the Group. This makes more economic sense than closing down the business unit, and it also benefits the company that is hiving the business off, since it can continue buying in the services or offer them to its own customers.
The Swisscom Venture Fund should not be confused with the CoMotion programme, which supports the establishment of companies in areas unrelated to the telecom industry and is reserved for employees who are being made redundant.
For further information (list of partners and a fact sheet on each of the new start-ups), please visit www.swisscom.com/venturefund.
Berne, 29 June 2004