Deeptech Nation cover
5 min

‘We should be creating 100,000 new jobs in young tech companies in Switzerland.’

If Switzerland wants to hold its own among the international players in cutting-edge technology, it needs more investment capital. Here we talk to Dominique Mégret, Head of Swisscom Ventures, about his vision of Switzerland as a globally successful ‘deeptech nation’.

Dominique Mégret has big plans for start-ups and the future of the Swiss economy. By 2030, he’d like to see 5,000 start-ups benefiting from CHF 50 billion in venture capital investments and creating 100,000 new jobs. This would make Switzerland a ‘deeptech nation’, with a leading business role in global cutting-edge technologies. Mégret’s book envisages ten ambitious innovation projects, or ‘moonshots’. They all relate to areas in which Switzerland can already call on first-class research. That includes precision medicine with customised applications and networked exercise, as well as sustainability. The idea is to monetise research through commercial ventures – right here in Switzerland.

This would take CHF 5 billion per year in venture capital, which is significantly more than Switzerland currently invests in start-ups; for 2021 the figure was CHF 3 billion. So is this just an unrealistic notion from the Head of Swisscom Ventures? No, it’s an economic necessity for consolidating and maintaining Switzerland as a business location in the face of dominant US and Asian tech giants, as Dominique Mégret explains in this interview.

Interview with Dominique Mégret

Dominique Mégret, does Switzerland even stand a chance against Silicon Valley? Could you imagine a ‘Swiss Google’?

Not really – it’s hard to compete in the B2C space. You need a lot of money to develop the technologies and, above all, market them. As an example, the mobility service Uber has spent USD 30 billion to date. That is double what Switzerland as a whole has spent in the last 30 years (CHF 17 billion in 2,700 start-ups with 29,000 jobs in Switzerland). But in the B2B space, in niches that are based on scientific research and strong intellectual property in the form of patents and expertise, that’s where we have a chance. I call this area ‘deeptech’. Here it’s important to have the best universities that are using cutting-edge research to develop technologies at a very high level. In this area we could be among the best in the world. We have already seen this happening in medicine, such as with Basel-based Actelion, the most successful biotech start-up in Switzerland, which was sold to the American pharma giant Johnson & Johnson for CHF 30 billion. And in robotics and fintech as well.

What will it take for these ‘deeptechs’ like Ecorobotix, for example, to make it globally?

Ecorobotix (Swiss start-up which could reduce around 90% of pesticide use in agriculture using technologies like AI and 5G – ed.) is a good example. If this company could scale, it could solve worldwide problems in agriculture. But for that Ecorobotix needs investment for European or global business activities. And that’s where we have a problem here in Switzerland. It used to take up to 20 to 25 years of self-funded, organic growth and debt until you were a global leader. Now within five years, growth companies can find hundreds of millions, if not billions in venture capital, particularly in Anglo-Saxon countries. And so they develop faster than anyone else. We don’t have the same opportunities in this competition. We need more investment capital.

‘Normally, successful entrepreneurs invest in the next generation.’

Dominique Mégret

We don’t have that kind of venture capital in Switzerland – you mentioned a figure of around CHF 5 billion. Where are we supposed to get this money?

Currently, around 80% of venture capital comes from international investors. It would be good if a larger proportion came from Swiss investors. Because even though Switzerland funds scientific research, it doesn’t benefit from the growth and value creation of these companies, as the profit from the investments goes to international investors.

Normally, successful entrepreneurs invest in the next generation. Silicon Valley has arranged itself, established an ecosystem so that one generation is already supporting the next early on. That’s what we need in Switzerland, and to a much greater extent than we have today. We have to accelerate the development process of growth companies.

Why hasn’t Switzerland managed to increase the volume of investments to date?

The volume is growing, around 30% per year in the last ten years, from CHF 300 million to CHF 3 billion in 2021. But we started from a very low base, 25 years behind the USA. Yet our share of the worldwide market for investment capital has remained steady at 0.5%, and in the last three years it has fallen slightly.

What will happen if Switzerland can’t attract enough venture capital?

In that case we won’t have a strong enough position in new markets, particularly digital markets. Europe only has 2% of the digital economy – by which I mean the cumulative market capitalisation of big tech – compared to 83% in the USA. Gaining a strong position is extremely important, because this is the market of the future. That includes things like the semiconductor industry, the whole information technology and telecommunications space, and the internet in general.

But it’s not just here that we’re lagging behind. The digital players are revolutionising established sectors such as cars, energy and agriculture. Start-ups funded by venture capital are disrupting sovereign sectors that were once state monopolies such as space travel (SpaceX) and education (Coursera). It is vital that Europeans advance their own innovation ecosystem to improve their technological and data sovereignty.

I would go so far as to say that technological innovation is essential for preserving our democracy in the face of autocratic systems. Even when those systems open up to liberal capitalism they find it difficult to establish a creative environment based on free thinking, or an entrepreneurial ecosystem that has the necessary dynamism.

So we can only win if we support entrepreneurs. But we have to be selective and not squander resources on purely speculative activities. Human and capital resources have to focus on the development of essential tech that helps solve the major problems of humanity and the planet. This is an exciting challenge for Swisscom and for Switzerland!

Deeptech Nation

Buch Deeptech Nation

The book by Dominique Mégret, Head of Swisscom Ventures, reviews the history of Swiss tech companies in a range of sectors. But above all the author looks to the future, showing how ‘moonshots’ could help the Swiss economy hold its own among the world leaders in the high tech space – because the alternatives are far from pleasant.

Dominique Mégret, Deeptech Nation, 320 pages, available in German, French and English, CHF 29

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