Swiss start-ups struggle to find funding to scale
Keystone / Gaetan Bally
When Clara Lepsius graduated from the federal technology institute Zurich (ETH), she went to Harvard University to do her thesis. In the US, she teamed up with another ETH alum on a startup that merges tech with infant nutrition.
Today, both are back in Zurich. They chose to develop their project in Switzerland rather than Boston or Silicon Valley, a move that goes against a trend of start-ups looking to grow in the United States, where there are deeper pools of money available to entrepreneurs.
“The motto there is ‘faster, farther, higher’,” said Lepsius. “For me, that was an encouragement to come back to Europe. Here, we aren’t as fast or as loud in what we do, but we are more precise.”
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Start-ups, failures and funding: the Swiss company landscape
The decision with the business, Aluere, shows that those behind innovative start-ups are still willing to make a go of it in Europe. However, scaling things up to sustainable levels faces multiple challenges, crucially surrounding funding.
That hurdle has pushed many founders to head west, to America’s huge public and private markets.
“The gap is capital, and it is structural rather than cultural,” said Ashwin Lalendran, co-founder of IndustriousAF, a nonprofit that provides research for policymakers and funders. “You cannot build a frontier AI company on Swiss-sized rounds.”
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The funding constraints for startups aren’t an issue just in Switzerland, but across Europe. Fragmented markets have long hobbled the continent in its bid to compete with economies like the US and China, an issue laid out in a landmark 2024 report by former European Central Bank President Mario Draghi.
‘Underpowered’ VC system
That warned of a vicious circle where high-growth companies leave, the pool of projects remaining is too small to lure investors, and capital markets don’t develop.
Other third-level institutions have also raised the challenge of funding and scaling up. A report by the Technical University of Denmark referred to an “underpowered” venture capital system in Europe.
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A new model for Swiss innovation
The concerns are backed up by the numbers. US companies such as Meta and Apple dominate when it comes to takeovers of European deep tech startups (firms built on particularly innovative breakthroughs), according to a report from Dealroom. Measured by value, nine of the top 10 deals between 2019 and 2025 involved a US buyer. The other was a Japanese medical technology company.
Since 2015, of the 22 VC-backed European deep tech companies that listed on stock exchanges with a valuation of more than $500 million, only four listed in Europe.
At Aluere, Lepsius and her cofounder Ben Chen are working on building their business, which uses technology to measure and improve infant nutrition. She came to the idea after reading a paper on how babies who are not breastfed are more likely to have chronic illnesses.
ETH, their former school, is pushing to create an entrepreneurial environment, and with some success. The institution, founded in 1855 and counting Albert Einstein as a one-time student, is a startup factory, churning out dozens every year.
The state-funded university has produced more deep tech spin-offs since 2022 than any other European third-level institution, Dealroom data show. Five such companies are valued at more than $1 billion.
Hard decisions
ETH’s measures include opening a Student Project House in a former power plant that provides 3D printers and the latest AI models free of charge. There’s office space for projects, of which there are currently more than 600.
It’s also working with around a dozen successful alumni-turned-entrepreneurs who share their experiences with students.
Still, ETH entrepreneurs will eventually face the same funding constraints as many founders across Europe.
“The number of billion-dollar Swiss AI companies will stay at roughly zero until domestic and European venture capital, as a share of funding, moves materially off its current floor,” said Lalendran of IndustriousAF.
Frank Floessel, head of entrepreneurship at ETH, said the university has benefited from its research in areas like AI and robotics. But he agrees that success at scale needs money, and politicians must step up.
“It needs to be as easy as possible to start and grow a business,” said Floessel.
“Start-up founders make decisions based on what makes economic sense,” he added. “The US, as a large market with a single regulatory framework, can quickly become an attractive option.”
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Investment in Swiss start-ups is falling
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