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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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Page 1: Swiss Cleantech Business Incubator

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

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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.

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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

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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

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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.

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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

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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

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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.

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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-

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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.

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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

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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

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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

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