Swiss start-ups struggle to find the funding needed to scale

Swiss founders are returning to Zurich, but the money to scale remains harder to find. Clara Lepsius and Ben Chen, both ETH graduates, built their infant-nutrition venture Aluere after meeting during their studies and research work in the United States. They had the option of developing the company near Boston or in Silicon Valley, where start-ups can draw on much larger pools of venture capital. They chose Switzerland.\n\nTheir decision reflects the continuing appeal of the Swiss research and business environment. ETH Zurich supplies technical talent, laboratories and a growing network for commercialising scientific work. The country also offers proximity to major European markets and a reputation for precision in engineering and science.\n\nThe difficulty emerges when a young company moves from proof of concept to expansion. Product development, regulatory approval, international sales and manufacturing require capital on a different scale from an initial seed round. Swiss start-ups can attract early interest, yet often face a thinner market when they need investors prepared to finance rapid growth.\n\nThat funding gap matters beyond individual companies. If promising businesses relocate or sell abroad before they mature, Switzerland can lose intellectual property, high-value jobs and the economic benefits generated by its universities.

The capital shortage is structural, according to venture policy specialist Ashwin Lalendran. The co-founder of IndustriousAF, a nonprofit working with policymakers and funders, said the difference between Switzerland and the United States cannot be explained by entrepreneurial culture alone.\n\n“The gap is capital, and it is structural rather than cultural,” Lalendran said. “You cannot build a frontier AI company on Swiss-sized rounds.” His assessment applies across sectors in which research-intensive companies must spend heavily before they generate reliable revenue. Artificial intelligence, biotechnology, advanced manufacturing and climate technology all require long development cycles and substantial technical teams.\n\nThe United States combines large public markets with deep private investment networks. Successful companies can raise successive rounds from specialist funds, corporate investors and institutional capital. Switzerland has strong private wealth and a sophisticated financial sector, but much of that capacity does not automatically flow into high-risk, long-horizon venture investments.\n\nEurope adds another layer of difficulty through fragmented national markets, regulations and investor networks. A company may need to raise money in several jurisdictions while selling across the continent. The resulting process can slow expansion at the point when American competitors are building scale.

The ownership data shows where European deep tech is ending up. Dealroom figures cited in the report show that nine of the 10 largest European deep tech deals by value between 2019 and 2025 involved a US buyer. The remaining transaction involved a Japanese medical technology company.\n\nThe pattern extends to public markets. Since 2015, 22 VC-backed European deep tech companies with valuations above $500 million have listed on stock exchanges. Only four listed in Europe. The figures suggest that European research can produce valuable businesses while European capital markets struggle to retain them through later stages of growth.\n\nFor Swiss founders, a foreign acquisition can provide the financing needed to expand, but it may also shift strategic control, research priorities and high-skilled employment away from Switzerland. A company that begins in Zurich can end up reporting to a US parent, raising its next round in California and building its largest commercial operation elsewhere.\n\nThe trend is not unique to Switzerland. A 2024 report by Mario Draghi, the former president of the European Central Bank, warned of a cycle in which high-growth companies leave Europe, reducing the pool of ambitious projects available to attract investors. That smaller pool then makes it harder to build a stronger funding market.

ETH Zurich is producing the companies that investors say Europe needs, yet its graduates still confront the scaling problem. The university, founded in 1855, has created a strong pipeline from research to entrepreneurship. Dealroom data show that ETH has produced more deep tech spin-offs since 2022 than any other European higher-education institution. Five of those companies have reached valuations above $1 billion.\n\nThe institution has invested in an entrepreneurial environment that includes the Student Project House, located in a former power plant and equipped with tools such as 3D printers. These facilities help students test ideas, develop prototypes and work across academic disciplines.\n\nLepsius and Chen’s Aluere illustrates the next step. Their company uses technology to measure and improve infant nutrition. Lepsius said the idea emerged after she read research linking the absence of breastfeeding with a higher risk of chronic illness. Turning that insight into a commercial product requires scientific validation, regulatory work and a route into hospitals, retailers or other customers.\n\nUniversities can support the first stages, but they cannot replace a mature growth-capital market. The challenge for Switzerland is to connect its research strengths with investors willing to finance the long period between a promising invention and a large, durable business.

Switzerland’s next task is to keep more start-ups growing after their first breakthrough. The country already has many of the ingredients associated with innovation: ETH Zurich and other research institutions, a skilled workforce, stable institutions and strong links to international industry. The funding problem appears later, when companies need larger rounds and investors with the patience to support expansion across borders.\n\nFor founders such as Lepsius and Chen, remaining in Zurich means building a European business from a market with fewer immediately available sources of venture capital. Their choice keeps expertise and decision-making in Switzerland, while exposing the company to the financing constraints that drive other entrepreneurs towards the United States.\n\nInvestors and policymakers face a practical challenge. They must help create larger pools of late-stage capital, improve connections between European markets and give successful companies credible routes to public listings or sustained private ownership in Europe. Early grants and university incubators can start companies, but they do not solve the financing needs of international expansion.\n\nThe outcome will shape more than the fortunes of individual founders. It will influence whether Swiss research produces Swiss-based employers, whether European buyers can compete with American and Asian groups, and whether the next generation of ETH graduates sees Zurich as a place to build for the long term.