Since the term was coined a few years ago, unicorns have become the mythical creature of the Venture Capital industry: privately held (tech) startups with a valuation of more than a billion dollars.

What is a Startup?

While indeed extremely rare (about 200 globally), the concept of unicorns helps to clarify what people instinctively mean when they say "Startup" - specially when used as an anglicism in other languages.

The most literal definition is a new company. But for that matter, most new companies are restaurants, gas stations and other small business. Or maybe being high-risk? By that definition restaurants qualify as well as many fail within a year. What about being innovative? Most successful innovation is created by large established organizations which have large R&D budgets and who can often attract the top talent in a given field.

My favorite definition of a "Startup" is the one by Steve Blank:

A startup is an organization formed to search for a repeatable and scalable business model.

This definition emphasizes on the potential for significant and potentially very rapid growth, which also implicitly requires to take aim at a significantly large market which would allow for such growth. Venture capital investors typically look for opportunities to make a 20-30 times return on their investment in less than 10 years to compensate for the failed ventures in their investment portfolio. Hence most venture capital backed companies have at least theoretically a big growth potential.

Swiss Startup Landscape

Critics of the Swiss Startup landscape often point to an extreme form of European culture which does not value risk taking nor forgive failures, a safe, comfortable and expensive life with plenty of attractive employment opportunities, an overly aggressive wealth taxation or a lack of B+ round growth capital from venture capital funds.

While there may be truth to all of this, the Swiss startup scene might also be for better or for worse an image of the overall Swiss economy which mostly excels at being highly specialized global niche-players.

After all the Swiss domestic market is barely the size of New York City or the San Francisco Bay Area and fragmented into several language regions and 26 very much sovereign jurisdictions. For somebody growing up thinking that Zürich or Genève is a large city, it is maybe possible to intellectually rationalize a market of a billion consumers, but intuitively grasping what this means is a whole different story.

With many founders, employees, experts, advisors, mentors, role-models or investors coming from a business culture which values focused excellence and reliability, Swiss startups are more likely to tackle hard sciency problems with a highly specialized and limited application domain rather than chasing after the mainstream consumer zeitgeist.