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Swiss Cleantech Business Incubator

Catalyzing Cleantech Entrepreneurship in Switzerland

Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland


January 2011

Authors
Dominic Hofstetter, Lead Emerald Technology Ventures dominic.hofstetter@emerald-ventures.com Reto Largo Climate-KIC reto.largo@sl.ethz.ch

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. Emeralds 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 th one week after the 15 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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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Foreword by Gina Domanig and Dr. Uwe Krger


By Gina Domanig and Dr. Uwe Krger 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 Switzerlands 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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Gina Domanig
Managing Partner Emerald Technology Ventures

Dr. Uwe Krger


President Cleantech Switzerland

Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Executive Summary
As global cleantech experts, we have observed Switzerlands 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.

Switzerlands 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. Switzerlands innovation ecosystem excels on many dimensions, as attested by multiple international studies. The countrys inventive capacity is unrivaled by any other innovation-based economy. It also offers high-quality infrastructure
Figure 1: The Swiss Innovation Ecosystem

Invention Funding Infrastructure

Entrepreneurship

Govt. & Regulation

Culture

Innovation Ecosystem

Market Demand

Switzerland excels in many elements constituting a successful innovation ecosystem. The countrys 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 countrys potential for economic growth through innovation and entrepreneurship.

Switzerlands weaknesses Switzerlands strengths Figure 1: The Swiss Innovation Ecosystem Source: Authors own graph

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 highambition 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 Switzerlands 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.
Figure 2: Switzerlands Cleantech Entrepreneurship

Cleantech Companies Going Through Incubation Organizations # of Companies Supported CTI Start-Up CTI Invest Venture Kick Venture Incubator glaTec 180 140 125 8 33 of which Cleantech 4 7 8 1 1 Cleantech Share 2% 5% 6% 13% 3%

Number of VC-Backed Cleantech Firms


Israel Norway Finland United Kingdom Canada Sweden Ireland United States Denmark Netherlands Switzerland Austria Germany Belgium France Italy Spain China 3.6 3.5 2.2 1.9 1.9 1.8 1.6 1.6 1.4 1.3 1.3 0.8 0.6 0.6 0.4 0.2 0.2 0.04

Source: Websites of business incubation organizations

Per million population Source: BNEF

Switzerlands 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 regions 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.

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Figure 3: Start-Up Development Path and Business Incubation

R&D

Proof of Concept

Prototype

Demonstration

Commercial Production

Diffusion & Adoption

Commercial Maturity

Business Incubation
Switzerlands weaknesses Figure 3: Start-Up Development Path and Business Incubation Source: Authors own graph Switzerlands strengths

Switzerlands business incubation landscape centers around the national innovation agency KTI/CTI and its sister organizations, but remains fragmented. Todays 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 countrys 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 highambition 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.

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 countrys 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 incubators 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 Switzerlands 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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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 startups. 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 Switzerlands 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 Switzerlands 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 Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 9 of 83

Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Tech Grnderfonds 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 incubators objectives and find answers to the questions of funding, management, political leadership, and collaboration.

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

Table of Contents
Foreword by Gina Domanig and Dr. Uwe Krger Executive Summary 3 5

Switzerlands Cleantech Innovation Ecosystem ............................................................................... 5 Switzerlands 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 List of Figures List of Tables List of Boxes Introduction About Innovation Ecosystems

13 13 14 14 15 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 Incubations 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

Switzerlands Innovation Ecosystem

31

Status Quo: Switzerlands Innovation Ecosystem .......................................................................... 31 Innovation Capacity & Competitiveness .................................................................................... 31 Entrepreneurial Culture .............................................................................................................. 32 Entrepreneurship in Switzerland ................................................................................................ 32 Entrepreneurial Finance ............................................................................................................. 33 Conclusion .................................................................................................................................. 35 Status Quo: Switzerlands Cleantech Innovation Ecosystem ........................................................ 38 Switzerlands Cleantech Economy............................................................................................. 38 Cleantech Invention .................................................................................................................... 38 Cleantech Entrepreneurship ...................................................................................................... 39 Cleantech Finance...................................................................................................................... 40 Conclusion ....................................................................................................................................... 40

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 Grnderfonds and Carbon Trust.................................................... 49 Case Study #3: Environmental Business Cluster ...................................................................... 49 Case Study #4: Kinrot................................................................................................................. 50

Switzerlands 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 Switzerlands 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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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

List of Acronyms
B2B / B2C CFI EIS FFGS GDP GEM GHG GUESSS ICT IP KTI/CTI NBIA PFM PPP R&D SEFI SME SNF UNEP UNFCCC VC WEF GCR Business-to-business, business-to-customer Commercial financial institutions European Innovation Scoreboard Foundation For Global Sustainability Gross domestic product Global Entrepreneurship Survey Greenhouse gases Global University Entrepreneurial Spirit Students Survey Information and communication technology Intellectual property Innovation promotion agency sponsored by the Swiss Federal Government National Business Incubator Association Public finance mechanism Public-private partnership Research & Development Sustainable Energy Finance Initiative Small and medium enterprises National Science Foundation United Nations Environment Programme United Nations Framework Convention on Climate Change Venture capital The World Economic Forums Global Competitiveness Ranking

List of Figures
Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 Figure 13 Figure 14 Figure 15 Figure 16 The Swiss Innovation Ecosystem Switzerlands Cleantech Entrepreneurship Start-Up Development Path and Business Incubation Elements of an Innovation Ecosystem Technology Commercialization Path and Valley of Death Cleantech Sub-Sectors as Defined by the Cleantech Group Public Finance Mechanisms and the Technology Development Path Venture Capital Investments as a Percentage of GDP in 2005 The Commercialization Gap Comparison of Spin-Offs Sectoral Distribution, ETH Zurich ETH Zurich Spin-Offs, VC/Angel Backing and Exits from Spin-Offs Switzerlands Share of Total Global Patent Registrations Venture-Backed Cleantech Companies by Country Core Services of Business Incubators Ease of Fundraising for Cleantech Start-Ups in Switzerland Measures Improving ETHs Technology Transfer Performance 5 6 7 19 23 26 30 34 35 37 37 38 40 44 55 56

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List of Tables
Table 1 Table 2 Table 3 Table 4 The Performance of U.S. Business Incubators 5 Years after Graduation Switzerlands Position in Global Innovation Rankings Cleantech Companies Going Through Incubation Organizations Summary of Key Incubator Performance Statistics & Benchmarks 24 32 39 48

List of Boxes
Box 1 Box 2 Box 3 Box 4 Box 5 Box 6 Box 7 Box 8 The Role of University Spin-Offs Facts & Figures about Business Incubation ETH Zurich Spin-Offs Masterplan Cleantech Schweiz Business Incubation in the United States Start-Up Selection and Rotation Israels Technology Incubator Program Project Catalyseur Cleantech de Suisse Occidentale (CCSO) 21 24 37 39 45 47 58 68

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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 todays 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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Swiss Cleantech Business Incubator Catalyzing Cleantech Entrepreneurship in Switzerland

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 nations 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 Switzerlands 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 governments 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 Switzerlands 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 nontechnical 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 companys innovation output can become part of another companys 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).
Figure 4: Elements of an Innovation Ecosystem

Invention Infrastructure Funding

Entrepreneurship

Govt. & Regulation

Culture

Innovation Ecosystem

Market Demand

Figure 4: Elements of an Innovation Ecosystem Source: Authors own graph

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).
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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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Box 1: The Role of University Spin-Offs Universities and research laboratories play an important role in shaping a countrys 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.

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 companys 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 ventures 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, venturebacked 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.

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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 regions 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 ecosystems 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 startup period when they are most vulnerable (15). Incubators differ from research and technology parks in their dedication to startup 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 startup and make it more attractive for venture capitalists.

Business Incubations 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:
Figure 5: Technology Commercialization Path and Valley of Death

Research & Development

Proof of Concept

Prototype

Demonstration

Commercial Production

Diffusion & Adoption

Commercial Maturity

Valley of Death = Business Incubator Scope


Figure 5: Technology Commercialization Path and Valley of Death Source: Authors own graph

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 companys 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 incubators 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
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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 Survival rate of graduates Number of tenants Graduates remaining in the community Employment created by graduates
Source: Rudy Aernoudt (5)

Technology Incubator 90% 13 97% 430

87% 15 97% 196

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.

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 worlds 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.

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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 Valleys 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. MITs 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 MITs strength are believed to be its entrepreneurial culture, embedded in the schools motto, as well as the way these values are materialized through the powerful ecosystem that has built up around the university. Other cornerstones of Cambridges 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 antihierarchical 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 Israels 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 Israels technology-based industries and propelled civilian technology-based firms to their present status (23). But Israels secret goes beyond culture and includes the active shaping of its innovation ecosystem, e.g. through the worlds 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 Energy Generation Wind Solar Hydro/Marine Biofuels Geothermal Other Air & Environment Emissions Control Monitoring and Compliance Trading and Offsets Energy Storage Fuel Cells Advanced Batteries Hybrid Systems Energy Infrastructure Management Transmission Energy Efficiency Lighting Buildings Glass Other Water & Wastewater Water Treatment Water Conservation Wastewater Treatment

Transportation Vehicles Logistics Structures Fuels

Materials Nanotech Biotech Chemical Other

Manufacturing & Industrial Advanced Packaging Monitoring and Control Smart Production

Agriculture Natural Pesticides Land Management Aquaculture

Recycling & Waste Recycling Waste Treatment

Figure 6: Cleantech Sub-Sectors as Defined by the Cleantech Group Source: Adapted from Cleantech Group LLC (24)

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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 demandside 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 multidimensional 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 sectors 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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Figure 7: Public Finance Mechanisms and the Technology Development Path

Figure 7: Public Finance Mechanisms and the Technology Development Path Source: UNEP/SEFI (26)

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 governments 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.

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Switzerlands Innovation Ecosystem


Status Quo: Switzerlands 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, topnotch universities and research institutes, substantial demand for new technology from large corporations, a developed financial sector, and highquality 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 Forums 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 Switzerlands scientific research institutions, which are among the worlds 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 (4th) and financial (8th) markets, and the second most efficient labor market were also cited as Switzerlands 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 st 2009 EIS, Switzerland ranked 1 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 Economists 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: Switzerlands Position in Global Innovation Rankings Rank/Source 1 2 3 4 5 EIS


1

WEF

Economist Japan

INSEAD Iceland

Switzerland Sweden Finland Germany United Kingdom

Switzerland Sweden Singapore United States Germany

Switzerland Finland United States Sweden

Sweden Hong Kong Switzerland 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 Switzerlands 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 Switzerlands 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. Switzerlands incorporation rate is 1.3%, compared to 2.7% internationally (33).

Entrepreneurship in Switzerland
Despite Switzerlands 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 peoples 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, th technological advances, or business model innovations (13 ) 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 WEFs 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. Switzerlands 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 th new ventures, Switzerland ranks 17 , 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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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)

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 Exchanges AIM. However, given the international orientation of the venture capital industry and the strong integration of the worlds 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 Switzerlands 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.

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Conclusion
It can be said with confidence that while Switzerlands overall innovation ecosystem is in good shape, it does not produce a high level of entrepreneurship. In fact, there is a large gap between Switzerlands inventive capacity and its ability to turn new inventions into viable businesses, as depicted by Figure 9:
Figure 9: The Commercialization Gap

Figure 9: The Commercialization Gap Source: The Boston Consulting Group (32), referencing the European Innovation Scoreboard 2007

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 Switzerlands 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 innovationbased, growth-oriented, and internationally-focused. As a result, venture activity in Switzerland is low.

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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 Switzerlands 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 Switzerlands 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 spinoffs 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-Offs Sectoral Distribution, UK Universities vs. ETH Zurich Source: Oskarsson and Schlpfer (2008) (12)

Figure 11: ETH Zurich Spin-Offs, VC/Angel Backing and Exits from VC-Backed Spin-Offs Only Source: Oskarsson and Schlpfer (2008) (12) Emerald Technology Ventures, Cleantech Switzerland, and Climate-KIC. All rights reserved. Page 37 of 83

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Status Quo: Switzerlands Cleantech Innovation Ecosystem


The main conclusion drawn for the general innovation ecosystem in Switzerland also applies to the countrys cleantech landscape: ample innovation and a generally favorable business climate, yet little entrepreneurship.

Switzerlands Cleantech Economy


The study Cleantech Schweiz by Ernst Basler + Partners and NET AG, published by CTI, examines the state of Switzerlands 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 Lndern in Europa werden die Massnahmen zur aktiven Frderung 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 countrys 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: Switzerlands Share of Total Global Patent Registrations

Figure 12: Switzerlands 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 Switzerlands share of global cleantech patents has decreased. The study concludes that while Switzerlands 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).
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 governments national cleantech strategy (6). The Masterplan is a tool for both economic development and the improvement of the countrys carbon footprint. It formulates a vision for Switzerlands 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 fr eine hohe Innovationsleistung im CleantechBereich nachweisbar verbessert, sodass die Schweizer Unternehmen das Wissen der Hochschulen wirksam fr ihre Cleantech-Innovationen nutzen knnen (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.

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 Unternehmensgrndungen im Zusammenhang mit CleantechAnwendungen sind unterdurchschnittlich. Die Anzahl Spin-offs als Ausgrndungen 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 CTI Start-Up CTI Invest Venture Kick Venture Incubator glaTec High-Tech Grnderfonds 180 140 125 8 33 150 Number of Cleantech Companies 4 7 8 1 1 11 Cleantech Share 2% 5% 6% 13% 3% 7%

Sources www.ctistartup.ch, www.cti-invest.ch, www.venturekick.ch, www.ventureincubator.ch, www.glatec.ch, www.htgf.de

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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 th cleantech companies in select countries and found that Switzerland ranks 11 , trailing most of its peers in this metric (see Figure 13) (22).
Figure 13: Venture-Backed Cleantech Companies by Country
Israel Norway Finland United Kingdom Canada Sweden Ireland United States Denmark Netherlands Switzerland Austria Germany Belgium France Italy Spain China Japan India Greece Luxembourg 3.6 3.5 2.2 1.9 1.9 1.8 1.6 1.6 1.4 1.3 1.3 0.8 0.6 0.6 0.4 0.2 0.2 0.04 0.02 0.01 0 0
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

Figure 13: Venture-Backed Cleantech Companies per Country Source: Bloomberg New Energy Finance (22)

This finding is in line with Switzerlands 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
Switzerlands 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:

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Der Innovationsprozess und die Innovationsforderung spielen eine zentrale Rolle fuer eine Verbesserung der Situation der CleantechUnternehmen in der Schweiz (37). And: Die Analyse der schweizerischen Cleantech-Landschaft enthlt deutliche Hinweise darauf, dass gezielte Massnahmen die Innovationskraft, Exportfhigkeit und Entwicklungsdynamik der Unternehmen positiv beeinflussen. [...] Will die Schweiz bei Cleantech zur Spitzengruppe der Innovation Leaders zaehlen und am Wachstum der globalen CleantechMrkte partizipieren, mssen fr Unternehmensgrndung 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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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

Business Inbubation Activities


Networking Corporations, universities, research labs, mentors, industry experts, strategic partners Access to Capital Angels, VCs, corporate investors, banks Demo days

Figure 14: Core Services of Business Incubators Source: Authors own figure

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

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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 incubators relationships with investors. Knowing the investor landscape and each individual investors 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.
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).

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).

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The source of funding in many situations has a great impact on an incubators 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 governments economic development plans (11).

Business Incubation Best Practice


The report Benchmarking of Business Incubators, published by the European Commissions 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 Commissions 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 incubators 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 sectorspecific 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 incubators 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 incubators 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 incubators mission and to maximizing managements 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).
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 regions 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 Europes 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.

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).

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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 capital investment cost Average operating costs % of revenue from public subsidies Incubator space Number of incubator tenants Incubator Functions Incubator occupancy rates Length of tenancy Number of management staff % of managers time advising clients Evaluating Services and Impacts Survival rates of tenant firms Average growth in client turnover Average jobs per tenant company New graduate jobs per incubator p.a. Cost per job (gross)
Source: Center for Strategy and Evaluation Services (CSES) (15)

Average EUR 3.7 million EUR 480,000 p.a. 37% 3,000 m


2

Benchmark n/a n/a 25% 2,000 4,000 m 20-30 firms Benchmark 85% 36 months 1:10 1:20 50% Benchmark 85% 25% n/a n/a EUR 4,000 8,000
2

27 firms Average 85% 35 months 2.3 managers 39% Average 85% 20% p.a. 6.2 jobs per firm 41 jobs EUR 4,400

Case Studies
As explained above, business incubators vary greatly along many dimensions, and each incubators 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 startups 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 Grnderfonds and Carbon Trust


Bonn-based High-Tech Grnderfonds 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 Grnderfonds has made 190 investments to date and its current portfolio includes 11 cleantech companies. With its focus on seed financing, High-Tech Grnderfonds 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 Kingdoms 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 Trusts 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 cleantech 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 (Israels 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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Switzerlands Business Incubation Landscape


This section presents the results of our analysis of Switzerlands 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, Switzerlands 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 (Standortfrderung) 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 Begl (44). For most entrepreneurs in Switzerland, one of the first doors to knock on is KTI/CTI, the government-funded innovation agency. The agencys 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 organizations 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 2 Canton covers the cost of a 1,000 m laboratory, while the operating costs are covered through a seed-fund set up with outside investors, including Index Ventures and Sofinnova Partners. Eclosions 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 Dbendorf, the City of Zrich, 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 Switzerlands 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 incubators 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-Ups 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 Gesprche 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 startups 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 startups, 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, industryexperienced 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 wellfunctioning 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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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)

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 Grnderfonds 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 taxpayers 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.

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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 ETHs Technology Transfer Performance

Figure 16: Measures Improving ETHs Technology Transfer Performance Source: Oskarsson and Schlpfer (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 Atlantas 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 regions highly successful informationand 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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Box 7: Israels Technology Incubator Program In 1991, Israels 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 dealflow 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 Israels 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 Israels unique and irreproducible circumstances.

Perhaps the strongest anecdotal evidence for the positive impact an incubator can make on a countrys level of entrepreneurship is provided by Germanys High-Tech Grnderfonds (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 HTGFs 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 Grnderfonds, 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 Switzerlands 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).

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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-ups 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 countrys 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 incubators management should be allowed to run the organization independent from political influence. More information on best practices can be found in the European Commissions 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-Ups coaching platform need not be replicated but just enhanced with cleantechspecific 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 HighTech Grnderfonds money pool. It will be extremely difficult for any privately led incubation initiative to raise these levels of money, even if adjusted for Switzerlands 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 widestranging 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 cleantechfocused 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 Switzerlands 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 hightech 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 entrepreneurs 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 incubators 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 companys 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 others 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 Switzerlands innovation ecosystem and incubation landscape as well as the responses from our interviews, we have arrived at the following conclusions:

Innovation Ecosystem
Switzerlands 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. Switzerlands 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. Switzerlands 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 Switzerlands 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 cleantechfocused 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, SCBIs 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 SCBIs 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 countrys 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 startups. 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. SCBIs 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 Begl, who writes: [] Il nous faut essayer, en Suisse aussi, dacclrer le mouvement et laptitude de nos start-up sinternationaliser. [] Notons encore quil est indispensable, ici, de se positionner sur le march international, le seul march intrieur tant souvent trop troit pour assurer une rentabilit adquate (44). Box 8 provides more information on the proposal set forth by Begl. Increase Level of Entrepreneurship SCBI should actively seek to increase the level of cleantech entrepreneurship in Switzerland. Together with educational initiatives like Climate-KIC, SCBIs 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 governments 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 dun ple dexcellence Cleantech Genve et en Suisse Occidentale, Claude Begl lays out his vision for developing a cleantech cluster in Geneva and Western Switzerland (44). Begls 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, lesprit dinnovation, 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 startups, 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, Begl 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 incubators 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 reports recommendations. As stated earlier, we believe coordination is paramount and in the best interest of all stakeholders, and we acknowledge that coordination in Switzerlands federalistic system will take time. At the same time we caution against protraction and advocate a swift and efficient execution. As Switzerlands 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 fr 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 KTIs 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 Eidgenssische Stiftung zur Frderung 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 linvention technologique FONGIT Fondation Genevoise pour linnovation 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 Zrich (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 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 Tomorrows Market Award (KPMG, EPFL) KPMGs 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! Grndungszentrum, Frauenfeld Its Industrie- und Technozentrum Schaffhausen Technopark Winterthur glaTec Technologiezentrum an der Empa Dbendorf Bio-Technopark Schlieren-Zrich Technopark Zrich StartZantrum Zrich Grow Wdenswil BusinessPark Zug Entrepreneur Tower, Chur Start-Up Centro Promozione, Lugano TZW Technologiezentrum Witterswil Creapole, Delmont Grnderzentrum Kanton Solothurn, Solothurn TEAG Technologiepark Immobilien AG, Bern innoBE AG, Bern Fri UP, Fribourg Y-Parc, Yverdon-les-Bains
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Bio Ple, Lausanne Parc Scientific de lEPFL, 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 (Erdl-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 Governments 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 fr Umwelt The Federal Office for the Environment (BAFU) is the federal governments 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, Osecs 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 Zrich is a regional initiative led by cantonal and municipal representatives of the metropolitan area of Zurich. The organizations 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 BAFUs 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, Prfung, Forschung, Hochschule fr Technik Rapperswil Fachstelle fr Erneuerbare Energien, ZHAW Zrcher Hochschule fr Angewandte Wissenschaften, Wdenswil Energy Science Center, ETH Zrich (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 Funds 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 Bonaccio, Dr. Silvio Brandkamp, Dr. Michael Corvini, Dr. Philippe Fratto, Kristen Gebald, Christoph Glauser, Markus Grichnik, Prof. Dr. Dietmer Grunt, Manfred Hamburger, Marc Jenni, Mario Jud, Daniel Krsi, Monika Magid, Deborah Martin-Garcia, Jesus Marxt, Prof. Dr. Christian Nutter, Rachel Plan, Eric Schillig, Beat Soederberg, Martin Stein, Peter Vuilleumier, Jean-Pierre Organization ETH Transfer High-Tech Grnderfonds Institut fr Ecopreneurship, Fachhochschule Nordwestschweiz Environmental Business Cluster Climeworks Venture Incubator HSG Bundesamt fr Berufsbildung und Technologie BBT StartZentrum glaTec / Biotech Center Schlieren Oekosolve CTI Start-Up IBM Eclosion Life Science Incubator Hochschule Liechtenstein Carbon Trust Cleantech Alps / Cimark Institut fr Jungunternehmen IFJ Independent / Mandat Claude Begl greenTEG CTI Invest Role Head of ETH Transfer Hauptgeschftsfhrer Institutsleiter Director, New Ventures Geschftsfhrer Head Investment Committee Head of HSG Business Incubator Sekretr Steuergruppe Masterplan Cleantech CEO Geschftsfhrer Geschftsfhrer Coach Head of Global Entrepreneurship and SmartCamp Initiatives CEO Professor Former Head of CT Business Incubator Div. Geschftsfhrender Partner Independent Head of Marketing & Sales CEO Date of Interview 07.10.2010 27.10.2010 28.09.2010 29.09.2010 23.09.2010 07.10.2010 27.09.2010 19.10.2010 20.09.2010 23.09.2010 23.09.2010 21.09.2010 21.09.2010 24.09.2010 24.09.2010 29.09.2010 29.09.2010 22.10.2010 28.10.2010 22.09.2010 27.09.2010

Other Contributors
Name Beglinger, Nick Reutimann, Herbert Studer, Sonja Troye, Tobias Organization swisscleantech Unitectra Swissmem Bloomberg New Energy Finance Role CEO Geschftsfhrer Ressortleiterin Energie Regional Manager

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Emerald Technology Ventures AG Seefeldstrasse 215 8008 Zrich Switzerland T: +41 44 269 61 00 F: +41 44 269 61 01 info@emerald-ventures.com www.emerald-ventures.com Emerald Technology Ventures Inc. nd 495 King Street West, 2 floor Toronto, Ontario M5V 1K4 Canada T: +1 416 900 3453 F: +1 416 900 3457 info@emerald-ventures.com www.emerald-ventures.com

Cleantech Switzerland Herrenacker 15 8200 Schaffhausen Switzerland T: +41 52 560 06 22 F: +41 52 674 06 09 info@cleantech-switzerland.com www.cleantech-switzerland.com

Climate-KIC ETH Zurich Hochstrasse 60 8092 Zurich Switzerland T: +41 44 633 93 15 www.climate-kic.org

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