Startups and politics: two worlds colliding

With strong growth in Switzerland, start-ups attract investment, create jobs and promote “swiss made” innovation around the world. But so far, they remain unsupported by politics. It’s time for a change, says Congresswoman Judith Bellaiche, who created a parliamentary group to support these innovative companies.

This content was posted on August 27, 2020 – 10:40 am

Last December, shortly after my election to the National Council, I had the opportunity to speak during my first parliamentary session on an important issue for start-ups. The proposal to facilitate the creation of a company was under discussion: in less complex cases, it would be possible to create a company without a notary process, which would have been a great facilitation, especially for start-ups.

Given Switzerland’s poor position in the international comparison in this area (77and position on the ‘ease of starting a business’), the case seemed clear to me: I was convinced that Parliament would approve this change. Then I was stunned when this proposal was rejected, a victim of the private interests of notaries. Politicians decided that in the future we would also have to go through complicated, lengthy and expensive procedures to set up a business.

It made me suddenly realize that politics likes to support start-ups on a rhetorical level. But when it comes to concrete actions, she doesn’t have the courage and doesn’t want to tread new paths. Or there is simply a lack of awareness of the importance of an ecosystem conducive to start-ups and an economy capable of facing future challenges.

For example, the much-lauded state bailout of companies during the coronavirus crisis did not take startups into account. Commercial loans and partial unemployment benefits were well designed, and their implementation and disbursement perfectly orchestrated. But they weren’t suitable for start-ups. The criteria for making the funds available were not adapted to the nature of a start-up in terms of employment or financing logic. Liquidity is often low for start-ups and they are quickly confronted with a problem.

In the blind spot of politics

Whether through lack of sensitivity or disinterest, when it comes to important things, our start-ups always find themselves in the blind spot of politics. Of course, they are admired for their exciting ideas (amazing!) and their sky-high stock market valuations (crazy!). But when it comes to defining the conditions of the political and social framework, start-ups are not seen as an integral part of the economy, but are belittled, held back and marginalized.

This is all the more difficult to understand because the private sector has long recognized the benefits of a fertile environment for start-ups. It is thanks to the initiative of committed associations and promoters that a thriving ecosystem of start-ups has been able to develop in Switzerland over the years – a system that, among other things, has proven to be both rewarding and crisis resistant. .

The semi-annual figures from Swiss Venture Capital Reports show an almost unchanged willingness to invest despite the crisis. During the first quarter of 2020, almost CHF 800 million was invested in start-ups, thus strengthening the resilience of their ecosystem. The conscience that drives investors has not yet prevailed in politics, that is, that high-level innovation is unthinkable without start-ups.

common interest

If we want to maintain our position among the most innovative countries, and therefore our prosperity, we must create a space in which start-ups can flourish. And as in any ecosystem, all players live with a common goal: to work in symbiosis, start-ups, small and medium-sized companies, large companies, incubators, investors, skilled workers and many others. Politics, in turn, must promote mutual enrichment and the dynamics of this relationship of common interests. And we cannot escape that responsibility. Start-ups are innovation engines, they are a necessity!

It is precisely in times of crisis that the advantages of start-ups emerge: they are agile and react quickly to their environment and to changes. They are also used to dealing with lean times and finding solutions in difficult conditions. And finally, thanks to their digital affinities, they have the ability to use crises as opportunities and implement or adapt their economic model very quickly. This makes them attractive to long-term investors.

Courage and speed are not part of the political DNA

So what’s holding the policy back? I identified several causes that explain the reluctant attitude of politicians. One of the main reasons is the growing dissociation between parliament and administration from economic reality. On the one hand, this is due to the gradual weakening of the parliamentary militia system and, on the other hand, because the rhythm of these two worlds is completely different. Although it takes years for the federal government to make a decision, the economy is growing rapidly, leaving politics far behind.

Another reason is quasi-ideological in origin: start-ups are inherently risky. Along with those around them, they are disruptive, breaking boundaries and daring to venture into new and unexplored territories. Startup activities are seen as reckless, visionary and volatile – and therefore are associated with high failure rates. But risk and failure are not part of the political culture. On the contrary, politics is democratically organized and therefore cautious, thoughtful and extremely risk-averse. This is where worlds collide.

Accordingly, the state has a stabilizing role and cannot be expected to take large risks. But it must allow private actors to take risks. We should be grateful to entrepreneurs for taking risks that we are not yet ready to take.

That is why any policy decision must also be accompanied by the question of what the consequences are for our innovation capacity and its drivers. Startups are not a fad, they are here to stay. But whether they stay in Switzerland or move to other parts of the world depends a lot on how we treat them.

Judith Bellaiche

Judith Bellaiche from Zurichexternal link, who joined the National Council last year, formed a parliamentary group to promote start-ups and SMEs. This liberal green elected member is a member of the Commission for the Economy and Royalties and heads the association Swicoexternal linkwhich brings together companies active in the digital sector.

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