Swiss start-ups wrestle with European funding gap
Clara Lepsius left ETH Zurich for Harvard, only to return with a business that blends technology and infant nutrition. She and co-founder Ben Chen picked Zurich over Boston or Silicon Valley, bucking a tide of founders who chase American capital.
Their startup, Aluere, shows Europe can still lure talent. But scaling remains brutal. Funding bottlenecks push many entrepreneurs westward, where public and private markets run far deeper.
“The gap is capital, and it is structural rather than cultural,” said Ashwin Lalendran, co-founder of IndustriousAF, a nonprofit providing research for policymakers and funders. “You cannot build a frontier AI company on Swiss-sized rounds.”
Europe’s fragmented markets have long handicapped its competition with the US and China. Former European Central Bank President Mario Draghi warned in a 2024 report about a vicious circle: high-growth firms leave, remaining projects grow too small to attract investors, and capital markets stall. A Technical University of Denmark report called Europe’s venture capital system “underpowered.”
Numbers reinforce the concern. US buyers dominated nine of the ten largest European deep tech acquisitions between 2019 and 2025 by value, according to Dealroom. Among 22 European deep tech firms that went public since 2015 with valuations above $500 million, just four listed in Europe.
ETH Zurich itself has become a startup factory. Since 2022, it has produced more deep tech spin-offs than any other European university. Five carry valuations above $1 billion. The school offers a Student Project House with free 3D printers and AI models, plus office space for over 600 active projects. Around a dozen successful alumni mentor current students.
Yet the funding wall remains. “The number of billion-dollar Swiss AI companies will stay at roughly zero until domestic and European venture capital shifts materially off its current floor,” Lalendran said.
Frank Floessel, ETH’s head of entrepreneurship, wants politicians to simplify starting and growing a business. Otherwise, founders will keep choosing the US for its single regulatory framework and vast market.
