How Zühlke supports startup warriors
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Our TOP 100 Investor Summit partner Zühlke Group is really two companies in one: an engineering business, and an investment firm. So startups who work with Zühlke get the benefit of both their business and technological expertise.
At their Industrialization Checkups, Zühlke helps startups to identify, develop and test their ideas. And one participant can win a free workshop worth CHF 20,000 to develop their prototype. (Apply by 30. September.)We talked to Patrick Griss, executive partner at Zühlke Ventures, about why founders should adopt the warrior spirit, and how the startup life forges true friendships.
You’ve been at Zühlke Ventures for 12 years – plenty of time to become intimately familiar with the startup ecosystem. Have you noticed any changes over that time in Swiss startups?
A lot has changed. It has become much more common to found a startup, much less weird. Twelve years ago people would say, “Are you out of your mind, why don’t you start at Novartis or Roche?” Now, there has been such a push from the universities, from foundations and organizations like Venturelab as well as from the state to develop an ecosystem, it has become much more common.
Because of that, the deal flow has increased and the volume invested has increased massively. The official figure is about CHF 1 billion a year; the reality is probably more like CHF 2 billion. More capital has been invested and we have more success stories. We have companies that have exited and we have a slowly growing ecosystem of experienced founders that might do it a second time or who want to help first timers.
What do startups get out of working with Zühlke? And what do you get out of working with them?
From the engineering side, they get a tremendous amount of experience of industrialization of product – really getting ideas ready to go to market – but also entrepreneurial experience, from Zühlke’s own history of growth. How do you hire people, how do you set up your accounting? What they get from us is often overlooked in the classic ecosystem. People forget that every startup actually builds a company. Regardless of the product or business model, they build a company, and that company needs to work reliably. We bring that entrepreneurial craftsmanship.
And what we get is very deep insight into trends and new technology. For me as an investor, that’s a route to business success; it means deal flow and investment targets. For my engineering friends, it’s a very attractive ecosystem to work with. They see exciting projects; it attracts talent.
What do you look for in a scaleup? How do you know if someone is ready to go to the next level? Or if they’re not?
We look for warrior spirit. When I see investors pitch in Silicon Valley, I see someone ready to go to war. Swiss entrepreneurs are sometimes more like blacksmiths: they want to make the sword, to bring a product to market, but they think once they have the product, magic happens. They’re not ready to go to war – launching a product is going to war. The tough stuff is not getting your product ready. It’s what comes next.
So the question is, is it time to go to war? We look at the quality of their plan and the psychology of the founding team. They need a willingness to grow and to take risks. The product must also be ready; it must be a reliable offering for customers. Then they have to understand where to get traction: is the market ready?
Thirdly, they need a sound launch and scale-up plan, which are often way too ambitious. We look for deep penetration in a very narrow segment, as quickly as possible. What we don’t do is shallow penetration in a badly designed market segment over huge territories. That rarely works.
What’s your top advice to an entrepreneur wanting to build their business?
The question is, are you in for a marathon or a sprint? If you’re a sprinter, forget about it.
What are some highlights from your time working with startups?
The highlights are not what people might imagine. It’s often small things, like a crisis that you successfully overcame. Friendships that were forged. My best days are when I come home with that feeling of: yeah, we got the cow off the ice. And everybody contributed. It’s very intense and you start to understand people, and that’s how I tick. I enjoy this environment – it’s chaotic and personalities come through. It’s not like the corporate world where people hide behind masks; it’s really personal. I love that.
What’s next for Zühlke Ventures? Do you have any exciting projects on the horizon?
We’re strengthening our relationships with other markets. Specifically to the Bay Area and the Far East. We are building those bridges to let our ecosystem grow into other geographies. It’s very much needed; we are working towards building our strengths in our own as well as other markets. These international relationships go both ways – they bring capital to Switzerland but we are also investing there. The Bay Area has more warriors, but we have fantastic engineers and technologies, so we try to combine that. Strategically, in the long term, the Far East will be very important.
