Library House reports that Switzerland could become the European Mediatech hub of the future..!?

The Cambridge based consultancy, Library House, writes that recently a number of large technology corporates have moved their major European operations to Switzerland’s two most populous cities, at the expense of London. Just last week Yahoo! announced its intention to move its European headquarters from London to Geneva. In 2006 Electronic Arts also relocated its European headquarters to Geneva from Chertsey, just south of London. Google’s newly opened engineering plant in Zurich overtook the web giant’s London base as Google’s largest facility in the EMEA region. Other international corporates with European headquarters in Switzerland include Proctor & Gamble and Colgate-Palmolive, both based in Geneva. Library House maintain that the rationale for locating in Switzerland instead of the UK is clear as Switzerland’s corporate tax structure is significantly more attractive than Britain’s.

A December 2007 survey carried out by KPMG, an accountancy firm, found Switzerland to have the third-most attractive environment in Europe for corporate taxation, while the UK placed 12th. However, asks Library House, the most interesting question from a European venture capital perspective is, will the presence of these international corporates increase the vibrancy of the innovation clusters around Geneva and Zurich? Large corporates provide experienced staff, technical expertise and partnering opportunities - just some of the ways in which they can benefit a local area. These benefits are evidenced throughout Europe, for example in the Scandinavian telecoms clusters surrounding Erickson and Nokia and in the UK software cluster around Reading, where both Oracle and Microsoft are located. Several early stage companies based around Zurich and Geneva may benefit from the presence of mediatech giants like Yahoo!, Electronic Arts and Google, including: Zurich-based Restorm runs a German-language social network that revolves around music. The company received an undisclosed amount of venture capital in Q3 2007 from Peter Schüpbach, Redalpine Venture Partners and b-to-v. At the time of this round, the company informed Library House that it intended to close a second round of funding of roughly €2m in the first quarter of 2008 and that at some time in the future it would look to exit via a trade sale to a media company. Also based in Zurich, Plazes develops geo-social navigation services. Through its website, users can publish and share their current location with other users. Community members can use this information to easily locate friends, family and business contacts. The company received initial funding from business angels in 2006 and in Q1 2007 received €2.7m from the European-based private equity firm, Doughty Hanson.

Two other Switzerland based start-ups, Zurich-based business collaboration software developer Collanos and Geneva-based online comment aggregator coComment have been covered in recent Library House Essential Intelligence Weekly Newsletters (‘Economic climate shifting exit expectations?’ – 11/03/08 and ‘Can Europe steal a march on the US for iPhone development?’ – 18/03/08). In 2007, Switzerland attracted €234m in venture funding, 4.3% of the total European investment level. Of this €234m, just 6% went into the Mediatech sector - compared to over 14% of the total European investment going to Mediatech companies. The major influence that the likes of Google, EA and Yahoo will have in the areas around Geneva and Zurich may lead to Switzerland becoming a major European Mediatech and software development hub - and eventually the country may find itself as one of the premier places in Europe for venture capital investment.

How is the O2C Arc and London to respond?