Professor Roland Siegwart
Siegwart was appointed Vice President in January after the sudden resignation of Peter Chen, who stepped down as head of research in December following allegations of data falsification. While not the best of circumstances under which to start a new job, Siegwart says there is no doubt that “ETH is on the right track.”
Quick Start for Fast Drives Company Celeroton
Martin Bartholet, co-founder of Zurich-based Celeroton, is an entrepreneur who has benefitted from the ETH ecosystem. Bartholet initially expected to work for a large company upon completion of his PhD in electrical engineering. But he says that the Venture Lab course, in which students are encouraged to develop a business idea, as well as a supportive professor, turned his thinking around.
At ETH’s Power Electronic Systems Laboratory, he and fellow student Christof Zwyssig were developing a high-speed electric drive that could achieve more than a million rotations per minute - a world record. Soon, industry requests were coming in for the drives, which promise to improve the efficiency of everything from medical tools to next-generation cars and electronics.
“We started looking at the option of making more than just a research project out of it,” says Bartholet. In 2007, Zwyssig and Bartholet hammered out a business plan to take part in the Mckinsey-ETH Venture Competition, for which they took third prize, entitling them to CHF 10,000 (€7,000). It was the first of several competitions they won, including Venture Kick, which brought them another CHF 130,000 (€90,700).
Celeroton was founded in 2008, while the founders were in the midst of completing their PhDs. Since last year they have been fully focused on the new company, which is located at the ETH Technology Park and continues to conduct research at the ETH labs to refine its products, Bartholet says. The self-financed company has begun selling its drives in particular for medical and dental applications in France, Germany, Austria, the US and Japan.
“It’s not just the ETH transfer office, but also professors within the department who offer their support on the technical side. The whole environment established by ETH helps you develop your ideas,” he says.
Adding to these credentials, Siegwart also sits on the ETH Board which launched the spin-out programme more than a decade ago. “Early on, ETH Zurich realised that spin-off companies were an important vehicle for transferring technology into the economy and society at large, which otherwise would not have the chance to be picked up by existing companies due to the high risk and capital investment needed,” he says. “These efforts have raised awareness among students, researchers and employees, stimulating them to start their own businesses.”
Record Number of Spin-Outs
The numbers bear this out. In the last year alone, the government-funded technology institute spun out a record 24 companies in the areas of cleantech, new materials, biotech, micro and nanotechnology and medical devices. A study published in 2008 by the London Business School also found that many of these startups have indeed fared well in the marketplace. The 130 spin-outs emerging from ETH between 1998 and 2007 showed significantly higher survival rates, created more jobs, and showed higher returns and VC/angel investments than other Swiss startups.
ETH companies also stacked up to their counterparts at leading UK universities, showing higher survival rates and similar returns on equity, as well as unusually high annual returns to investors - in the range of 20 per cent to 25 per cent annually over that time period - the study said.
ETH can also point to a number of successful exits. One of the most famous is of Glycart, an antibody specialist, which was acquired by Roche for CHF 234 million (then US$180 million) in 2005, having taken in only CHF 23 million in venture capital funding. Another, U-Blox, a maker of GPS chipsets, which went public in 2007, while the biomaterials spin-out Kuros was acquired by the Swiss Straumann Group in 2002.
Meanwhile, sensor manufacturer Sensirion in Zurich has remained independent and grown to a profitable company with 160 employees.
That doesn’t mean there haven’t been failures, particularly in the IT sector, where companies have suffered from lack of financing. Semiconductor spin-out Celetrius went into liquidation last year, for example.
Support for spin-outs
The support network today includes everything from the long-running Venture McKinsey-ETH business plan competition, held every two years, to courses on entrepreneurism and advice on patenting from the technology transfer office, through to the availability of low-cost rooms to rent at the onsite Technology Park and BioTop incubator for life sciences companies.
ETH alumni also serve as role models for current students who may want to start their own companies, and their founders frequently coach would-be ETH entrepreneurs. Felix Mayer, CEO of Sensirion, for example, serves as a startup coach for the business plan competition, advises selected companies and serves on the board of ETH spin-out Optotune.
Helping Good Ideas Get Farther
Siegwart says that there are still areas for improvement. For one, ETH startups could use better access to outside capital. The London Business School study pointed out that the ETH spin-outs suffer from a lower proportion of venture capital backing than their UK counterparts, with only 26 per cent of companies gaining VC or angel investment, compared to 60 per cent of UK startups. ETH needs to expand its networking with VC Funds, according to Siegwart. Another plan is to develop spin-out guidelines to structure the entire process, including support programmes, conflict of interest and confidentiality
Financing of very early stage ideas is also remains an issue. “Seed funding is still a problem. If you have a new technology, it is difficult to get the funds for a feasibility study to show what the technology can, or cannot, do. There is a gap,” says Siegwart. He advocates an “Innogrant” in which internal funds would be used to help entrepreneurs develop their idea to the stage of a pilot, proof-of-concept or prototype. “This strongly reduces the technology risk and gives a potential spinoff a good head-start, making it more likely to raise money and achieve a better valuation.”
Siegwart also wants ETH to work on better tapping into its alumni pool, as many alumni are in important positions in Swiss industry. And overall he wants to see more interdisciplinary cooperation such as the European Institute of Innovation and Technology’s Climate-Knowledge and Innovation Community, in which ETH is participating with industry and other research institutions to address technologies and businesses ideas to reduce Europe’s carbon emissions. Siegwart would like to see this concept extended to other areas such as life sciences, working closely with local hospitals and clinics for example.
“We want to stimulate research to solve big global problems such as an ageing society and the environment. It is the responsibility of universities like ETH to approach these problems with an interdisciplinary approach,” he says. “Only with this kind of collaboration can we solve some of the imminent problems we face.”
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