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.

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 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.

Norstel, the Sweden-based developer of wide bandgap semiconductor materials, has raised €15m from Northzone Ventures, Eqvitec Partners, Creandum, the Sixth Swedish National Pension Fund and other undisclosed investors. Norstel specialises in the production of silicon carbide wafers which, when implemented in devices in a wide range of applications such as hybrid cars, mobile phone base stations and radar systems, can result in a 50% reduction in energy loss over the same device manufactured using conventional silicon technology. The funding will be invested into R&D and the expansion of its Händelo facility.

Complinet, the UK-based publisher of information and software for the financial services industry, has raised £18.5m (€23.5m) from Fidelity Equity Partners in return for a significant minority stake. The funding will be used to enhance Complinet’s product offering and increase its international presence, and will provide a liquidity event for some of its shareholders. Complinet will look to further expand into financial services sub-sectors, either through organic growth or an acquisition.

SpinVox, the UK-based voicemail to text company, has raised $100m (€64.0m) from Goldman Sachs, Blue Mountain Capital Management, GLG Partners and Toscafund Asset Management, giving the company a valuation of more than $500m (€319.8m). SpinVox has developed a technology which converts voicemails sent to mobile phones to text and will use the funding to expand its presence in North America and introduce voice-to-text services in more languages.

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Xcalia, the France-based developer of technologies for data integration and a proponent of the SDO standard, has been acquired by NASDAQ-listed Progress Software. SDO is a data access standard allowing service-oriented architecture applications to access any kind of data, from various kinds of data sources, in a consistent way. Xcalia will become part of DataDirect Technologies, Progress Software’s operating company, which intends to announce new products later this year combining Xcalia’s technology with its existing products.

Nexagent, the UK-based developer of technologies for workflow automation and closed-loop performance management, has had its assets acquired by EDS, a US-based outsourcing company. EDS will use Nexagent’s technology to reduce the time and expense required in migrating clients onto the EDS network. Under the terms of the acquisition, current Nexagent employees will become employees of EDS.

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Alchimer, the France-based developer of specialty chemical formulations and wet processes for nanometric coatings for integrated circuits manufacture, has appointed Steve Lerner as chief executive. Mr Lerner has 29 years’ experience in the semiconductor development and manufacture industries, and has previously founded Alpha Szenszor, GigSys and CS2.

OptimalTest, the Israel-based developer of technologies for semiconductor testing, has appointed Kenneth Levy as chairman. Mr Levy has more than 35 years’ experience in the semiconductor industry, and founded, and was chief executive and chairman of, KLA-Tencor, a US-based semiconductor company with a turnover of more than $2bn (€1.3bn). OptimalTest also appointed Haim Shani, the chief executive of NICE, to its board.

Steganos, the Germany-based developer of encryption software, has appointed Michael Marzy as joint managing director, with responsibilities for sales and marketing. Mr Marzy has over 25 years’ experience in marketing and sales, with 20 years in the software industry. Prior to joining Steganos, he had been an independent consultant and freelancer and before this held senior management roles at Micrografx, Intuit, Metacreations, Lighthouse and Tendi.

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LogneX, the Russia-based inventory management system developer, has informed Library House that the company is likely to seek between $500k and $1m (€320k and €640k), in six to twelve months' time, to be used for marketing. At this point the company aims to have about 100 paying corporate customers. Mr Askar Rahimberdiev (chief executive and co-founder) told Library House that the company is likely to exit by either a trade sale or an IPO in four or five years' time, with it being too early for him to have a preferred exit route.

Six To Start, the UK-based developer of alternate reality games, has informed Library House that the company will likely require funding of over £1m (€1.3m) in two to three years’ time, though the amount would be dependent on the intellectual property the company generates by this point. In the meantime the company intends to grow organically, looking to double its team size from seven to fifteen by the end of the year. The company will launch its début game, a project for the UK’s Channel 4, later this year.

More companies' intelligence at www.libraryhouse.net