Foreign nationals make an exceptionally strong contribution to Switzerland’s innovative capacity: they account for about half of all startup founders—and an impressive 78% of those behind so-called “unicorns,” companies valued at over one billion U.S. dollars. At Swiss universities, every second professor holds a foreign passport, and in STEM PhD programs (science, technology, engineering, and mathematics), three out of four graduates come from abroad.

At the same time, Switzerland’s continued high levels of immigration are increasingly giving rise to “growing pains.” The federal government’s strained finances are also taking a toll: planned spending increases for education and research are modest, sparking frustration among affected institutions. Meanwhile, political interference and budget cuts are stirring uncertainty in the U.S. research landscape—potentially opening new opportunities for Switzerland.

What do these developments mean for innovation and competitiveness? The following seven questions offer some answers.

1. Why are foreigners so prominent in startup founding?

As an international hub for research and business, Switzerland attracts highly skilled talent from around the world—individuals who often bring a different profile than the average population. They tend to be younger, highly educated, and notably more inclined to take entrepreneurial risks. These are people who are driven to achieve and make an impact.

Many of them first come to Switzerland as students or researchers at universities. In high-tech urban sectors—such as the innovation clusters around Lake Geneva, Zurich, or Basel—they find a fertile environment. These areas are home to strong companies and leading institutions like ETH Zurich and EPFL Lausanne. Many startups are created as spin-offs directly from academic research or deliberately locate themselves near this dynamic ecosystem.

2. Are Swiss citizens too risk-averse for entrepreneurship?

Wealth, strong job prospects, and a certain aversion to risk may indeed play a role in why Swiss citizens are less likely to take entrepreneurial risks. More important, however, is Switzerland’s targeted immigration of highly skilled talent—driven in large part by the strong pull of its universities.

The country also benefits from well-developed industry clusters and attractive regulatory conditions—for example, in the crypto space, where many founders strategically choose Switzerland as their base. In short: the dominance of foreign founders is not a sign of weakness, but rather proof of the openness and strength of Switzerland’s innovation ecosystem.

3. What explains the high rate of self-employment among foreigners in less academic professions?

High entrepreneurial activity isn’t limited to high-tech or academic sectors. Foreigners are also strongly represented in industries with low barriers to entry—such as construction, transport, and personal services. These fields often require little startup capital, few formal qualifications, and only limited administrative know-how, making it easier to become self-employed.

It’s often assumed that foreigners are pushed into self-employment due to a lack of other opportunities. But in Switzerland, there’s little evidence to support this claim. Many actively seize the advantages of the Swiss environment: strong domestic demand, affluent customers, and a relatively business-friendly administration. In these cases, self-employment reflects a proactive choice—not a fallback option.

4. Can the shortage of skilled workers—especially in STEM—be solved through domestic education?

Switzerland invests heavily in education and actively promotes STEM subjects—for instance, through school programs. Girls can develop their own apps in the “Coding Club” and meet professional role models, while platforms like educamint.ch connect and showcase STEM initiatives across the country. Still, education alone can’t fully address the skills shortage. The reason is straightforward: Switzerland’s population is small, and the demand—particularly in IT and engineering—far exceeds domestic capacity.

Of course, it would be desirable to attract more young people to STEM careers. But that would mean fewer would be available in other important sectors. And we can’t and shouldn’t pressure anyone into a specific path. The Swiss labor market allows young people to find their footing with almost any qualification.

At the same time, Switzerland has maintained near-full employment for years: over 80% of working-age individuals are employed—an internationally leading figure. Yet tens of thousands of new jobs are created each year. That’s why both are needed: strong domestic education and openness to international talent.

5. Should Switzerland actively target researchers from the U.S. who are considering leaving due to political uncertainty?

Private institutions like the IMD Business School or certain companies tend to be more agile in this regard. However, in the long run, it is wiser to ensure stable framework conditions and be perceived as an attractive research location, rather than launching short-term programs that may only temporarily attract highly mobile talent.

Research thrives on international exchange. Overly aggressive recruitment efforts could strain established collaborations. What matters most is this: Switzerland must clearly demonstrate that it is a reliable, open, and long-term attractive destination for world-class research.

6. Do budget cuts and higher tuition fees threaten the attractiveness of Swiss research?

There’s no doubt: universities are vital pillars of innovation and prosperity. They not only train skilled professionals, but also enhance the country’s competitiveness through research and collaboration. Accordingly, public spending on education and research has grown significantly in recent years—federal investment alone now exceeds CHF 8 billion annually. Only social spending has increased more.

Against this backdrop and in light of growing budgetary pressures, a more moderate pace of spending growth appears justifiable—especially as other sectors are facing even deeper cuts. Planned tuition increases remain comparatively lowby international standards. In a country with a well-functioning dual education system, many people gain qualifications outside of universities. It’s therefore reasonable to expect students—who benefit greatly from their education—to contribute more. Targeted scholarships can continue to support talented students with limited financial means, as is already the case in some instances.

These measures do not fundamentally undermine Switzerland’s attractiveness as a research hub. What matters most is maintaining strong long-term framework conditions and a clear commitment to excellence. After all, future generations also rely on sound public finances—so that education and research can remain well-funded at a high level.

7. What would be the impact on innovation if Switzerland ended free movement of people?

Ending the free movement of people could, depending on how it’s implemented, have a significant impact on innovation and entrepreneurship in Switzerland. The vast majority of foreign founders, researchers, and skilled workers come from the EU. Immigrants from Germany, France, and Italy alone account for roughly half of all foreign company formations.

Restricting this inflow would directly reduce Switzerland’s innovation potential—especially without suitable alternatives, such as simplified pathways for non-EU skilled workers. It could also send a signal internationally that Switzerland is closing itself off. This perception could deter the very talent the country hopes to attract—similar to what happened in the UK after Brexit, where overall immigration surged, but EU nationals stopped coming in significant numbers.

That said, the challenges of high immigration cannot be ignored: it contributes to social tensions, tightens the housing market, and strains infrastructure. But the answer should not be rigid limits. A smarter approach might involve steering immigration through mechanisms like a per-capita levy. Such a fee could gently curb inflows without adding unnecessary bureaucracy. That said, even this solution would not come without side effects.

This blog post appeared in a slightly modified and shortened version as an interview on the SME Portal of the State Secretariat for Economic Affairs (Seco).