Eastern Switzerland leads in number of newly founded companies

St.Gallen – Switzerland has seen the number of newly founded companies sore to an all-time high last year. Cantons in Eastern Switzerland in particular had a leading role in setting the record. Interestingly, the share of new IT companies was particularly large in Eastern Switzerland.

In 2019, a total of 44’482 new companies were founded in all of Switzerland, according to an announcement of the St.Gallen-based IFJ Institut für Jungunternehmen, a management consulting institute for start-ups. This amounts to a year-over-year increase of 3%, according to the IFJ. In Eastern Switzerland, there was an overall surge of 7% in new companies launched. Appenzell Innerrhoden (+14%), Glarus (+13%) and St.Gallen (+11%) enjoyed the highest growth rates of all Swiss cantons. Behind fourth-ranked Western Switzerland’s canton of Bern (+10 per cent) came Eastern Switzerland’s Thurgau (+8%) and Graubünden (+7%). In absolute numbers among the Eastern Swiss cantons, St.Gallen’s 2,297 newly founded companies finished first ahead of Thurgau’s 1,201.  

Several reasons account for the record results, explained IFJ Managing Director Simon May in an article in local newspaper “Tagblatt”. Firstly, Switzerland’s cantons have improved their start-up support programs over the years. While “support does not always produce an immediate effect, it is paying off today”, according to May.

Start-up forums at Olma and Rhema, two important (inter-)national trade fairs in the region, have also contributed to the strong growth of company numbers in Eastern Switzerland, he continued. The information and communications technology sector has experienced particularly strong growth. The number of new ICT companies in Eastern Switzerland rose by 56%, “more than twice as fast as the Swiss average”, writes “Tagblatt”. And yet, traditional sectors in Eastern Switzerland such as small and industrial trade, gastronomy and retail, still accounted for a larger portion of new companies created than in the Swiss average, according to the newspaper.   

That limited liability companies and sole proprietorship firms are becoming more popular as legal entities shows that a majority of the new companies are launched by small-scale entrepreneurs. Such companies tend to be set up in their local region, suggesting that questions of taxation are not as critical now as they were five years ago, according to May. Even though most of the new companies are still small, the strong growth of young companies is a positive for Eastern Switzerland’s economy: “Roughly 10% of all employees in Switzerland work at companies that have been in business for less than 10 years.”