Ryskex

RYSKEX December 2018
VU Junior Consultants: Lisa van Meegeren (2624506), Jessica Frank (2634793), Samuele Quarta (2640834), Daniel Petcu (2644958)
VU junior consultancy RYSKEX
1

SITUATION TRIGGER QUESTION
RYSKEX provides a platform
and marketplace to the B2B
insurance market, allowing to
cover and transfer risks faster,
cheaper and more transparent.
RYSKEX builds upon
blockchain contracts to handle
the closing of contracts and
further processing, such as
claims in the case of damages.1
Their headquarter is based in
Berlin.
However, Berlin has lost its
charm. RYSKEX believes that
the city is not the place “where
it happens” in their industry
and that they can increase their
value if they move their
headquarter to a place where
they are closer to their clients,
network and knowledge.
The question then is: where
should RYSKEX move their
headquarter to?
VU junior consultancy
recommends RYSKEX to
move their headquarter to the
metropolitan area of Zürich,
defined as the area including
the cantons Zürich and Zug.
VU junior consultancy composed a STQ in order to shed light on the problem and
question RYSKEX is facing.
2STQ

3
Metropolitan
area of Zürich
Highly
regulated
insurance
industry
Concentration
of possible
partners
Low
bureaucracy
within a
stable
economy
Swiss
Sandbox as a
mediator
FinTech
friendly due
to FinMa
‘Tax-haven’
on
corporate
level
Innovation
hub
univer-
sities
FinTech
expertise
spillover
Great
infrastruc-
ture/
transport
Moderate
income cost
relation
Small entry
barriers
Location of
risk-takers
and policy
holders
Industry
Cluster
Knowledge
universities
and
conferences
Location advantages

Overview on the analyzed stages for the metropolitan area as RYSKEX’ new headquarter.
4
Table of content
Introduction to the issue
1. Main arguments
● Institutions
● Network
● Knowledge
● Ease of Entrance
1. Further research on main arguments
● Institutions
● Network
● Knowledge
● Ease of Entrance
References
Appendix Table of content

1. Main arguments
5

RYSKEX needs to take into account four different variables when considering where to
move the headquarter.
INSTITUTIONS NETWORK
KNOWLEDGE EASE OF ENTRANCE
RYSKEX’ interaction with local institutions may
be crucial to achieve short-term strategic goals and
gaining a competitive advantage. More
specifically, the institutional analysis takes into
consideration the administrative factor, legal
compliance and taxation.
One of the main criteria the CEO mentioned is
being close to knowledge. Two variables are used:
university and spillover. It is useful to be close to a
technical university for recruitment and the
innovation hub. The spillover means being close to
seminars and events happening in the FinTech
field.
When switching the HQ to another country, ease of
entries like bureaucracy, regulations and language
barriers should be considered. Also, the price level
(including currency) and especially the infrastructure
(transport) are important factors for RYSKEX and its
employees.
One of the reasons RYSKEX wants to move the HQ
is to be closer to a valuable network. The existence
of companies open to approach risks as well as
entities available to finance those risks (“business
angels”) are important criteria. Moreover, this
includes the presence of powerful companies that can
either function as policyholders or risk takers.
6Variables

RYSKEX should move its headquarter to the metropolitan area of Zürich because of four
main reasons.
INSTITUTIONS NETWORK
KNOWLEDGE EASE OF ENTRANCE
The FinTech industry is highly regulated, therefore
RYSKEX may take advantage of the Sandbox, an
institutional mediator between FinTech startups and
regulators. This makes administrative issues less
appearing allowing RYSKEX to operate compliant to
FinMa and G.D.P.R. legal requirements. 2
Zürich has one of the best technical universities
ranking 7th in the world ranking list.3 RYSKEX
could recruit the best professionals from there and
this university could be used as an innovation hub.
There is a clear spillover effect, because lots of
seminar and events are hosted in the area.4 Moving
the headquarter there will be very beneficial.
The mentioned area belongs to the most attractive
locations for businesses in the world. When
moving the headquarter from Berlin, RYSKEX can
profit from low bureaucracy, a stable economy and
most important the so called “tax-haven”
(especially in the Canton of Zug).6
The metropolitan area is known for a highly
concentrated number of startups, exuberant
innovation ideas and closeness not only to possible
partners but also to important InsureTech
competitors. The close cooperation, proximity and
power of financial entities (banks) provide strong
advantages for RYSKEX.5
Main arguments 7

2. Further research
8

ADMINISTRATIVE
The insurance industry is highly regulated and the new InsurTech
ecosystem challenges the traditional regulatory frameworks.
Both InsurTech firms and regulators have interest to cooperate, in
order to clarify the “uncertainty” of the whole regulatory
ecosystem.7
LEGAL COMPLIANCE
For young InsurTech firms it is fundamental to operate legally in
order to avoid dangerous consequences (i.e. fines) that would
threaten their survival probabilities. RYSKEX needs to be
compliant in terms of data protection, in order to avoid severe
fines (up to 4% of the total revenue), because InsurTech
companies are characterized by real-time data collection and
high-profile cyber-attacks.8
TAXATION
The fiscal aspect represents a key point for the survival and
growth of technological new ventures, especially in their early
years of life. The metropolitan area is identified as a “tax-haven”
at the corporate level, and approximately 30% of Fortune 500
companies have operations in the country.9
INSTITUTIONS RYSKEX needs to consider the role of institutions in the host country
when moving their headquarter.
Institutions
LegalAdminis-
trative
Taxation
Institutions 9

INSTITUTIONS The Swiss Sandbox makes administrative issues approachable, allowing
RYSKEX to operate compliant with FinMa and G.D.P.R. legal requirements.
THE SWISS SANDBOX
● is considered an “institutional mediator”
between FinTech startups and Swiss
Regulators;
● helps regulators in understanding ongoing
innovation, emerging technologies and their
impact on customers and the insurance value
chain;
● allows regulators to monitor a startup’s new
technology in an effort to identify whether
that technology fits within current regulation
or whether the regulation and/or application
of that technology need to be changed in
order to protect consumers.10
FIN.MA. & G.D.P.R.
● FinMa (Swiss Financial Market Supervisory
Authority) is a public law institution
responsible for ensuring that the financial
markets function effectively, protecting
creditors, investors and policyholders;11
● FinMa makes the metropolitan area a
FinTech-friendly environment, facilitating
and supporting blockchain initiatives to
ensure compliance;
● G.D.P.R. (General Data Protection
Regulation) → data privacy rules must be
applied to all personal data of data subjects
residing in the European Union, regardless of
the companies’ locations.12
Adminis-
trative
Legal
Institutions 10

INSTITUTIONS The cantons of Zürich and Zug: the “tax-haven” at the corporate level.
TAX HAVEN
● In a global comparison, the metropolitan
area keeps its attractive position for
corporate taxation, ensuring very low
taxes compared to other European
countries;
● The average of corporate income tax
rates continues to fall marginally, with a
decrease of 3.05% from 2007 to 2018→
RYSKEX should take advantage of this
negative trend;
● Corporate income taxation differs by
Cantons, Zug is placed 6th out of 26 in
the ranking of Cantons with the lowest
rate.13
Source: kpmg.com
Taxation
Institutions 11

NETWORK Clusters provide advantages for RYSKEX, VU junior consultancy advises
RYSKEX to move to a cluster area.
CLUSTERS
The metropolitan area of Zürich
enjoys a high number of starting
businesses, mainly in the
technology sector, due to a rich
history in blockchain activity.14
Being located in this area with
high industry clustering, could
enable RYSKEX to access
resources.15 Clusters can be
beneficial, because it can increase
cooperation and network
advantages. However, there is
also a risk of over-competition, in
which there is a tough
competition between members of
the cluster over scarce
resources.15 In the metropolitan
area of Zürich, the cluster mainly
provides cooperation and
competition advantages.
COOPERATION
There are a lot FinTech startups especially based in the cantons Zürich and
Zug. This is mainly due to the fact, that this area is one of the biggest
financial centers of the world which attracts many companies operating in
the industry.16 RYSKEX could cooperate with those similar companies
already based in the region. These cooperations could be fruitful, since it
increases RYSKEX’ networks and contacts. Tapping into the network, can
indirectly increase RYSKEX’ revenues and will increase the awareness of
RYSKEX’ “brand”.17
COMPETITION
The metropolitan area of Zürich provides a young and energizing
environment for entrepreneurial activities that creates an increasing wave
of startups with an inspiring competition for market shares.14 The most
important competitors for RYSKEX in this area are: the Zürich Insurance
Group and Suisse Re. Being collocated closer to these firms, indeed,
increases “the entrepreneur’s consciousness and responsiveness to
opportunity”18 in these markets and RYSKEX can be part of the local
competition.
Network 12

CLIENTS
RISK TAKERS
The risk takers are Fortune 500
companies, insurance and
reinsurance companies and most
importantly banks and financial
institutions.19 Zürich scores 9nd
on the Global Financial Centres
Index, indicating the importance
of this area for the financial
sector.20 Also, many of the
global key global players in the
insurance industry are based in
the metropolitan area.21 This
implicates that there is a lot of
risk takers available for
RYSKEX to encounter in the
metropolitan area of Zürich.
POLICY HOLDERS
Policyholders are the companies
that want to be insured by
RYSKEX.22 In the metropolitan
area of Zürich there are 14
companies of the Fortune 500
companies based.23 Moving the
headquarter near the clients -
policy holders, will be very
advantageous. One of the main
disadvantages of Berlin is that
the city is not close to the
policyholders that RYSKEX
wants to attract. RYSKEX
needs a better network to tap
into, to increase their client-
group and consequently
increase revenues.
NETWORK Moving the headquarter results in easy access to clients.
Network 13

KNOWLEDGE Knowledge is considered an important aspect in the search for a new
headquarter location.
UNIVERSITY
Geographical proximity between firms and
universities, establish human resources links
useful to provide key-workers.26 In Zürich, one
of the finest technical universities of the world
is located. The university ranks 7th at the
world ranking list.27 RYSKEX could benefit
from this knowledge in different ways:
● RYSKEX could recruit professionals
from the university. Something that is
according the CEO very important in
the search for a new headquarter
location.
● It could also serve as an innovation
hub. The university is where the
research is conducted that could help
RYSKEX to improve and stay ahead of
the competition that is located
elsewhere.
KNOWLEDGE GENERAL
Being located close to external knowledge can
be very beneficial for RYSKEX.24 It can provide
access to valuable information, can be necessary
to recruit the greatest experts and professionals
as future employees and RYSKEX could benefit
from the innovation hub and spillover of
knowledge to the company.25 For knowledge,
the university and the spillover effect will be
analyzed. The conclusion is that the
metropolitan area of Zürich provides key access
to network opportunities.
Knowledge 14

KNOWLEDGE Knowledge is not only originating from universities, the spillover effect
through seminars and events is also considered important.
SPILLOVER
RYSKEX also emphasizes the importance of
seminars and events as drivers to get in touch
with their potential clients.29 The metropolitan
area of Zürich represents the area of FinTech
and is one of the largest financial centers of the
world.30
● Consequently, numerous seminars and
events hosted in the field of FinTech
are hosted there. RYSKEX attends
most of those meetings already, but
having the headquarter based there can
only provide more advantages.
● These events in turn attract
professionals and can attribute to
increase RYSKEX’ knowledge as a
valuable resource in order to maintain
the competitive advantage.
SPILLOVER RESEARCH
In the literature related to knowledge spillover
effects, researchers emphasize the importance of
the proximity of firms in a geographical area
and on the quantity and quality of the events,
seminars, etc.28 hosted in that certain area. Thus,
the extent to which the knowledge spillover can
take place, depends on the extent to which the
relevant industry is present in a certain area.
Knowledge 15

EASE OF ENTRANCE Great infrastructure and a moderate costs / income relation.
AIRPORT
In 2017 the airport Zürich
offered flights to 185
destinations (London and Berlin
in top 5) in 66 countries and is
only about 10 km away from
the city center.31
OTHER
In the Global Competitiveness
Report, the country got ranked
3rd in total in infrastructure;
leading in ‚efficiency of train
service‘ (1st) and in ‚quality of
roads‘ (2nd).32
GENERAL
The price level is higher
compared to other countries,
but there is a moderate relation
with the incomes.33 The Swiss
Franc is one of the most
important currencies for
trading. 34
LIVING
Zürich got ranked 2nd in 2018
out of 444 cities in the world in
the cost of living report.
However, this also indicates
how wealthy the region is,
which could be advantageous.
35
STARTING A BUSINESS
The metropolitan area has an
innovative economy with tax
benefits, low inflation rates and
low long-term capital costs very
beneficial for a HQ.36
BUREAUCRACY
The requirements to set up a
company are quite low and
permits reachable non-
bureaucratically. Also there a no
language barriers for German
companies like RYSKEX.36
Ease of Entrance 16

REFERENCES
17

1 Crunch base. (2018). Company overview: RYSKEX. Requested from: https://www.crunchbase.com/organization/ryskex
2 HollandFintech. (2018). Global trends in fintech regulation. Requested from: https://hollandfintech.com/2018/03/fintech-regulation-global-trends/
3 QS Rankings. (2018). World Ranking 2018 Technological Universities.Requested from: https://www.topuniversities.com/universities/eth-Zürich-swiss-federal-institute-technology
4 Fintechnew. (2018). Fintech Events. Requested from: http://fintechnews.ch/fintech-events-schweiz/
5 Clusters in Zürich. (2018). Financial Center Zürich. Requested from: https://meeting.zuerich.com/en/clusters/finance
6 Hooper, J. (2008). Welcome to Zug. Requested from: https://www.theguardian.com/business/2008/may/31/taxavoidance.tax
7 Goldestein, S. (2018).DailyFintech. To sandbox or not to sandbox, that is the Insurtech question. Requested from: https://dailyFinTech.com/2018/04/05/regulatorysandbox/
8 Web learning resources for the EU General Data Protection Regulation. (2018). Requested from: https://www.gdpreu.org/compliance/fines-and-penalties/
9 Goetz, L. (2018). Investopedia.Why is switzerland considered a tax haven? Requested from: https://www.investopedia.com/ask/answers/060716/why-switzerland-considered-tax-haven.asp
10 Hsu, P. & Bahar, R. (2017). Switzerland: Fintech rules eased, International Financial Law review. Requested from: http://www.iflr.com/Article/3745366/Switzerland-FinTech-rules-eased.html
11 Swiss Financial Market Supervisory Authority FINMA website. (2018). Requested from: https://www.finma.ch/en/
12 EU GDPR website. (2018). Requested from: https://eugdpr.org/
13 KPMG. (2018). Clarity on Swiss Taxes. Requested from: https://assets.kpmg.com/content/dam/kpmg/ch/pdf/clarity-on-swiss-taxes-2018-en.pdf
14 Koopman, M. (2018). Blockchain in Switzerland. Requested from: https://www.rvo.nl/sites/default/files/2018/08/blockchain-in-switzerland.pdf
15 Porter, M. E. (1998). Clusters and the new economics of competition (Vol. 76, No. 6, pp. 77-90). Boston: Harvard Business Review.
16 McCance, D. (2018). London loses top spot as top financial centre ahead of Brexit. Requested from: https://economia.icaew.com/news/september-2018/london-loses-top-spot-as-top-financial-centre-ahead-of-brexit
17 Bell, G. G. (2005). Clusters, networks, and firm innovativeness. Strategic management journal, 26(3), 287-295.
18 Fernhaber, S. A., Gilbert, B. A., & McDougall, P. P. (2008). International entrepreneurship and geographic location: an empirical examination of new venture internationalization. Journal of International Business Studies, 39(2), 267-290
19 RYSKEX. (2018). Short Pitch RYSKEX.Requested from: https://canvas.vu.nl/courses/34628/files/folder/Documents%20case%20study%20assignment?preview=985505
20 McCance, D. (2018). London loses top spot as top financial centre ahead of Brexit. Requested from: https://economia.icaew.com/news/september-2018/london-loses-top-spot-as-top-financial-centre-ahead-of-brexit
21 Hsu, P. & Fluhmann, D. (2018). Insurance and Reinsurance Switzerland: trendreport and overview. Requested from: https://uk.practicallaw.thomsonreuters.com/4-501-3019?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk
22 RYSKEX. (2018). Short Pitch RYSKEX.Requested from: https://canvas.vu.nl/courses/34628/files/folder/Documents%20case%20study%20assignment?preview=985505
23 Fortune 500. (2018). Global ranking list.Requested from: http://fortune.com/global500/list/filtered?hqcountry=Switzerland
24 Fernhaber, S., Mcdougall-Covin, P., & Shepherd, D. (2009). International entrepreneurship: Leveraging internal and external knowledge sources. Strategic Entrepreneurship Journal,3(4), 297-320.
25 Rothaermel, F. T., & Thursby, M. (2005). University–incubator firm knowledge flows: assessing their impact on incubator firm performance. Research Policy, 34(3), 305-320.
26 Conceição Vedovello, Science parks and university-industry interaction: Geographical proximity between the agents as a driving force, Volume 17, Issue 9, September 1997, Pages 491-502, 530-531.
27 Topuniversities. (2018). ETH Zurich. Requested from: https://www.topuniversities.com/universities/eth-Zürich-swiss-federal-institute-technology
28 Fernhaber, S., Mcdougall-Covin, P., & Shepherd, D. (2009). International entrepreneurship: Leveraging internal and external knowledge sources. Strategic Entrepreneurship Journal,3(4), 297-320.
29 RYSKEX. (2018). RYSKEX about the company. Requested from: https://www.ryskex.com/
30 Economia. (2018). London loses top spot. Requested from:https://economia.icaew.com/news/september-2018/london-loses-top-spot-as-top-financial-centre-ahead-of-brexit
31 Flughafen Zürich. (2017). Zahlen und Fakten. Requested from: https://www.flughafen-zuerich.ch/unternehmen/flughafen-zuerich-ag/zahlen-und-fakten
32 World Economic Forum. (2018). Global Competitiveness Report. Requested from: http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf
33 The Local. (2018). This is how much people earn in Switzerland. Requested from: https://www.thelocal.ch/20180515/this-is-how-much-people-earn-in-switzerland
34 Desjardins, J. (2016). Most traded currencies my value. Requested from: https://www.businessinsider.com/the-most-traded-currencies-in-2016-2016-12?international=true&r=US&IR=T
35 Numbeo. (2018). Costs of Living in Zürich. Requested from: https://www.numbeo.com/cost-of-living/in/Zürich
36 Meyer Consulting. (2018). Firmensitz Schweiz. Requested from: http://www.firmensitzschweiz.de/firmenstandortschweiz.htm
37 London & Partners. (2017). London is Europe’s number one fintech hub for global investors. Requested from: https://www.londonandpartners.com/media-centre/press-releases/2017/20171019-europes-number-one-FinTech-hub-for-global-investors
38 Fintech News. (2018). Asia: 100 Insurtech Companies and Counting. Requested from: http://FinTechnews.sg/23449/InsurTech/asia-100-InsurTech-companies
39 Alenn, T. (2014). Forbes. Charles Schwab: Another Fortune 500 Company Leaves California. Requested from: https://www.forbes.com/sites/realspin/2014/02/20/charles-schwab-another-fortune-500-company-leaves-california/#44a273f94d6e
40 Financial Times. (2018). Lloyd’s of London given go-ahead to open Brussels base. Requested from: https://www.ft.com/content/4eb79d82-5d9c-11e8-ad91-e01af256df68
REFERENCES Endnotes.
References 18

Appendix
1919

LONDON
Europe’s leading FinTech hub37
Brexit → political uncertainties
SAN FRANCISCO
Many Fortune 500 companies headquarters
Risks connected to cluster’s high
rate of competition
High taxes and excessive regulation 39
BRUSSELS
Proximity to EU Regulators → information advantage
Lloyd’s of London is moving the HQ from London to Brussels 40
Underdeveloped financial district → few
Not that much Fortune500 companies (yet?)
SINGAPORE
One of the most dynamic ecosystem
for FinTech startups → networking
opportunities 38
Not close to RYSKEX’ target
markets
APPENDIX 1 Pros and Cons of other possible HQ locations.
Appendix 20

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