Startup.IT: Overview of the Italian Venture Capital and Startup Environment

Guest Author: Sarah Raniero

Most of us think 'sovereign debt crisis' when 'Italy' is mentioned. Ok, maybe olive oil, pasta and The Godfather also come to mind but did you know that Italy's early stage funding is pretty active? The importance of turnaround is also growing. Considering the amount invested within the different funding stages, the Italian Association of Venture Capital and Private Equity (AIFI) reported that during the economic crisis of 2008 and 2009 only early-stage and turnaround segments grew: they increased respectively by 34% and 150%, while the expansion and buyout segments decreased by 33% and 12% respectively.

When it comes to the number of investments, AIFI shows that the segments that received the majority of investments were early-stage and expansion; moreover, the former has grown by 33% and the latter by 16%. The amount invested and the number of investments within the early-stage sector shows the growing importance of this stage in Italy. The sectorial distribution of the number of investments in high-tech Companies is: medical (19%), computer (15%), biotech (12%), other services (12%), media & entertainment (11%), manufacturing (5%), telecommunications (4%), energy & utilities (4%). 

The entrepreneurial environment is influenced by different factors; like the rest of Western Europe the Italian entrepreneurial environment is positively influenced by the high number of good opportunities and talented entrepreneurs. However, Government support is lacking in terms of facilitating the opening/closing of companies, improving the cultural acceptability of bankruptcy, developing a financial system that supports innovation, sustaining R & D activities and having more favourable business taxation. A lot of new initiatives are coming up especially within the consumer-internet and digital-media sectors: just to provide an example, from the 17th to the 23rd of September Social Media Week took place in Milan, an event where entrepreneurs get together to exchange ideas and keep up-to-date on new technology trends. Another important event is Working Capital - the Italian Innovation Prize; it is a joint-project of Telecom Italia and PNICube (Italian University Incubator Association); it sustains young Italian talent and promotes the creation of start-ups. This year it supported several web, internet & ICT, green, bio & nano and social innovation projects. They provide 30K EUR to each of the 30 projects. Moreover, 1M EUR equity investment is provided by Quantica Venture Capital Fund for the best project. Among Universities, Politecnico di Milano is the most active in supporting innovation: its incubator has supported 61 start-ups since its foundation in 2000; it is primarily active in ICT, Bioengineering, Clean Technologies and Design and Innovative Services. Last but not least is StartuParty, a regular social event which brings entrepreneurs and venture capitalists together. 

So that is the framework, but where are the startups?? In Italy there have been several cases of successful start-ups: Dada is a mobile & web media and advertising start-up that exited with an IPO on the Italian Stock Exchange with a value of 120M EUR; MutuiOnline is an online booking of financial services that exited with an IPO on the Italian Stock Exchange with a value of 170M EUR and had a market cap of 220M EUR in September 2010; Venere is an on-line travel aggregation of hotels that was acquired by Expedia (multiproduct online travel aggregator) for 500M EUR; Yoox is an e-commerce of multi-brand apparel that exited with an IPO on the Italian stock exchange with a value of 220M EUR and was valued at 360M EUR in September 2010. A more recent case of success is Spreaker, an online platform used to create and share audio content on internet; it also allows users to become DJs. In September Spreaker announced the closing of its first seed-funding of 1.1M USD with two European investors: Italian Angels For Growth (one of the most known Italian business angels) and ZernikeMeta Ventures. 

Others receiving growing attention in the Italian environment include: Appsbuilder, a universal platform to develop mobile applications; Money 360, an on-line credit broking platform based on comparative search tools; and Paperlit a multiplatform publishing and advertising solution for newspaper, magazines, catalogs, newsletter and other content producers. 

While the fate of the Eurozone and the PIIGS is far from certain, the Italian start-up environment is indeed active and presents several opportunities to investors.