Italy is one of Europe’s largest economies and a key player in the G7, however, it has had a historically slower trajectory in the tech sector. At the beginning of 2022, it ranked 12th in terms of VC 1 investment in the European region. However, the country is really turning the tide despite the slowdown in global funding. The growth in innovation is being elevated by local assets including a significant wealth of university-educated talent, central government support coupled with a multitude of culture-rich city locations.
The Growth Engine
We talked to prominent Italy scale-up CEO Andrea Ferrato of Young Platform, about what’s behind this rate of skyrocketing growth,
The Italian entrepreneurial attitude is among the strongest in Europe if not the world! There is finally an awareness that only innovation can do good for the economy and the social fabric. Only territories that focus on innovation can grow and developAndrea Ferrero, CEO Young Platform
So, what are Italy’s tech start-ups benefiting from?
– Relatively low set-up and expansion costs versus many Western or Central European economies.
– Highly educated talent market.
– Relaxed laws to enable global workers (digital nomads) to move and work in Italy.
– Cultural rich cities offering a high standard of living.
– A central government determined to make tech work through investment support.
As founder of Italian Insurtech startup Wallife CEO Maria Enrica Angelone has a special insight into the current state of the Italy scale-up ecosystem and what it means for the country,
There is no doubt that the Italian startup ecosystem is getting more solid, especially after Q3 2022 being particularly active in terms of VC fundings, leading Italy to gain two unicorns. Wallife is also part of this exciting growth, having recently closed a 12 million euro Series A Round led by United Ventures. These results can only confirm that Italian startups are contributing to create a virtuous circle that generates growth and development in our economic systemMaria Enrica Angelone, CEO Wallife
Helping Italy’s Scale-Ups succeed at home
Italy has had a long battle with losing start-ups just as they reach a critical mass. Specific examples include Depop which was created in Italy but relocated abroad before achieving Unicorn status. Many entrepreneurs felt more secure leaving the country for fear of aggressive tax burdens and complicated bureaucracy. This is exactly now what Italy is working to curb. The country is aiming to keep scale-ups focused on building their business at home rather than see the possibility of the next great Italian success stories being developed abroad.
Milan has over 300 active start-ups and the highest concentration of venture capital in the country. But innovation is not limited to the north. Further south in the capital Rome, over 20 incubators and accelerators, plus numerous scale-ups are flourishing.
The perspective from the investor’s side is another important perspective to add to the Italy scale-up scenario, and according to Massimiliano Magrini, co-founder and managing partner of United Ventures, a venture capital firm based in Milan counts among its investments Wallife and Young Platform, this is how they see the Italian ecosystem,
Ten years after the launch of the Start-Up Act, we have reached a tipping point: there are more and more established funds and investments ripe for an exit. The numbers of VC funding have become large enough to generate success stories. Finally, we have developed the knowledge and infrastructure to capitalize on the potential of emerging businesses.
Despite the macro environment, Italian tech is on a solid trajectory and close to being integrated with the rest of Europe. Through our three funds (plus a fourth in the making), we are committed to making the most of the Italian market’s peculiarities, connecting Italian entrepreneurs and talents to the global market.Massimiliano Magrini, Co-Founder United Ventures
How is the Italian government supporting start-up growth?
- Creating and sponsoring the Fondo Nazionale Innovazione, overseen by CDP Venture a kind of nationalised Venture Capital firm. The initiative is a €1 billion investment program to boost the country’s start-up ecosystem, which is targeting a minimum of €2.5 to €3bn investment by 2023.
- Adding two accelerators to its Italy scale-up and tech growth programs. Accelerator Imprese and Digital Xcelerator. To offer learning tools, mentorship, networking and advisory support for start-ups and SMEs
- The Italian Start-up Act, now considered one of the most advantageous start-up laws in the EU. It’s actually designed to join all previously related legislature into one law, empowering local tech hubs with tax exemption and breaks, removing bureaucratic obstacles and adding incentives to attract more resources.
- A new digital visa is still in development for “highly skilled immigrants” that enable tech talent to relocate to work in the country. However slow the process has been it does signal a positive step for companies that may need to dip into a wider talent pool to hire new talent. It’s unclear when it will come into effect and how long the list of requirements will be but it’s moving in the right direction.
With these foundations in place, we believe that Italy’s scale-ups have a great opportunity to play catch-up with some of its more established European neighbours including Spain, and France.