Why is Italy the place to be? And what can it do to become the European leading force?
We did it again and this time with higher definition. We updated and published a complete map of the players operating in the Italian startup ecosystem. You may remember our previous map, well.. this one accommodates a greater deal of information. What happened? Has the ecosystem actually grown bigger in 6 months or did we improve our sources? Did we have a fully dedicated resource on the job or did we receive very detailed feedback from players and community builders? This is for you to figure out. Meanwhile, I hope you enjoy a few thoughts on why is Italy the place to be and what can it do to become the European leading force which I thought would be a nice addendum to the map.
Btw, if you want to share your thoughts on the map or know important Italian startup ecosystem players that should be included, please, don’t hesitate to share that with us!
Why is Italy the place to be?
1. CDP Venture Capital
While other Italian governmental supporting initiatives have already proven their impact (i.e. Smart & Start ) Cassa Depositi & Prestiti (CDP) plans to be the real game-changer for the entire ecosystem is in full motion. As in other countries before Italy the role of a government investment force, whether through co-investment, fund of funds, policy, and strategic vision will turn out strongly impactful. With 7 funds already operational and 1.3 Bln Eur to manage, CDP intends to invest over the next few years in 1.000 startups, and support more than 15 accelerator programs. Personally, I think their role is key for a few reasons: it will magnify (in a few years) returns of this specific asset class, will liaise with government and policymakers for smoothing procedures, will give the opportunity to fail and learn to thousands of entrepreneurs, it will help to spread innovation language into not-so-innovative environments.
2. Next Generation EU
Set up at the European summit in July 2020 in response to COVID 19, the Next Generation EU will massively contribute to Italy’s economy over the next 6 years. More than 200 BLN Eur in loans and grants (out of total 750 to be divided amongst 27 EU members), of which 49 intended for digitalization, which places Italy at the center of this historical European achievement. Besides possible cash management and execution potential problem, there will be unprecedented opportunities for growth and value creation, especially for innovation business providers (aka startups).
3. Tax incentives
If intended as an incentive and not as the main motivation, tax incentives can constitute a good reason to be investing in startups. 30% tax credit (up to 50% in some cases) represents a clear nudge in the right direction from the Italian government Especially considering alternative asset classes’ returns. With banks starting charging negative interest for account holders, early-stage return perspective, including now of tax credit, starts becoming really attractive also for non-professional investors.
4. Number of international players
Startup Wise Guys is not the only international player who landed in Italy recently. It is getting crowded and we could not be happier (although, I am not going to do free advertising for them eh eh). More international players mean more credibility, more resources, more co-investment opportunities. Welcome to Casa di Wise Guys everyone!
5. Funds availability
It is no secret that private savings and cash reserves in Italy represent a strategic asset for private investors (4.4 BLN Eur at the end of 2019 according to Bankitalia). While being rich does not necessarily mean being innovative (see the Baltics) it is certainly an exploitable asset. Now, if you are an entrepreneur, you know resources are not the problem, so sharpen your pencil and make sure investors really understand your value proposition. (Take a look at how we fundraised 1.2M Eur in times of Covid.)
And what can it do to become the European leading force…
A. Stop the back talking
Man! If you nurture a negative culture you won’t build empathy within your network, your company, your investors. Granted, it is much easier to blame others for whichever problems we have, but ecosystem growth goes also through the courage of being propositive, empathic, and straightforward.
B. Old economy and the new economy
If things are going faster than anybody has ever imagined, we can’t think of approaching opportunities and business cases with an old economy mindset. Recently, while fundraising for our Italian operations, I have been asked about P & L and business plans of the 200+ startups Startup Wise Guys have been investing in the last 9 years by some investors to prove the credibility of our track record; like I was asking money for approving a new production line for a cement plant. That is not right. There are public bonds and publicly available financial instruments that mirror old economy approaches (and return). If you want to make things ready for the next “Google” you better prepare yourself to ask some “google-like questions.
C. More investors less consulting, less sweat equity…in other words: Put your money where your mouth
Do you believe that early-stage startups are the unexpressed potential of our economy? Great! Then, stop selling them consulting services and start investing in them. This will do two things for you. It will show you the importance of building a diversified portfolio. It will build your credibility.
Look, I love my country, and I respect the hard-working people of the public administration. I just don’t understand why a newly established company has to pay ~300 Eur for accounting book validation tax or why if you open a bank account you have to pay a quarterly tax (bollo) to the government. This doesn’t smell like a new economy to me. Where is the public service there? And while I could understand this applied to established businesses with steady cash flow, it is always hard for me to argue when I am trying to convince non-Italian startups to come and establish a business in Italy.
E. Gender Balance
It may be too late to become the world’s leading force on gender equality, but not too late to become a European driving force and I really mean — driving force. How do you do that? I wish I knew the recipe. I know that antagonizing doesn’t work, nor positive discrimination. I know role models work…and Italy has nothing to envy there.
F. International events & arenas.
For all the event organizers out there. There are no English-speaking events for early-stage startups in Italy. I repeat! There are no English speaking events for early-stage startups in Italy. What does it mean? That it is difficult to accommodate international players when showcasing the good results we are achieving. You don’t need to pay us a royalty for the idea. Just get out there and do it. What Startup Wise Guys will do? We will bring along international startups, investors, partners, speakers longing for being part of the Italian new tech renaissance.