If you are planning on launching your own startup in Europe, this is the right time to do it, and Italy might just be the perfect place. After lagging behind the rest of the western world for a few years, particularly in terms of capital and funding, Italian startups appear to have finally found their feet and achieved sustainable growth. The funds have not come from the channels that startuppers might be traditionally expected to turn to – such as incubators or accelerators – but from corporate capital, mostly in an open innovation setting. An increasing number of existing companies have realised that there is great value to be found in startups and they have taken an active interest in the startup scene, either acquiring Italian startups or participating in their funding, to help them scale up and become profitable.
How to get your startup funded in Italy
Private capital to the rescue
The startup scene in Italy went through a few years of trial-and-error experiments, in which it was suggested that the government, by means of dedicated funds or tax cuts, might prop up the emerging startup economy. Over the past year, however, after the first government funding program was completed and not renewed, private capital has come to the rescue, breathing new life into several promising startups. An impressive 23% of Italian startups currently benefits from funds provided by existing companies, while incubators and venture capitals together barely reach 9%.
SMBs in the lead
If you are assuming, based on these data, that we are talking about big corporations, you are mistaken. In fact, major league players in the Italian economy seem pretty reluctant to trust inexperienced startuppers. Most of the funds come from small-to-medium businesses, thus establishing themselves once again as the true powerhouse of Italian enterprise. There is much to be said about this trend, particularly about the fact that small entrepreneurs seem to be adopting a more modern and open-minded perspective than top CEOs and CFOs. In fact, most of the companies that decided to invest in startups, did so multiple times, supporting several startups at any given time, often regardless of whether or not the beneficiaries of their funds operated within the same industrial cluster or were located in the same region. These entrepreneurs are investing in innovation and development, in the knowledge that a healthy, advanced and vibrant economy will benefit the whole Country in the long run, but also with a view to short and medium term gain.
Innovation and research
Companies investing in startups are looking to benefit not only from said startups economic success, but also from the research and innovation potential that they offer. Entrepreneurs know that they have to innovate to succeed and grow, but they don’t often have the human capital to do so, and the market often fails to provide adequate solutions to their needs. Funding a startup that is working on the kind of innovation they need is an excellent way to get early access to new technology and stay ahead of future developments. The relationships between startups and financing companies, however, are not always entirely smooth and often need some negotiating, in order to strike a workable balance between the startup’s original vision and the investor’s expectations. It helps to have clear-cut governance guidelines, as well as a detailed idea of subsequent steps in the startup’s growth.