The Italian startup scene is thriving: here’s how innovative companies won over investors

italian startup

If you’ve been hearing rumours of the inevitable bursting of the Italian startup bubble, you are not alone. The cutting of a government funding program started in 2016 and the disappointing turnout of some promising projects had led many to believe that the Italian startup scene was shrinking and destined to become irrelevant. Recent data, however, lead to a rather different conclusion. In its third report, P101 Sgr registered an increase in the overall investment in Italian startup companies, as well as in the average value of individual investments. All this, combined with a widespread tendency to internationalisation and the increased rate of scaleups, is painting a substantially more optimistic picture than expected.

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Increased investment, with unequal distribution

The report analyses data from 2018, registering an increase in investment of an impressive 261% compared to 2017. More money was invested in a larger number of companies. Specifically, 2017 saw a global investment just shy of €150M in about 50 startups, while 2018 saw 180 companies rake up over €600M. Venture Capitals have rediscovered an interest in Italian startup companies and have deemed them worthy of their trust and investment, thanks in no small measure to the work of incubators and accelerators like P101. What many startuppers still identify as a problem is the less-than-homogeneous distribution of both capital and incubators in the Country. Milan is leading, aggregating almost every relevant actor in the Italian startup scene and attracting almost all the available investments. Rome lags shortly behind and individual cities have occasional success with hubs and projects (particularly in Trentino-Alto Adige and Valle D’Aosta), but the rest of the Country doesn’t seem able to create a viable startup ecosystem. This is particularly detrimental to those companies that have unique ties to a certain territory and that aim at innovating specific aspects of agriculture or tourism.

The Italian startup scene is thriving on small and young enterprises

According to a recent survey of the Ministry for Economic Development, innovative startups account for 3% of all new companies and count over 50k founders. The companies included in this report are under five years old and tend to have small and relatively young teams. Just over 40% has at least one founder under 35 years of age and only 4 out of 10 count at least one employee besides the founders. They have an average turnout of €150k per year or less and they stand out for the innovative nature of their core business. While all fields have seen a surge in relevant startups, all the reports produced over the last year agree that fintech and software development are leading by a significant margin both in the number of active companies and in the value of collective investments. The manufacturing compartment has also seen a significant increase in both parameters.

italian startup scene

A new dawn of the Italian startup ecosystem?

Speculations over the general state of the Italian economy have been running wild over the past year, contributing to a perception of general instability that has not contributed to the well-being of the Country’s economy. The Italian startup scene, in this scenario, has proven to be a surprising variable, with a significant number of young and inexperienced founders stubbornly refusing to be constrained in both the national confines and the confines of a perceived situation of perpetual crisis. As a result, many companies have reached out to international partners, capitals, incubators, and institutions, showcasing a level of innovation, proactivity and sheer talent that several European partners suddenly found they couldn’t ignore. By creating international connections on a European and often global scale, while keeping their operations in Italy, they have created a positive economic trend and encouraged investors to keep their capitals in the Country. Predictions for 2020 are overwhelmingly positive.

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She is a part-time digital nomad. She would go full-time, if only she could stay away from Berlin for long enough without pining for a Pretzel. She was born in Italy and she enjoys life as an expat, but visits home often enough and can still remember how to bake a perfect lasagna. She is passionate about writing, marketing, languages and the systematic demolition of cultural stereotypes.

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