2018 is proving to be a great year for Italian startups: so far they have benefitted of over 250 Million Euro’s worth of investments. The trend seems to be shifting towards fewer, larger investments from bigger players in truly remarkable projects, rather than a myriad of smaller investments on the off-chance that a promising startup might take off on its own. Overall, the amount of capital that Italian startups are able to attract has doubled over the past eight years, with a steep increase in the past two. The year is expected to close on half a billion’s worth of capital invested in startup companies, not counting the contribution provided by accelerators and incubators to the overall growth of the startup economy in Italy.
A growing economy
Experts attribute this sudden growth to the opening of new channels for venture capital to access the market and to the increased trust in the potential of Italian startups, after the encouraging results of earlier investments. Of the 31 major startup investments of the first two quarters of 2018, eight are worth over € 10 Million. This is often the case with venture capitalists investing in scale-ups, after helping consolidate projects in their early startup days. The recipient of the largest investment (€ 46 Million from Allianz Group and United Ventures) is the Milanese startup MoneyFarm – currently based in London. The runner-up is Cuebig, the American spin-off of an Italian project called Baintoo, with € 27 Million. We have to get to the last place on the podium to find an Italian startup that hasn’t moved abroad yet: Erydel (which received € 26 Million) is a Milan-based biotech company.
A long game
Those who have been closely following the Italian startup scene over the past decade are not surprised by the current trend. After all, a sudden doubling in investments doesn’t just happen overnight and by chance. New venture capitals are actually reaping the financial rewards of operations started as early as six years ago and are able to focus on supporting the development of startups that have shown great promise and proved to be reliable over a number of years. The equity market, after all, craves consistency as much as it craves investments. While there are plenty of reasons for optimism among Italian startuppers, some draw attention to the fact that Italy is still somewhat lagging behind the rest of Europe when it comes to financing startups and scale-ups. Analysts, therefore, warn against complacency and look to the next step: raising awareness among national institutions in order to keep the trend going without relying entirely on venture capital. The good news is that the general awareness of the importance of tech innovation and the need to promote and support it financially have increased significantly and that kind of progress can’t be rolled back. It is now generally understood that these companies embody the kind of potential that entire industries might benefit from, once it’s developed. This awareness forms the basis for the creation of a positive and profitable startup ecosystem, in which ideas are allowed to thrive and funds are made available to boost their growth and help develop them into new technologies.
Forecast vs reality: how startups redefined the idea of success
Less than a decade ago, startups were cropping up at an almost unbelievable speed, and some analysts expected them to create thousands of jobs over the course of a few year. This has not been the case, for a number of reasons. Because of some rather egregious downfalls, investors are now considerably more cautious when financing startups and would rather spend more on a project that has proved its reliability, rather than sink smaller sums of money in startups over which they have no control and whose policies are not always fit to withstand the swings of the market.