In a recent statement, Italy’s prime minister Mario Draghi declared that the country will surpass growth expectations, in its economic recovery from the pandemic. Jamie Dimon, chairman and ceo at JP Morgan, agrees: “I think that this is the right time to have trust and invest in your country,” he said to economic newspaper Sole 24 Ore. As a matter of fact, the current figures depict Italy as an increasingly fertile land for investment opportunities. The digital fuel is running fast and so does the venture capital and innovative startup scenario.
The data collected by the P101 SGR Observatory Report 2020 by BeBeez over the past five years is an encouraging testament to this. Specifically, it highlights a remarkable increase in the overall Italian startups investment turnover, which has quintuplicated since 2016 up to 2020.
These are the figures: 165 million euros spread over 128 rounds in 2016; 605 million euros spread over 244 rounds in 2019, up to 780,5 million euros spread over 306 rounds in 2020, the biggest numbers Italy has ever reached.
Most certainly, the pandemic has crucially contributed to boost the investments recorded in 2020. This is evident especially among startups specialized in e-commerce services, a sector which has boomed as it probably never did before.
While the overall figure of 780,5 million euros collected in 2020 come from a variety of players, among which venture capital firms, investment holdings, business angels and crowdfunding platforms, the venture capital sector has played a major role towards both the corporate and innovative startup businesses in Italy.
As illustrated by the Venture Capital Barometer 2020 (EY with VC Hub Italia), the fintech still represents the most attractive sector, having recorded the 30% of total operations (32 rounds) and having reached 244 million euros in 2020.
It is followed by the pharmaceutical bio-tech industry, where startups have been allocated the 15,5% of total funds, (120 million euros, 56 rounds), and by the growing food-tech sector, raising 11,3% of total amounts (88 million euros, 44 rounds).
If we place these figures on the international stage and compare them with other countries ($300 billion is the value of venture capital investments worldwide), it will be evident that the sector in Italy still records a pretty humble size. Weighing on this situation are the lack of a more efficient and investment-oriented bureaucracy, and also objectively limited funds.
However, you should not be fooled, as the thousands of small and medium-sized enterprises (PMI) operating in the field of mechanical engineering are a proof of an ongoing evolution which began a decade ago. Their elevated quality standards, in fact, have enabled them to outdo their giant competitors by providing unique technological solutions to the global leading companies spread all over the world.
Despite the limited investments they get, it is crystal clear that the added value they ensure is the key of their success, making Italy home to a great technological avant-garde.
In the end, Italian venture capital firms are extremely selective when it comes to invest. In turn, this forces startups to excel in order to access VC funds. So eventually it is this very shortage of resources that makes our local startups even more fierce to gain opportunities. Finally, the remarkable push to digitalization given by the Next Generation EU funds (Italy is to invest 46,3 billions € in the sector) represents a crucial opportunity for further growth. So, while they might not be unicorns (valued more than $1 billion in the marketplace) – be certain: Italian startups represent rather valuable gems which should be looked closely at, in the context of Italy becoming an increasingly strategic market to invest in.
Andrea Di Camillo, P101 Venture Capital founder and managing director