According to data from Dealroom, the Italian economy is the fourth biggest in Europe and has raised €3.6B in VC investment in the last five years. The combined enterprise value of Italian startups is €21B.
So far, Italy has created two unicorn companies valued at over $1B – Yoox and MutuiOnline – and is home to 12 future unicorns valued between $250M and $1B. However, Italy isn’t short on innovative minds. Multiple unicorn companies were initially born in Italy before relocating in order to scale overseas. One example is London-based Depop, which was acquired by Etsy in June for $1.6B.
The vast potential of Italian startups is why TechChill, the key tech and startup event in the Baltics, is heading to Milan and hosting TechChill Milano from September 28-29. The two-day event will bring together startups, investors, media and tech enthusiasts on a mission to bridge the gaps in knowledge, skills and network in the startup world.
Hurdles for startups
“In recent years, the Italian startup ecosystem has displayed strong growth, with capital invested in startups overcoming the €1B threshold in 2021, four times more than in 2016,” says Fabio Mondini de Focatiis, founder partner at Growth Capital, an Italian financial advisory firm focused on fundraising for startups, scaleups and SMEs.
“Despite global macroeconomic and financial tensions, the Italian VC world is expected to significantly grow in percentage more than the other European main ecosystems. At Growth Capital, we expect it to reach the €1.6B-€2.0B range by the end of 2022.”
Fabio believes that most of the difficulties for startups in Italy’s ecosystem are experienced at the very early stages of a startup’s lifecycle.
“It can be a challenge to raise the very first round,” he says. “The shortage of Italian institutional players compared with other EU countries and the small size of their tickets limit the number of startups finalising a significant seed round. In early stages, the few Italian VC funds might also use their bargaining power to negotiate nonstandard conditions to protect their investment that might be better to avoid.”
Hazim Nada is cofounder and CEO at AEHRA, a Milan-based electric vehicle startup, and has faced challenges as a startup looking to grow from Italy.
“Our main challenges have been slow bureaucracy and the lack of a sizable autochthonous funding scene able to support large scale projects like ours,” says Hazim. “Italy is one of the most creative nations on the planet with a severely disorganized and dysfunctional public system.
“The plethora of startups is a testament to this, and the main problem is the scaling up process. The mentality remains small scale, and the ecosystems in place are not supportive of scaling up. Capital is dry and forces anyone with serious growth intentions to have to look beyond only the largest of funds in Italy.”