In the first 6 months of 2019, 397 million Euros were invested in Italian start-ups and start-ups that have been founded by Italian entrepreneurs – as pointed out in a recent analysis by StartupItalia!. The Italian Venture capital market continues to grow, as shown by a comparison with the previous year: P101’s third Annual Report on the progress of venture capital in Italy (created in collaboration with BeBeez) shows that in 2018 Italian start-ups and scaleups (as well as those founded by Italian start-uppers) had announced investment rounds for a total value of 480 million euros, versus the 144 million Euros that had been registered in 2017 (we talked about it here). This means that, the first half of 2019 almost equalled last year’s whole market value.
The number of deals continues to decrease, which signals that deals are bigger: the value of H1 2019, i.e. nearly 400 million euros, was distributed over 43 rounds and included crowdfunding operations for 24 million euros. Besides, Viralize and Easy Welfare closed million-dollar exit deals: €16 million the former, acquired by Vetrya from P101’s portfolio, and €53 million the latter. In 2018, over 408 million Euros of the total 480 million Euros that had been invested in Italian rounds had pertained to deals equal to or higher than 3 million Euros… and 316 million Euros had concerned rounds starting from 10 million Euros. This trend indicates that the Italian VC market is finally able to finance the process of growth and not just the start-up phase of innovative companies.
Italy is shortening, albeit very slowly, the gap with the rest of the world (and with Europe) where, according to the latest report by Kpmg, Venture Pulse, the overall Q2 2019 value of venture investments reached the stable figure of 52.7 billion dollars – to which we need to add 53 billion dollars, i.e. the market value of Q1 2019, in order to have the global market size of the first six months of the year. The Asian market is pulling the brakes as China’s investments seem to be in standby, after the mega deals recorded in the previous months, while investments in Europe and the United States remain substantial.
The United States in particular keep showing high figures: $64.1 billion were invested in the first half of 2019 in various sectors such as logistics, food delivery, aerospace, technology, consumer durables, meat substitutes, technology, AI and self-driving vehicles. Also Europe continues to show record numbers in terms of invested volumes: $14.24 billion in the first two quarters. In contrast, the number of operations continues to decrease: only 825 in Q2, while they were 958 in the first quarter. This contraction is caused in Europe by the difficulty of early stage companies to attract venture capitalists, but the trend is indeed global: the number of venture capital operations has fallen for the fifth consecutive quarter, for a total of 3,855 deals globally in Q2 (plus 2,657 in Q1, the lowest value in the last 31 quarters).
However, according to KPMG, “The strength of Europe’s VC market continued to be defined by the growing diversity of its innovation hubs; while VC investment in the UK was well-off of historical highs, increasing investment in the Nordic countries, France, Spain, Poland and others combined with steady investment in more established innovation centres in Germany and Israel helped keep VC investment in the region high during Q2’19.” And, of course, record volumes plus smaller deals equals larger single transactions, especially with the high concentration of investments of Q2 2019: of $8.74 billion, $3 billion went into the first 10 deals.
According to Kpmg, heading into Q3’19, “the trend towards a smaller number of late-stage deals is expected to continue globally, which could affect the ability of some high-quality early-stage companies to attract funding”. Undoubtedly, this is not an Italian problem as here, if anything, the innovative companies that still need to become stronger and proliferate are precisely scale-ups.