It’s a think tank that aims to promote a further development of Italian venture capital market, which is almost ready to compete on the international ground. It is called VC Hub Italia and is a “permanent forum” created by the managers of the main Italian venture capital funds, including us at P101, 360 Capital, Innogest, Panakès, PrimoMiglio and United Ventures. But it’s open to all venture capital funds investing in innovative Italian start-ups.
The goal of this forum – which is far from being a trade association, but plans to create a constant dialogue with trade associations – is to create awareness through awareness-raising actions and to offer institutional support to the Italian innovation ecosystem. So this is a very different initiative from Aifi, the Italian Association of Private Equity, Venture Capital and Private Debt funds, established in May 1986 to develop, coordinate and institutionally represent these subjects on the Italian market.
VC Hub Italia is for us a means to build an Italian culture of venture capital, which is necessary to nurture a further development of the national ecosystem, which has already seen an acceleration in 2018.
We have talked about this change of pace several times (here, for instance), and its explanation lays in numbers: according to the third edition of the Report on the Trend of the Italian Venture Capital, realized by P101 in collaboration with BeBeez, the Italian market has registered rounds for €480 million (of which €408 million are large deals, at least €3 million each). The number and quality of start-ups has also risen, and more of them can now compete in a global context. Besides, the number of professional operators has risen too, and they have larger funds which make the whole system more efficient.
Certainly, this trend is part of a more general growth throughout Europe, where in the first quarter of 2019 VC investments rised to €5.1 billion from the €15.8 billion of year 2018. It was the strongest first quarter ever recorded (+76% since Q1 2018) as we read in a report by Refinitiv, the former Financial & Risk division of Thomson Reuters that was acquired last year by Blackstone (here is the complete presentation).
However, it is important to note that the Italian VC market had never before exceeded the range of €100 to €130 million and, therefore, the €480 million of 2018 signify a particularly meaningful growth. What we need to do now is to press down on the accelerator in order to continue this race.
With VC Hub Italia we’ll do this by creating and sharing content – through meetings and position papers – that will contribute to raise the awareness of private and public stakeholders towards the specific characteristics of this asset class and the fundamental role it plays in promoting the country’s economic and social growth. For example, pointing out the role that VC can have in the creation of new job positions – almost all of which, in the United States, come from the world of start-ups. In Italy, 10 thousand innovative start-ups (each of which has, on average, 4.3 members) are registered in the Register of Companies and have created 12 thousand job positions. Moreover, venture capital is not just a tool for the growth of companies, it is also an asset class that – at a difficult time in terms of interest rates and traditional financial product returns – can offer investors the opportunity to obtain extra return and to contain risk, thanks to its decorrelation from short-term economic cycles.
Last, but not least, with VC Hub Italia we aim to start a constant dialogue with institutions such as the Italian investment bank Cassa Depositi e Prestiti (CDP) and the Ministry of Economic Development (MiSE). In particular, in the short term, VC Hub founders intend to recommend useful actions to facilitate the development of the Italian ecosystem through regulation. Indeed, we see the potential of the regulations in the 2019 Budget Law, starting from the obligation to invest 3.5% of PIRs (the Italian individual savings plans) into VC funds, to the extension of tax deductions to subjects investing in innovative SMEs (which first reserved to start-up investors), to the creation of the Government Fund which reports to CDP, and finally to the transfer of 15% of the state participations’ dividends to VC funds. All these innovations should contribute to the movement of the Italian VC market towards a billion-euros dimension, slowly approaching the French market (which is worth €4 billion) and the Spanish one (€2 billion). However, we believe that in order for this to happen, we need to favour indirect investments instead of direct investments and to avoid drifts that would just extend the investment programs to non-venture funds, or funds not investing in Italy. Finally, we believe that the government should facilitate the rise of a plurality of fund allocators. If these actions will be carried on, Italy will finally be able to run along the path of innovation.