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Record year for the Italian venture capital, which aims to invest 500 million euros in start-ups

NewsFromThePlatform | July 31st, 2018

The 31 deals that were closed in June, for a total funding of € 250M, raise hopes that 2018 could mark a turning point for the start-up market – which is the engine of the country’s growth

2018 is marking a change of pace for Italian venture capital. A record year that could reach half a billion euros in the next 6 months. This is a monster figure for Italy. Of course, this figure is just a projection, but it’s grounded in numbers. Source reports, as usual, are not unambiguous nor consistent. According to ScaleIT, which only takes into consideration tech companies funding starting from 1 million euros, Italian VC has invested in start-ups for over € 200M in the first six months of 2018. But if we look at an analysis conducted by Agi on the basis of the deals that were closed in 1H 2018, this number raises to € 250M: 31 deals, of which 8 are equal or over € 10M.

Of course, this is still just a drop in the sea when compared to ​​what happens in the rest of the world, or even just in Europe, where, in 2017, the United Kingdom, France, Germany, and even Spain, covered total values ​​of 4, 2.8, 2.5 and one billion euros respectively. But the spark that ignites innovation seems to be finally lit also in Italy, for many reasons. First of all, Italian VC may be ready to grow towards its maturity. After being stationed, for the last 6 years, around € 100M total investment per year (according to AIFI data), the  Italian market is finally taking a big leap and getting stronger. The second reason is that the general environment seems to be favourable: in a recent and controverted report by Casaleggio Associati (the data analysis company that is close to 5SM) we read that “to create an ecosystem of innovation funding, Italy will necessarily have to strengthen its risk capital, coordinate state intervention, promote a culture of innovation and open innovation.” We hope that this words will be translated into strategies that more strongly encourage VC investments.

Moreover, VC companies have launched new, more capacious funds. We have done it with P102, which aims at raising € 120M. The larger volume of Italian funds has already started producing some good results, which are reflected in market numbers. However, this situation also has a flip side: one conceivable scenario is that, once the work of the new funds has been completed, the situation will go back to the previous stage and the market will fall again in the second part of the year. This happened in 2017 because of a phase of transition in which the old funds were at the end of their investment cycle and the new funds were still in their collection phase. However, we don’t believe this is likely to happen: we need to be aware and monitor the market, in order to catch any signs of a reinforcing trend. We believe it is very important to consider a medium and long term horizon, taking into consideration cyclical movements but also being able to look beyond them. There’s no doubt that higher financial resources will allow new funds to operate larger deals: this means a structural change that could generate surprising results.

Italian VC funds have also grown in number – competition is always desirable in any market – and have gained more credibility thanks to their longer history. Today they have more chances to convince subscribers and other market players to support them.

In short, the market of Italian venture capital has officially kicked off, however let’s not indulge in any easy enthusiasm. Resting up at this point would be the most serious mistake: we need to create new awareness around start-ups, talk about them and make it clear that they are important, indeed fundamental, means of innovation – and as such they should enter the radar of structured companies and big corporations, as is already happening in the rest of the world. Such a great opportunity for the Italian economy can only develop through the support of venture capital.