Quarterly Journal of Italian VC — Q2 2022

A quarterly series on what’s going on in the Italian VC & startup ecosystem

Welcome to the 2nd edition of a quarterly series on what’s going on in the Italian VC & startup ecosystem, curated by Ubaldo Mafrici and myself.

Inspired by the announcement of the first Italian tech unicorn in February (Scalapay 🚀), we decided to keep track of all things startups & VC in the country. If you missed our Q1 report, you can access it here.

Want to find out all the numbers and the juicy pieces of news of Q2? Read on 😎.

Q3 2022 in numbers

• Total amount raised by startups (only equity): €562M
• Total funding rounds (disclosed): 56

Q2 total funding amount is only €10M short of the amount raised in Q1 (€572M), which is great news. At this pace, the €2B threshold is attainable for the Italian ecosystem in 2022.

Top 3 sectors by money raised and number of deals

Around 70% of all money raised has been fueled into these 3 sectors:

Clean tech: Clean tech is Q2 big winner, mostly thanks to the Newcleo mega-round (€300M). Good news for the Planet!

Enterprise tech: Enterprise tech tanks 2nd this quarter by amount invested, mostly thanks to VedrAI (€40M) large round.

Fintech & Insurtech: Fintech & Insurtech makes it to the podium for the second quarter in a row. It’s also the sector that recorded the most number of deals in Q2 (7 rounds), stressing the depth of Italian deal flow in the field.

Top 3 largest funding rounds:

• Newcleo (Clean tech, €300M), VedrAI (Enterprise tech — AI, €40M), Arduino (Industrial tech, €32M)

The picture is quite similar to that of Q1, with one company taking more than 50% of all the money raised. Is it good or bad? Our view: if Italy keeps this pace (one mega-round per quarter), Italian startups will have raised €2B at the end of the year, an Italian all-time high. So yes, it’s good.

Most active investors

CDP Venture Capital stays at the top of the podium and does not slow down capital deployment in Q2. Big up for Azimut, who took part in 7 rounds which accounted for 70% (€388M) of all the money raised in the quarter. Primo and Prana Ventures (no, it’s not a tongue-twister) follow.

Main startup hubs:

• Turin (€350M raised, 6 rounds), Milan (€164M raised, 27 rounds), Rome (€9.8M raised, 4 rounds).

Turin jumps on the top of the podium this quarter for the total amount raised, mainly thanks to the Newcleo mega-round (€300M). However, it’s in Milan where most VC deals get done (27), consolidating its leadership position as the main startup hub over the (usual) runner-up suspects (Turin and Rome).

Fresh new capital available

Around €250M has become available for Italian startups this quarter. Who could you count on for your next fundraising?

Indaco Venture Partners

Milan-based Indaco Venture Partners announced the first closing of Indaco Bio (€95M raised so far, with an overall fundraising target of €150M). The fund will invest in biotech startups, from the preclinical to the clinical stages, involved in the development of innovative drugs (molecules, gene and cell therapies, vaccines, etc.) intended for various clinical indications, with particular attention to those related to the central nervous system, oncology, ophthalmology, metabolic- and infectious-diseases. Investments will be mostly in Italian companies, but also selectively in Europe, North America and Israel.

360 Capital Partners

The Milan and Paris-based 360 Capital Partners announced the first closing of 360 square II (€45M raised so far). The fund will be invested in pre-seed and seed companies across South of Europe (Italy, France and Spain). The entry investment ticket will range from 200k to €2M. Sweet spot: B2B software, deep tech and consumer tech. Congrats Lucrezia, Selma and the rest of the team!

Kairos Partners

Kairos Partners, a Milan-based asset and wealth management company, announced the first closing of Kairos Ventures ESG One (€10M raised so far, with an overall fundraising target of €100M). This is the first-ever VC-dedicated fund raised by the company, whose VC operations are led by experienced investors Roberto Zanco and Elisa Schembari, formerly founders of RedSeed Ventures. The fund will invest mostly in early and late stage companies, with a strong focus on: B2B software, life science, space tech and clean energy. Dear founders, Daniele wants to meet you!

Ulixes Capital Partners

Milan-based Ulixes Capital Partners announced the first closing of Argo III, (€4M raised, with an overall fundraising target of €10M). The fund will lead pre-seed / seed investment rounds with tickets ranging from 150k to 700k. Looking for early-stage funding? Niccolò is eager to hear from you 😉.

Grey Silo Ventures

Cereal Docks, an Italian agri and food ingredients group (€850M revenues in 2020), launched its brand new corporate venture capital arm, Grey Silo Ventures. Key focus areas will be: new ingredients and technologies for non-animal-based food products, innovative fermentation-based ingredients and technologies, cellular agriculture and agri-tech solutions. Investment focus will be on early-stage companies across Europe and Israel, with an average entry ticket ranging from €300k to €500k.

CDP Venture Capital

The Italian government is feeding CDP Venture Capital, its innovation financing arm, with new money. More in detail:

CDP will have 2 new funds to manage (not active yet)

• Green Transition Fund: the fund will have an allocation of €250M to sustain the energy transition, with a focus on renewables, sustainable mobility and energy efficiency. The fund will invest both directly and indirectly in startups and SMBs with high growth potential.
• Digital Transition Fund: the fund will have an allocation of €300M with the goal of accelerating digital transformation in the country, through investments in AI, Cloud, digital health, Industry 4.0, cybersecurity, fintech and blockchain. The fund will invest both directly and indirectly in startups and SMBs with high growth potential.

CDP has launched 3 new accelerators

• New National network of accelerators: as we discussed in “The week in Italian startups podcast”, CDP Venture Capital is building a network of 20 brand-new accelerators, each of them on a different vertical. Fourteen are now live: Motor Valley Accelerator, Zero, CyberXcelerator, FuturEd, Fin+Tech, Faros, Forward Factory, Magic Spectrum, Terra Next, We Sport Up, NextAge, Takeoff (Q2 📰 hello Eugenia! and Plug and Play, €21M to deploy), Vita (Q2 📰, €6.3M to deploy) and Habitech (Q2 📰, €5.75M to deploy).

CDP announced “Service Tech” fund’s first closing

• CDP Venture Capital announced the first closing of Service Tech (€60M raised to date, with an overall fundraising target of €100M). It’s one of the four multi-corporate venture capital funds managed by CDP. The fund’s mission is to promote digital transformation in the corporate world, with a particular focus on financial services, insurance and health care. BNL BNP Paribas and GPI (an Italian healthcare technology provider) contributed to the fund for an unknown amount.

Banca Sella & dpixel

Banca Sella, an Italian bank, will invest 100k in each of the 5 startups selected for the first batch of its new acceleration program ‘Metaverse Finance’, run by dpixel. The acceleration program will last 16 weeks and it will be hybrid, the physical sessions being held at Turin’s OGR Tech hub. P.S. I know that the term Metaverse could be confusing and one-fits-all definitions are hard to find out there. Here is the best read I had on the topic so far.

34BigThings

34BigThings, an Italian game studio now part of Saber Interactive, has a €10M allocation per year to invest in gaming startups. The company will run a 6-month acceleration program called Quickload and will host the selected companies at Turin’s OGR Tech Hub. Companies from any country in Europe can apply, but at least one team member will need to attend the program physically in Turin.

Scientifica VC

Abruzzi-based Scientifica VC recently announced a partnership with Lazio Innova to sustain investments in Latium-based companies. Scientifica VC invests in Italian pre-seed and seed startups with a focus on scientific research and technological innovation, giving them access to infrastructure and laboratories. The fund plans to invest in 10 startups per year with an average ticket size of €500k.

M&As, IPO trend

Italy gets its second unicorn. This is probably what made the most headlines in recent months. A few other interesting things happened:

• Facile.it: EQT and Oakley have agreed to sell the Italian leader of online price comparators (insurances, utilities, financial products, …) to Silver Lake which will invest €1.1B to acquire the 100% of Facile.it. This transaction technically makes Facile the second Italian unicorn 🦄 (defined as a private company, with an enterprise value > €1B, born from the early 00s on and that raised external capital for growth) even if its founder, Alberto Genovese, exited the company to Oakley back in 2014 for €100M. We believe Facile.it to be a good example of a successful tech company born and raised in Italy, now employing almost 1000 people and backed by top-notched investors.
• Will Media: Will, a Milan-based digitally native media company, has been acquired by Chora media, a rival podcast startup led by Mario Calabresi (former director of Republica and La Stampa) for €5.2M. The two realities together have around 2 million followers on major social media and an average of over 3 million monthly podcast listeners. Despite the small size of the transaction, It’s nice to see an exit for 2 Italian investors (Davide Dattoli through Talent Garden and Koinos Capital). According to Will Media itself, “consolidation is key in the media industry, in order to gain bargaining power fast with advertisers”. We believe that this is great news for high-quality information in Italy, where young readers are eager for high-quality news reporting free from the endless political debate that characterizes the country’s traditional media. More on the FT.

P.S. You can find Ubaldo discussing Italian startups on Will — for Italian speakers only 🇮🇹

• White and Seeds: Granarolo, an Italian agri-food multinational group (2020 revenues: €1.28B), acquired 51% of the Brescia-based White and Seeds, a protein-intensive dairy products brand, for an undisclosed amount. The good news is that a historical multinational company such as Granarolo is taking open innovation seriously. The less good news is that the company never raised external capital since its inception in 2019, apart from a small equity crowdfunding campaign.
• Bloovery / Colvin: Bloovery, a Milan-based digital flower and plant wholesaler, has been acquired by Colvin, a Barcelona-based competitor. Even if transaction details are undisclosed, VC-backed company exits strengthen the ecosystem as a whole (IAG, LVenture, CDP Venture Capital backed Bloovery). LVenture announced a 2x multiple on their initial investment.
• LemonOne / BOOM: BOOM, a Milan-based visual production company, went shopping in Germany and acquired LemonOne, a Berlin-based competitor. We hope to see more of these acquisitions in the future, which signal renewed ambitions of Italian entrepreneurs, chasing customers beyond the domestic market.

Miscellaneous & bonus links

Doug Leone and Diego Piacentini on the Italian startup ecosystem

Did you know that Doug Leone, the legendary silicon valley investor who led Sequoia from 1988 to 2022, was born in Genova and lived there until his 11th birthday? We found it out in a recent interview released by Startup Italia and Liguria Notizie. A few things strongly resonated with me reading the interview:

“Italian entrepreneurs should look at the industries of the future, such as AI, Web3, Robotics and Clean Energy”.

We can’t agree more on this one. And we can back it up with numbers: the three biggest rounds of the quarter fall in one of the categories mentioned above: Clean energy (Newcleo, €300M raised Artificial Intelligence (VedrAI, €40M raised) and Robotics (Arduino, €32M raised). To all aspirant Italian entrepreneurs: industries of the future attract the most money.

Diego Piacentini, a former Apple and Amazon executive now turned angel investor, shares a similar view (and a lot more interesting insights) here.

“Genova (and many other Italian cities) has terrific weather, affordable housing, and a great quality of life. This would guarantee that young people stay, earn a great living, feel confident about their future, and start families. Many of them would become entrepreneurs and start new companies”.

We strongly believe that Italy should leverage its territory and associated quality of life as a competitive advantage to attract and retain talent. A great digital nomad visa for remote workers could be a great start to attracting talent?

Summer holidays are approaching. Want to make them super productive business-wise? You can try your chances in Santa Margherita this year, where Leone still loves to get some rest when he’s not busy taking care of his seven grandchildren.

Italian-fastest growing companies

Il Sole 24 Ore, an Italian newspaper, recently published a list of 450 companies that registered the highest CAGR from 2017 to 2020. We put together the top 50 companies to save you some time skimming through the chart:

• Percentage of VC-backed companies: just 22% of the first 50 companies on the list are VC or crowd-backed. This result is in line with the analysis of FT 1000 realized during Q1. Congrats to Winelivery for the first place! 🚀
• 2022 vs 2021 rankings: just 6 companies out of the first 50 were present in the first 50 of last year ranking. Nice to see that 4 out of 6 are VC-backed companies: Everli, Hyntelo (former Sixth Sense), Instilla and Mia Platform.

Summer reading suggestion

VC-related

If you are really considering going to Santa Margherita this summer, there’s one book I want you to take to the beach with you: The Power Law, by Sebastian Mallaby. I’ve been looking for a book on VC history since I started my career in VC. This is what I would call ‘the ultimate guide’. Mallaby is a great storyteller and the book beautifully gives you a sound understanding of how VC went from its early days to a $200B industry worldwide. Fellow investors, did you know that we should all thank Arthur Rock for having our job today? If you, like me before reading the book, don’t have a clue who Arthur Rock is, then give it a look.

Not strictly VC-related

A call to all deep-tech investors out there: have you ever come across Seven Brief Lessons of Physics by Carlo Rovelli? It’s a super quick and easy reading which will guide you through 100 years of physics, unveiling complex “mysteries” such as quantum physics or the theory of relativity. Moreover, Mr. Rovelli is a theoretical physicist who artfully hints at meanings beyond its immediate scope, and his thoughts are extremely insightful. Furthermore, are you working on a quantum computing dossier and struggling to understand the basics? Helgoland, by the same author, is for you 📚.

Did we get something wrong? Did we miss anything important? A funding round, a big piece of news? Don’t hesitate to let us know it, by dropping me or Ubaldo a line on LinkedIn 📩.