Quarterly Journal of Italian VC — Q3 2022
A quarterly series on what’s going on in the Italian VC & startup ecosystem
Welcome to the 3rd edition of a quarterly series on what’s going on in the Italian VC & startup ecosystem, curated by Ubaldo Mafrici (Early, growth Investor @ Wellness Holding) 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 and Q2 report, you can access it here and here. Want to find out all the numbers and the juicy pieces of news of Q3? Read on 😎
Quick spoiler: we have a new unicorn, Satispay! 🦄
Q3 2022 in numbers
- Total amount raised (equity + debt): €1.3B
- Total amount raised (only equity): €716M
- Total funding rounds (disclosed): 52
Q3 total funding registers a 27% increase from Q2 and a 25% one from Q1. Money raised surpassed €1.8B so far, thus making our predictions of €2B raised by Italian startups in 2022 attainable.
The huge difference between the “only equity” and “equity + debt” amount raised comes from Casavo and Bending Spoons, which both obtained a €300M line of credit.
Top 3 sectors by money raised and number of deals
Around 75% of all money raised has been fueled into these 3 sectors:
- Fintech & Insurtech: Fintech & Insurtech is always on the podium (1st in Q1 and 3rd in Q2). The 2 newly minted Italian unicorns are both fintech companies. We see a trend here.
- PropTech: PropTech ranks 2nd this quarter by amount invested, mostly thanks to Casavo (€100M) mega round.
- Life sciences: life sciences investments show great vivacity in Italy. This time on the podium mostly thanks to the round of Medical Micro Instruments (€73,4M).
Top 3 largest funding rounds
- Satispay (Fintech, €320M), Casavo (PropTech, €100M), Medical Micro Instruments (€73,4M).
Thanks to its latest €320M raise, Satispay becomes Italy’s second unicorn 🦄 (or third, depending whether you are counting Facile.it, which didn’t make much headlines). For those who don’t know the company, Satispay’s mobile app allows its 3M users to exchange money among them as easily as on Paypal and to shop at more than 200k merchants around Italy, France and Germany. The smaller bars and merchants love it especially because it allows them to avoid commissions tolled in the most used payment circuits.
Most active investors
For all the fund managers reading this and dreaming of becoming the most active investor of the quarter: you need to do better than CDP and Azimut / Gellify, which are consistently on top of this ranking.
Our wish for future editions: more Italian money in the mega rounds, which are always led by large US funds. This is not an issue peculiar to the Italian ecosystem, though: in 2021 US investors took part in 2.210 deals in Europe worth a total of €71B, out of €120B raised by EU startups during the year (Pitchbook).
Main startup hubs
No big surprises here, apart from a quiet Q3 for Turin, which stays off the podium.
Fresh new capital available
Fundraising activity didn’t take a lot of vacation this year: around €276M has been raised by Italy-based VC operators this quarter, in line with the amount raised in Q2 (€250M).
Who could you count on for your next fundraising?
Neva Sgr
Neva Sgr, the VC arm of the Intesa SanPaolo (the largest Italian bank in Italy total assets) announced the final closing of Neva I at €250M. Neva has already allocated around €150M in 26 companies around the world since August 2020. According to Sifted, Neva wants to increase the share of investments in Italian companies beyond the current 30% quota. The average entry ticket size is around €4M, with the possibility to go up to €10M. Despite being sector agnostic, the fund leans towards fintech and deeptech.
CDP Venture Capital
CDP Venture Capital, the government’s innovation financing arm, announced:
- The first closing of Energy Tech (€80M raised so far, with an overall fundraising target of €100M). Energy Tech is a sub-fund of the larger Corporate Partners I investment vehicle (the others being Industry, Service and Infra Tech). Investors in the fund include large corporates, such as Baker Hughs, Edison, Snam and Italgas. The fund will invest in startups developing innovative solutions to boost energy transition. Italy has a brand new climate tech fund!
- Italia Space Ventures (€90M raised so far, with an overall fundraising target of €250M). As the name suggests, the fund’s investment scope will be the space economy. The fund will invest both directly and indirectly in startups and SMBs with high growth potential. Italy can already boast a great startup success story in the space (pun intended) with the quasi-unicorn D-Orbit — which should have gone public via SPAC this year at $1.28B valuation (then postponed due to the market downturn).
- Personae call for applications: Personae is the 15th (out of 20) startup accelerator launched by CDP as part of the program of creating 20 new accelerators across the country (Rete Nazionale Acceleratori). Personae has a total dry powder of €6.1M to be invested in startups active in the welfare space. The program lasts 4 months and accepted startups will receive a €100k cheque. The first 10 startups batch will start in January 2023.
Finally, we’re glad to see that the €2B budgeted for CDP Venture Capital from the Italian Treasury in late 2021:
- has become €2.5B (Thank you 🇪🇺).
- has been officially allocated to CDP Venture Capital, whose endowment before the announcement amounted already to €1.8B (despite it’s not clear the deployment period).
This is important. The Italian VC market needs long term support from institutions — not erratic policy making. This allocation will allow CDP Venture Capital to comfortably lead the way for a while.
M&As, IPO trend
Musixmatch
Musixmatch, a Bologna-based music data platform, announced a significant majority investment from TPG, a San-Francisco based global private equity firm with notable experience in the music and entertainment industry. Musixmatch was founded in 2010 by Max Ciociola, Giuseppe Costantino, Gianluca Delli Carri, Francesco Delfino, and Loreto Parisi. The total amount raised by Musixmatch before the TPG investment was $19.3M and Bebeez estimates a €300–400M valuation range (based on 2022 projected EBITDA of 30M), which we find reliable. It has been likely a great exit for historic investors, such as P101 and United Ventures. Kudos 👏
ProntoPro
ProntoPro, a Milan-based marketplace for professionals, merged with Arca (a Turkish competitor) and the new venture raised €15M from existing investors. ProntoPro was founded by Silvia Wang and Marco Ogliengo in 2015 and it is now active in 5 countries: Spain, France, Germany, Switzerland and Austria. We like this news for 2 reasons:
- No early exit for ProntoPro: the company is growing bigger while remaining independent (undersized firms contribute to a sluggish total factor productivity in Italy).
- One of its co-founder, Silvia Wang, is already a repeat entrepreneur and recently raised €2.6M for her new venture, Serenis.
Askdata
Askdata, a search-driven analytics startup with HQ in San Francisco (but most of its team in Rome) has been acquired by SAP for an undisclosed amount. Askdata was founded in 2015 and went through Y Combinator in 2019. The company raised less than €0.5M in total from TIM Ventures, Pi Campus and Y Combinator (Crunchbase). Despite not being a billion dollar exit, SAP doing shopping in Italy is positive for the ecosystem — which has historically been characterized by limited exit opportunities.
Evensi
Evensi, a startup for discovering events with HQ in San Francisco (but most of its team in Modena) has been acquired by Events.com, a leading US-based event planning platform. Evensi created one of the best event search engines out there, capable of processing more than 200k events per day in more than 100 countries. Organizers pay Evensi to show their event to the relevant audience and event-goers don’t need to browse dozens of different web pages to find what they look for. Before the acquisition, the company raised $4M from Regency Corporate, Primo Ventures and others. Events may seem a trivial topic, but Evensi tech is quite advanced. Despite being anecdotal, we believe this to be an additional proof point of the Italian tech talent potential.
Aulab
Aulab, a Bari based online coding school, has been partially (60.61%) acquired by Multidiversity (€190M in revenues in 2020), a large e-learning group with brands such as Atenei Pegaso, Mercatorum and San Raffaele Roma. The amount of the acquisition is not disclosed but rumors say that it can be something between €10–15M. The company raised short of €1M in equity since inception in 2014, and around €200k in grants according to Bebeez. In 2021, Aulab was making €1.6M in revenues.
We believe the fil rouge behind these rounds of exits is easily identifiable. Historically, Italian startups have been undercapitalized and privileged the path to an early exit by bigger peers or corporates. But now that capital represents less and less of a constraint in the country, we expect this trend to reverse. In a couple of years we’ll be proven right or wrong — but until then — you need to keep reading us.
Events
During Q3, we left our offices and went into the field to take part in two events.
TechChill
We went to the first edition of Techchill Milano, a widely-recognized Baltic event generally happening in Riga.
What we liked
- Italy can attract international event brands and Milan was full of foreign investors attending Techchill. Moreover, Techchill brought the presence of side events, which are typical of leading conferences such as Slush and Web Summit.
- TechChill gathered in Milan the community of Italians in VC, which reunited for the first time after the event for an informal meetup. It was great to meet all those people in person (almost 55), from years of zoom calls or slack messages.
What could be improved
- Attracting more international and Italian stars is definitely key to increase panels’ audience. We noticed that people were more keen on scheduling meetings during the event rather than listening to the panels.
Italian Tech Week
It was the second time we took part in Italian Tech Week, the flagship innovation event in Italy, sponsored by the GEDI group, a large Italian editorial group, this year at its 3rd edition.
What we liked
- The venue is beautiful: Turin’s OGR, a former railways maintenance hub, completed its conversion to an innovation hub in 2020. Part of it, OGR Tech, really looks like Station F (literally, we believe they got more than an inspiration). Also, it’s located 10 minutes walking from a high speed train station, Porta Susa. Should we start considering Milan-Turin as a single innovation hub? (Milan is 1h of a speed train away).
- Founders speeches were not banal: it’s tempting to get on stage and repeat “success mantra” commonplaces such as resilience, hard work, humility, and bla bla. It’s tempting because those are all true factors of success. However, what struck us has been the narrative around failure: Degioanni (Sysdig), Simoneschi (Truelayer) and Mancini (Scalapay) all shed light on tough moments of their journey. We believe this is relevant, especially in a country where around 45% of adults think there are good opportunities but do not start a business for fear it might fail (GEM Report, 2021). Despite the accuracy of such research (US stands at 40% and UK above 50%), we believe that lifting the taboo around failure is a factor that can help unlock entrepreneurship in Europe and in Italy — where we have historically had way less iconic entrepreneurs who founded billion dollar companies and spoke up about it.
- People were generally bullish about the ecosystem growth and the interest from international investors to start fueling money in the country tech startups was tangible. Tech.eu seems to confirm it here.
What could be improved
- Despite solid international guests, such as Eric Demuth (Bitpanda), Felix Oshwald (goStudent), Patrick Collison (Stripe), Jean de la Rochebrochard (Kima) and Alexander Tamas (VY Capital), we wished for more international stars that could have attracted a higher number of international guests. Let’s be bolder in the next edition.
- This year’s event’s timing was not lucky, as general elections had been held 1 week before and a new prime minister was yet to be appointed. However, in the next edition, we want the future Italian prime minister to open the event. We want him/her to breathe innovation and entrepreneurship and understand its strategic role for the Italian economy’s growth.
Other takeaways
- Jean de la Rochebrochard mentioned the French Tech visa program (which we already discussed here) as a policy tool to take inspiration from to boost the ecosystem talent pool. If even the Kima King (new nickname for you, Jean) says so, maybe we could start approaching MPs of the new government, Francesca Bria?
- Most founders on stage highlighted cumbersome bureaucracy as the most limiting factor of doing business in the country. Unfortunately, sometimes the legislator seems to weigh the form more than the substance. Should we start by letting people (again) incorporate online?
Bonus links
Thanks for getting so far in reading this piece. You deserve a prize 🏆. Here’s two bonus links for you.
Very well-done analysis of Italian-founded unicorns: the research was conducted by Club degli Investori, one of the leading business angels groups in Italy. Here’s a quick summary:
Number of European unicorns: 151 (July 2022). The first 3 countries are: UK (44), Germany (29), France (25).
Number of unicorns with Italian founders: 10. (Yoox, King, Faceit, Kong, Advanced Accelerator Applications, Depop, Scalapay, MutuiOnline, Truelayer and Sysdig).
Key learning for founders:
- Don’t rush 🐢: the average time to become an unicorn is 10 years.
- Go global 🌎: 9 out of 10 analyzed companies raised on average more than €300M and more than 40% of capital raised come from beyond national boundaries.
- Experience is key 👨🦳👩🦳: the average age of unicorn founders is 40 years old. Despite the myth of the twenty-something college dropout, we often forget that Bill Gates or Mark Zuckerberg are outliers. Researchers on the matter seem to agree here and here.
Key proposals for the ecosystem:
- Higher cooperation between investors.
- €1B+ fund creation by CDP to co-invest with international VCs with ticket sizes of €50M.
- Innovating the current startup law, which dates back to 2012, to prevent founders from moving their HQ abroad.
If you want to be updated weekly on what happens in Silicon Valley, don’t hesitate to subscribe to Silicon Valley Dojo, a weekly newsletter curated by Irene Mingozzi, Massimo Sgrelli and Luigi Bajetti from Lombard Street Ventures. They discuss mostly Bay Area stuff, but with an Italian audience in mind. Their goal is to strengthen the link between here and there to contribute to the ecosystem growth. We find it to be a great initiative, as the quality of local startup news in Italy has room for improvement.
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 Matteo a line on LinkedIn 📩.
