The new Italian (tech) renaissance

O mangiar questa minestra o saltar questa finestra

Sebastián Fernández-Medrano and myself (Samaipata’s Southern Europe squad!) usually do quarterly catch-ups in the geographies we cover. We travel to the major tech hubs in Portugal, Spain and Italy to spend 2–3 days speaking with the key stakeholders of the ecosystem. Last week, we did this remotely for the first time in Italy and we spoke to c.20 key VCs and accelerators in the Italian ecosystem.

These trips (now virtual) make me realise how important it is to keep your boots on the ground wherever you invest as a VC, specially at pre-seed/seed level. Main reason is because in tech, in a blink of an eye everything suddenly accelerates, new faces arise, and what seemed impossible becomes a reality. This is what I believe has happened to Italy in the last 18 months so I couldn’t find a better time to share our view on why we believe Italy is cementing the ecosystem with the right ingredients to become a leading country in the European tech scene.

Put the numbers where your mouth is

Before getting into our thesis for the country, I believe numbers speak louder than words so here are some relevant figures on the ecosystem:

  • Population: 60 million
  • GDP per Capita: $34k
  • 67 VC funds headquartered in the region
  • Out of those, 18 of them (+25% of total) have been raised since 2015
  • 12 corporates have an active VC arm
  • VC funding reached +$850m in 2019 (4x since 2015)
  • c.300 deals were venture-backed in 2019
  • Italy’s top 5 superstars in the ecosystem are:
  1. MoneyFarm ($127m) — United Ventures, Allianz
  2. Prima.it (€100m) — Blackstone, Goldman Sachs
  3. Soldo (€83m)— Accel, Battery Ventures
  4. Casavo (€59m) — Greenoaks, Picus, Project A, 360 Capital
  5. Milkman (€32m) — p101, 360 Capital Partners

Why we believe in the Italian Ecosystem

If we look back since Samaipata was launched four years ago and started actively investing in Italy (CornerJob and TogetherPrice), a big part of our thesis has been fulfilled. However, in the last 18 months all those ingredients we had been observing are no longer naive assumptions but a reality. Here are our four key beliefs that will trigger Italy to become a reference tech hub in Europe:

  1. Italian VC landscape is growing at a fast pace, fuelled by a less oligopolistic ecosystem and by top-tier international VCs setting their first foot in the country
  • +$850m VC funding for 2019 (4x vs. 2015).
  • 67 VCs investing in the region: 12 of them are relevant Seed to Series A firms and 18 were born after 2015. Also, 50% of the relevant VC funds focused on Seed to Series A opportunities have raised +100m funds in the last year and are actively investing despite the pandemic.
  • 12 big corporates have launched their CVC funds.
  • ScaleIT has gathered leading European VC firms in Milano for 2 consecutive years to meet scale-ups.

2. Government administration is thoroughly backing innovation

  • €1 Billion investment program by CDP Venture Capital was finally disclosed last week. The stated goal to close the venture capital gap with our European peers.
  • Ministry of Economic Development launched an initiative called Italian Startup Act which collects different measures to incentivise the Italian Ecosystem such as tax deductions on early-stage investments as well as R&D credits or Startup Visa to attract worldwide talent. It was originally set up for the first time in 2012 but the act is being updated on a yearly basis.

3. Italy’s tech talent pool is increasing in both quantity and quality, led by leading universities increasing their international base and big international tech corporates placing a bet in the ecosystem

  • Microsoft announced last month a $1.5 billion investment plan to accelerate digital transformation in Italy, including its first cloud datacenter region.
  • NTT data announced two weeks ago in their global conference in Tokyo that they will be investing heavily in their R&D center in Calabria, making it their third biggest centre at a worldwide level.
  • Apple sponsored a Naples-based developer academy, to foster technological careers in the region.

4. First signs of potential success stories are preparing the country to become home of unicorns

  • Commerce Layer, a headless commerce platform, has raised a $6m round led by Benchmark, one of the most reputed VCs worldwide.
  • Milkman, logistics platform which offers a same-day delivery service and a tracking system, raised their €25m Series C in the middle of the pandemic led by leading Italian VCs and strategic investors.
  • Genespire, a biotechnology company focused on the development of transformative gene therapies for patients affected by genetic diseases, closed in April a €16m round led by Sofinnova Partners.
  • Already some relevant exits are also taking place such as Klarna’s acquisition of MoneyMour at the beginning of the year.

Wrapping up — something’s happening and we don’t want to miss out!

When you look at what are the key factors needed for a tech ecosystem to boost, it comes down to four: capital flowing in, talent pool increase and entrepreneurial culture, government support and success stories. As proven, Italy is well positioned in all of them! In the last 18 months, the country has set key actions in place which put them in the right spot to enter a success/growth loop. And as we know, growth loops are unstoppable and only get bigger and bigger… so I don’t know about you but at Samaipata, we don’t want to miss out. Welcome to the new Italian (tech) renaissance!

As always, we’re keen to hear contrarian thoughts so please do reach out to us if you’d like to discuss our view :)

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