Business strategies

Family businesses and start-ups, a marriage for innovation

In the USA 3 out of 10 corporate venture capital from family businesses, in Germany five times more than here. An opportunity for new technologies

by Anna Migliorati

26 May 2025

Start Up Business of Creative People Concept - Modern graphic interface showing symbol of entrepreneurship, fund, and project plan to start a new small business by smart group of entrepreneur.

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Key points

Geographical and industry proximity the US recipe
Corporate venture capital is growing in Italy, but less than in Europe
The Danish case, patents grow

4' min read

(IlSole24Ore-Radiocor) - The tradition and territorial roots of family businesses and the vocation for innovation of start-ups. A marriage that is not always easy but which, with generational change accelerating, could be the key to Italian SMEs catching the train of change that can no longer be postponed. And, at the same time, an opportunity for new initiatives to last. A Bocconi University study relaunches the theme and puts new data on the table.

The American Lesson

In the spotlight is the US market, where almost 30% of corporate venture capital transactions from 2000 to 2017 originated from family businesses. So much so that family-owned VCs accounted for a total of €12 billion in the US, compared to non-family-owned VC transactions amounting to €20.9 billion. Figures that well underline how overseas the taboo is now behind us, points out Mario Daniele Amore, lecturer in the Department of Management & Technology, among the authors of the study, "which shows that it is possible to avoid natural reluctance in companies with a long tradition".

There are two winning chapters in the American lesson: territorial proximity and contiguity of the investment sector. In short, proximity. That element that allows businesses led by an entrepreneurial family to have more control and, at the same time, integrate innovation into the process. 'Investing in start-ups is inherently risky, especially in the early stages; consequently, the allocation of venture capital funds is subject to moral hazard risks,' explains Amore. An attitude that is difficult to reconcile with long-standing family businesses, according to "the view that family investors try to minimise risk in their corporate venture capital activities. In the US scenario, we find that family VC portfolios, however, are more likely to include ventures that operate in the parent organisation's core industry and are geographically closer to it'.

This is precisely the key: 'geographical proximity to portfolio companies reduces moral hazard, facilitating monitoring and improving the exchange of information'. A two-way advantage considering that 'companies financed by family cv are more likely to make a successful exit,' Mario Daniele Amore further explains.

In addition to this, companies led by family CEOs tend to invest in companies with founders who have a strong academic and entrepreneurial background, such as Ivy League degrees or previous start-up experience. As a result, according to the Bocconi professor, "startups backed by family businesses are more likely to be successful. Even after taking into account factors such as syndication, venture experience, and investor reputation, companies backed by family-owned VCs have consistently performed better financially than their non-family-backed counterparts'.

The Italian scenario

A recipe applicable to the Italian scenario? In Italy, investments by large international companies in start-ups have grown by 689% in recent years, rising from 19 million in 2023 to 163 million in 2024. The world of digital innovation and the new frontier of ia: Software & Digital and Technology & IoT are the main beneficiaries. The difference, however, not only with the American market, but also with other European countries remains a gulf. In Germany, 97 per cent of corporations active on the DAX index have their own corporate venture capital arm, compared to 16 per cent of Italian companies operating on the FTSE Mib in 2021. A ratio of one to five. And a not dissimilar scenario appears when looking at family businesses.

Faced with the now categorical imperative even for Italian companies to follow the path of innovation, strongly reiterated also in the Draghi report on the European economy, precisely the path of start-ups could be the key. 'Provided we learn the American lesson,' says Amore.

Even more so, family businesses often form well-established networks within their sectors. The ability to work with reliable partners would reduce risk. Last but not least, through corporate venture capital, companies with a long tradition 'would gain an innovative impetus, accessing new technological frontiers in an ever-changing scenario'.

More patents with the younger generation at the top

On the other hand, a confirmation would come in Europe from the Danish experience this time. Where another element emerges: innovation comes with the new generation. "We have shown that with the generation change, when a new family ceo is appointed, the number of patents in the company increases. An increase that we estimated at around 3.5 per cent'. A number which in itself is not huge, but which 'also depends on the path of the new generation. When the newcomers at the top chosen in the family have a degree in economics, it leads to an 8% increase in the number of patents, and even more, if the degree is in engineering, the increase is 13%'.

This drive for innovation is even more pronounced than in companies that choose external leadership at the time of generational change. This is because the real drive for innovation, in companies firmly rooted in tradition, works best when it comes from within. "CEOs from within the family members of a company are more likely to undertake long-term and potentially risky projects, due to the job protection and long-term orientation resulting from the desire to preserve family control over time. Thrusts that apply the other way round when it comes from outside,' explains the Bocconi professor. So much so that family CEOs of the new generation increase both the number and quality of patents.

Now is the time to change course

Looking again at Italy, where after Covid the game of generational change has officially opened and where the new generations that are about to arrive at the top of family-run SMEs are increasingly graduates, the ingredients for a marriage between tradition and innovation seem to be all there. "If well directed, an alliance between start-ups and family businesses works, also in terms of results. And if family businesses innovate, they can become an engine for the entire economic system,' says Mario Daniele Amore.

The winning recipe, according to the American lesson, is to 'involve the new generations, those who will have to face future challenges. A successful marriage that can only come from skills within the family and long-term vision. With the inclusion of new generations at the helm of realities that are by nature linked to the territory and their sphere of experience. And which, in essence, can make the company capable of seizing the opportunities of technological change, with the leverage of corporate venture capital in Italy not exploited to its full potential,' he concludes.

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