Trend

Start-ups, investments in Italy touch EUR 1.5 billion

According to the Observatory of the Politecnico di Milano, the trend is to grow by 32% in 2024 thanks to formal actors

by Giampaolo Colletti

5 December 2024

3' min read

Key points

Ghezzi: "Investment in cordate"
Still a small market compared to the rest of Europe
Reduced corporate role

3' min read

Almost 1.5 billion euros. It is around this figure that the recovery of our start-up ecosystem revolves after last year's annus horribilis, which marked a drastic drop in growth and funding. For 2024, total equity investments in hi-tech start-ups in Italy amount to approximately 1,493 million euros, registering a good recovery with +32% compared to the final total value of 2023, although still well below the record balance of 2022, which had deluded markets and investors with that 2,160 million euros. But the glass is still half-full: investments by formal players show excellent momentum with +42 per cent.

Despite the transition phase in the European market - the general decline is linked to late-stage rounds and exits - international funding also shows a recovery. This is the year-end snapshot taken by the Startup Hi-Tech Observatory of the Politecnico di Milano in collaboration with InnovUp and presented in a preview in Il Sole 24 Ore. A growth that marks a consolidation of the market, although much is still expected from alliances. The Italian figure on investments is in contrast with the international scenario, which sees the value of the European venture capital market fall by 9.7% in the first nine months of 2024.

Ghezzi: 'Rope investments'

However,' the research points out, 'the Italian ecosystem still needs a real leap to reach a scale comparable to that of the main European countries. "The good news is that we have surpassed the billion euro collection mark and until a few years ago this was just a mirage. But in this year of recovery, there is a lack of momentum from corporations, although the role of formal funds, i.e. venture capital funds, has been consolidated. Companies, however, are starting to make these investments in syndication, and therefore in cordate, and this is an important signal,' says Antonio Ghezzi, director of the Startup Hi-Tech Observatory of the Politecnico di Milano.

From Italy to the rest of Europe, round trip. The report shows that international financing is up 30%. The role of international investors in the main financing rounds is recovering, a sign of confidence in the champions of the Italian ecosystem.

A market still small compared to the rest of Europe

But at European level, the market is in a transition phase, with a shortage of late-stage and exit financing, particularly in terms of IPOs. "Compared to the broader context, we are still in the rear compared to France, Germany and Spain, being five times smaller. In France EUR 7 billion has been invested, in Germany the plan is EUR 20 billion over several years. In order for Italian start-ups to grow, a coordinated effort is essential, which cannot be separated from the creation of favourable conditions to push innovation,' Ghezzi points out. In short, good but not great. Also because the Italian way should pass through alliances with corporations and SMEs. And then the game should be declined in the plural and push large companies to inject confidence.

Reduced corporate role

"In America the role of corporations weighs up to 50 per cent of the market, in the rest of Europe it reaches 30-40 per cent, while here we are at around 10 per cent. Consolidation is needed, and all this could come through the fabric of the districts and SMEs, renouncing that dualism between established companies and start-ups that has marked a sterile opposition in the past. We must accept the fact that we are a pre-seed and seed financing oriented ecosystem,' says Ghezzi.

Analysts are also looking at start-up studios, but with some distinctions and on condition of continuous investment. "After all, the start-up studio model can represent an evolution of the incubator concept, which has played a mentorship role in recent years. But conflicts and distortions must be avoided. This strand originated in America, but the rules of the game should be better defined, i.e. the phase of the life cycle in which to place oneself and the mechanisms for investors' entry and exit. In Italy, too, we have realised that entrepreneurship is a process that must be managed in structural terms, but we should not be taken by the throat thinking that the scale of American ecosystems is attainable because today we do not have megarounds and in any case we have a small number of unicorns. From Silicon Valley we should learn the experimental method of validation, integrated with the vertical technological competence that is manifested in the districts,' Ghezzi concludes. Once again, distinctiveness comes from those districts that have their roots in the territories and that today must necessarily become interconnected.