Venture capital: the market is growing, but there’s no sign of a turning point

It is as if we were at a turning point, but the turning point were slow to materialise. The venture capital market in Italia is growing, but it remains small and is struggling to make ‘that leap in quality which, for years, we have thought was just around the corner’, explains Francesco Cerruti, managing director of Tech Alliance, the Italian industry association, commenting on the figures from the Quarterly Observatory on Venture Capital Investments in Italia, produced by Growth Capital in collaboration with Tech Alliance itself.

In the second quarter of this year, the number of funding rounds (76) was up on the 69 recorded in the first quarter, and the total value of investments also rose slightly (€427 million compared with €411 million). Deals in the early-stage (pre-seed) phase have decreased, but average deal values have risen, as shown by a comparison between the first half of this year and the same period last year: the number of funding rounds fell from 210 to 145, but the total investment rose from 545 million to 813 million.

The more optimistic would talk of consolidation, the more cautious of stagnation. “In fact, although these figures are not negative, they do not reflect the growth potential of the Italian economy,” adds Cerruti. By the end of the year, however, expectations are for figures to remain stable or show moderate growth compared with 2025 (€1.7 billion). But the real issue lies elsewhere and concerns national and European policies: there is no adequate framework to support the sector’s potential or to trigger the shift that would bring us closer to the major European countries: the venture capital market in the UK reached a value of €20.3 billion in the first half of the year, whilst in France it stood at €6.8 billion.

One of the key issues is the renewal of the 30 per cent tax incentives (due to expire in December 2025) for start-ups and innovative SMEs. This partly explains the decline in pre-seed and seed-stage deals, which is also affected by the deadlock in the governance of CDP Venture Capital (one of the main drivers of the market, both through direct investments and support for funds), ahead of the renewal of its board of directors. The launch of new funds has also declined, and one reason for this could be the regulatory uncertainty surrounding the new competition law, approved in December 2024, which is designed to encourage institutional investors (such as pension and insurance funds) to invest in start-ups and innovative SMEs. At European level, too, the venture capital sector has criticised the lack of impact of the proposal to create the ‘EU INC’ – a set of company law rules applicable uniformly across the European Union, as an alternative to the various national regimes.

The regulatory framework is lacking – or inadequate – but the ‘raw material’ is there: ‘In these first six months, some significant developments have emerged, such as Bending Spoons’ listing on the Nasdaq, WeRoad’s new €58 million funding round, and the deal by Fincantieri, which acquired four companies with the aim of creating a national hub for the underwater industry.’