2021 is the record year for Italian startups

​A record year for investments in the startup ecosystem in Italy: adding together the rounds for raising capital, crowdfunding and Business Angel investments that finance companies through the purchase of shares, in the first 6 months of 2021 €651 million were invested in startups and innovative companies. Eleven startups raised between 10 and 100 million euros, 28 between 1 and 10 million, and the remaining raised 1 million and below.

Six exceptional months if you think that, in all of 2020, total investments had just exceeded 700 million. If this trend continues, the conditions would be in place to close the year with over 1 billion investments in Italy for innovative startups.

But let's take a step back: what is a startup? It is a newly established company, not necessarily operating in the hi-tech or ICT sectors, which promotes an innovative or incremental product or service compared to those offered on the market. To be considered a startup, within a short period of a few months the company must be established, and the product must be launched to market.

According to the legislation – the Startup Act (DL 179/2012, art. 25, paragraph 2) – an innovative startup is a corporation, also established in cooperative form, which meets the following requirements:

- Cannot have been established for more than five years, which is why we talk about "young companies"

- They must be based in Italy or in a European Union member country 

- Starting from the second year of activity, the total production approved in the last balance sheet must not exceed 5 million euros

- The company cannot distribute profits generated by the production and sale of services or goods 

- The corporate purpose in the by-laws at the time of registration must be the development, production or marketing of innovative products or services with high technological value

- Startups cannot be listed on financial markets

- Startup cannot be established by merger, company split or as a result of the transfer of another company

Finally, an innovative startup, to be considered as such, must meet at least one of the following three criteria:

- Take on expenses in research, development and innovation equal to at least 15% of the greater value between turnover and cost of production

- Employment of highly qualified personnel (at least 1/3 PhD, PhD students or researchers, or at least 2/3 with a master's degree)

- Ownership, deposit or license of at least one patent, or the ownership of a registered software​

Thus, innovative startups are young, high-tech companies with strong growth potential. They represent one of the key points of the current Italian industrial policy, as innovative tools for the growth of the country.

The sector is mainly driven by companies in the fintech, service technology & engineering innovation, and information technology sectors. And it is precisely the latter that show the best data: in 2020 the registrations of innovative startups and SMEs in the ICT sector reached a count of 2006, showing an increase of 17.9%, a figure almost five points higher than those in all other sectors (+13.3%), and more than one in three was born online.

Like all innovative startups, ICT startups are mainly microenterprises: two out of three have up to four employees, capital of less than 10 thousand euros and a production value of between 100 and 150 thousand euros. Almost one in five is founded by under 35s, but there are few women-owned businesses, amounting to only 10.7%.

The 72 crowdfunding operations already concluded in the first 6 months of 2021 (i.e. the process whereby several people contribute sums of money to finance a business project or other initiatives through the internet), have reached the figure of 48 million euros, ten more than in the first half of 2020.

It is worth highlighting the important support of CDP Venture Capital – the National Innovation Fund created in 2020 with the aim of making venture capital a cornerstone of the economic development and innovation of the country – which created the conditions for an overall and sustainable growth of this ecosystem. This ecosystem, overall, has supported over 680 startups with total funding of 400 million euros.

Made in Italy is also very popular abroad: foreign funds have decided to invest in more than 10 operations exceeding 10 million euros.

In Italy, from 2012 to 2021, 12,291 startups were registered: of these, 14% have a high technological value in the energy sector. A sector that is gaining more and more importance in Europe, also due to the various agreements signed by EU countries to combat climate change.

We can conclude that, after a very difficult year due to Covid, the sector did not stop even during the pandemic, supported by foreign and private investors - also thanks to the relative tax relief promoted by MISE - and the commitment of CDP Venture Capital. In Italy, too, interest in startups has increased, and prospects are very favorable.