This article accompanies our new ranking of Italian startups and scale-ups to watch for 2022.
A late bloomer among European venture capital-backed ecosystems, the Italian tech scene has seen an exceptional wave of growth in 2022.
Things started to heat up in February of this year, when a whopping $497 million B-series round crowned buy now, pay later fintech Scalapay as the country’s first unicorn after the dotcom boom. Then a second head grew when the payments provider Satispay hit a valuation of over $1 billion in September. The likes of Casavo, VEDRAI, Tinaba and Everli also made healthy checks in 2022.
But aside from headline-grabbing increases, Italy’s success at every level of the pyramid has sparked a long-awaited, half-full attitude towards the country’s tech ecosystem.
A brief history of Italian technology in 2022
The “boot” of Europe is one of only four countries – the others being France, Switzerland and Belgium – to have maintained a positive growth rate in the first three quarters of 2022. Some 1.8 billion has been paid out to Italian startups so far this year, just 12 months after investments first surpassed the $1 billion cap.
Besides the Scalapay cycle, the first half of the year presented a relatively stable funding environment, mainly following good traction gained in 2021.
But Q3 2022 — an all-time record quarter for the country — was particularly successful, welcoming north of $830 million in new venture capital funding during an otherwise bleak time for European tech. You could feel the positivity at the first edition of TechChill Milano in September, as the news from the megarounds sparked discussions and big smiles in the busy meeting rooms.
Deal types and sizes have also changed in 2022. Fewer but larger rounds are being signed – Subdued research found the average deal size has increased from $2.9 million to $6.7 million over the past year, indicating larger checks at a later stage, and in line with numbers seen from the top performers in Europe.
Still room for improvement
Current trends have definitely propelled the country into the top 10 European ecosystems for the year, but Italy still lags behind other European countries in several key dimensions.
It still has one of the lowest startup-per-capita ratios in Western Europe, around half that of Spain and only a quarter of that of the UK, plus a shy $30 in equity funding- per capita risk.
Although on the rise, it still has a small number of active investors across the board – around 450, compared to around 2,800 for the UK and around 1,300 for France and Germany. CDP VC has led the pack lately, along with LVenture Group, LIFTT, Primo Ventures, Startup Wise Guys and crowdfunding platform Mamacrowd.
It’s also not very well dispersed across the country, with Milan’s financial hub taking an overwhelming share of total deals – Sifted estimates that around 43% of rounds in the last two years were signed there, followed by the capital Rome (11%), Turin (9%) and Bologna (2%).
It’s no coincidence that fintech far outpaces all other sectors in venture capital investment, followed by healthcare, food and real estate. The fashion industry – much revered in the country – is floating surprisingly near the bottom.
But promising growth patterns are a sign that things are progressing at different institutional levels. Although not immune to criticism, the government-backed CDP VC fund has pledged ample resources for direct and indirect investments over the next five years. Intesa Sanpaolo’s VC arm Neva Sgr’s The €250m fund was followed by promising multi-stage fund announcements.
National accelerators are also multiplying, inside and outside the major universities, notably the B4i of Bocconi, the PoliHub of Politecnico di Milano, the Enlabs of Luiss, DigitalMagics or the H-Farm of Depop.
Based in London Founders Factory has also just moved to Milan, symptomatic of increased international interest in Italian startups. U.S. fund activity has grown 14 percentage points over the past two years, while Asian venture capital firms have hit a record 7% share of overall funding so far in 2022. at 78% in 2016, domestic investment has fallen to around 38% since the start of the year.
What’s next for Italy?
When Sifted asked Italy’s tech executives about the current state of the country’s scene, many blamed an “old” and “secure job” mentality problem for its current standing relative to other European countries. Others pointed to a mismatch between dry powder and melters and between different regions and cities. Others spoke of brain drain, pessimism and a general lack of trust in the ecosystem.
Although the fourth quarter has so far settled on calmer waters, the country’s historic entrepreneurial spirit may finally be paying off in the wider tech space, and the excitement is palpable among its operators. .
Federico Scolari is an intelligence analyst at Sifted. Ruggero di Spigna is a Startup Analyst at Sifted
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