The Startup Ecosystem of Italy

Despite the economy being largely export-driven, national startup ecosystems have yet to make a significant impact. Italian startups face various challenges, including the need for a more supportive regulatory environment, complex tax policies, limited involvement of the private sector (especially SMEs), low levels of VC funding per capita, and a cumbersome bureaucratic process. These obstacles hinder the growth of startups in Italy and make it difficult for them to thrive.

Although the public sector’s involvement in developing the startup ecosystem is less compared to other European countries, there are some promising initiatives on the horizon. The Italian government recently launched an investment program to support native startups, resulting in the creation of CDP Venture Capital. Additionally, The Italian Startup Act, introduced by the Ministry of Enterprise and Made in Italy, aims to incentivize startup formation by offering tax incentives on early-stage investments and R&D credits, as well as a startup visa program to attract foreign talent. The National Innovation Fund also plays a crucial role in providing strategic support to innovative startups and SMEs in the country. Non-profit organizations like Roma Startup are also actively supporting the startup ecosystem by fostering connections between ecosystem players and advocating for pro-startup policies.

While the government’s efforts are commendable, there is still a need for faster reforms to prevent founders from relocating their businesses elsewhere. On a positive note, Italy boasts a vast pool of talented individuals, thanks to its network of top universities and science and technology parks. The country has even produced unicorns like Scalapay, which achieved a valuation of over US$1 billion in 2022.

As Italy joins the unicorn club, we anticipate a further boost in the growth of its startup ecosystem in the years ahead. The country’s potential is evident, and with the right support and reforms, Italy could soon become a major player in the global startup scene.