The Startup Ecosystem of Italy

The economy is largely export-driven, and the local startup ecosystem has still not managed to substantially contribute to the economy. Other challenges that the Italian startup ecosystems face are: building a more favorable regulatory environment to stimulate startups, improving tax policies, encouraging greater involvement of the private sector (SMEs in particular), establishing a stronger global outlook, and simplifying the bureaucratic process, which is currently among the heaviest burdens that startups have to face.

Italian public sector ecosystem developers are much less active than in other European nations, but some initiatives are changing that. In 2020, the Italian government sponsored an investment program aimed at the native startup ecosystem, creating a new venture arm: CDP Venture Capital. Additionally, the Ministry of Economic Development launched The Italian Startup Act, which reorients existing legislation to incentivize Italian startup formation with tools like tax breaks on early-stage investments and R&D credits, as well as a startup visa to attract foreign talent.

Italy will need to implement reforms faster to stop founders from moving their headquarters elsewhere. On the other hand, it is encouraging to see that startup founders have a large and increasingly talented labor pool. Italy boasts an extensive network of high-quality universities (300,000 graduates per year), as well as science and technology parks. In addition, the country has proved its capacity to breed unicorns as seen in the case of Scalapay’s valuation of more than US$ 1 billion in 2022.

With Italy joining the unicorn club, we expect further acceleration of its ecosystem growth in the years to come.