Italian Venture Capital Slows Down in Anticipation of Startup Act 2.0

Venture Capital in Italy: Trends and Future Perspectives

Italian Venture Capital is currently experiencing a slowdown while awaiting the Startup Act 2.0.
Despite a decrease compared to the previous quarter, the overall data for the first semester confirm stability compared to the same period last year.

The Venture Capital Observatory in Italy, conducted by Growth Capital in collaboration with Italian Tech Alliance, monitors quarterly the trend of Venture Capital investments in the country, highlighting the most dynamic sectors and the current challenges of the Italian innovation ecosystem.

Second Quarter 2024 Insights

In the second quarter of 2024, the Italian Venture Capital ecosystem registered a total of 228 million euros invested in 69 investment rounds, marking a decline compared to the previous quarter (443 million euros in 108 rounds) but maintaining some continuity with the second semester of 2023.
These figures emerge from the Venture Capital Observatory in Italy, conducted by Growth Capital and Italian Tech Alliance.

In the first semester, France raised 3.9 billion euros in 584 rounds, the United Kingdom 8.7 billion euros in 1,587 rounds.
Only Spain performed worse than Italy, with 800 million euros in 155 rounds.

Within the European context, Venture Capital has shown signs of recovery, with an 18% increase in the number of rounds and a 3% increase in the amount invested compared to the second semester of 2023.

The presentation event of the Observatory, held at Copernico Isola for S32 in Milan, highlighted not only the numbers but also the emerging trends in the technological investment landscape.
Particularly, the Software sector recorded the highest number of rounds, reflecting a continuous interest in advanced technologies and artificial intelligence.

Analysis of Trends and Sectors

Looking more closely, the second quarter of 2024 saw a predominance of investments in the early stages, with 71% of the rounds represented by Pre-seed or Seed stages.
This indicates a cautious approach by investors, likely influenced by global economic uncertainties and the need to carefully evaluate opportunities.

Sector-wise, Software led the number of rounds (13) in the quarter with a particular focus on artificial intelligence, followed by Life Sciences (11 rounds) and Deep Tech (7 rounds).
These sectors confirm the trend of recent years, highlighting the importance of advanced technologies and biomedical innovation in the Italian landscape.

Examining the top 5 deals of the second quarter of 2024, Newcleo ranked first with 87 million euros raised in a Series A round.
Banca Aidexa followed with 16 million in a Series B round, and Futura with 14 million in a Series A round.
Tes Pharma secured 10 million in a Series A round, while Beta Glue Technologies and Avaneidi closed the ranking with 8 million each, in Series C and Series A respectively.

Surprisingly, Fintech is no longer the leading sector in venture capital.
Over the past two years, investments have decreased from 510 million euros in 39 rounds in 2022 to 41 million euros in 15 rounds in the first six months of 2024.
Currently, Fintech represents about 10% of the rounds in Italy, compared to 30% a few years ago, with a significant contraction in the last 18 months.

Future Perspectives

Despite the slowdown in the second quarter, future prospects remain encouraging, especially with the anticipation of new legislative initiatives like the Startup Act 2.0.
This new regulatory framework has been long-awaited as a catalyst for further investments in the startup and technological innovation sector, potentially strengthening the Italian VC ecosystem and accelerating economic growth.

“In a delicate market scenario, characterized by high-interest rates, inflation, and difficulties in achieving successful exits, we are witnessing increased challenges in closing capital fundraising and dealing with increasingly complex deals.
The sentiment of operators remains stable compared to six months ago, and a market recovery is expected in the coming quarters, depending on a variety of factors.
Among these, the role of CDP will be crucial: the €3.5 billion in investments planned in the next 4 years and the ratification of the new industrial plan could give new impetus to the Italian ecosystem, creating a positive ripple effect on direct and indirect investments,” commented Fabio Mondini de Focatiis, Founding Partner of Growth Capital.

“In expectations, the second quarter of 2024 was supposed to be a decisive period for a leap in quality for the Italian innovation ecosystem.
The presentation of the new industrial plan by CDP Venture Capital on one side and the imminent launch of the Startup Act 2.0 on the other side hinted at a new centrality of VC, potentially accompanied by a continuation of the investment growth seen in previous months,” commented Francesco Cerruti, General Director of Italian Tech Alliance.
“Instead, the downward numerical framework is accompanied by a situation in which, despite the announcements, the Government has not yet presented the Startup Act 2.0, which we believe could be a fundamental tool to strengthen an ecosystem that has already shown its potential to contribute to the economic and social well-being of the country.”

In conclusion, although Italian Venture Capital shows signs of slowdown in the short term, the interest in advanced technologies remains robust.
The challenge now lies in implementing policies and strategies that can further support and stimulate innovation and investments in the country.