P101 presents “State of Italian VC”

From a decade of building solid foundations of the industry, to the acceleration essential to navigate a phase of technological disruption, global competition, and geopolitical complexity:

• Over the past 10 years, VC has invested €10 billion in Italian startups, €7.5 billion of which in the last five years
• In 2025, investments in Italy rose to €1.4 billion (+17%), while Europe declined to €60 billion (-3%) and the US surged to €285 billion (+44%)
• Italian innovative startups and SMEs in 2025 generated a production value of 10 billion euros employing 62,000 people
• Italy ranks 10th in Europe by total investment over the past five years, but falls to third-last in per capita terms
• Institutional investors’ interest in Italian VC is growing, driven by CDP, EIF, Azimut and regulatory changes
• Investments in AI in the US double to 155 billion euros, European investments stop at 21 billion

P101, a leading player in Italian Venture Capital with an international focus, presents the tenth edition of the “State of Italian VC” report, an analysis of the evolution of the Italian innovation industry.

Over the past decade, the Italian venture capital (“VC”) has followed a steady growth trajectory becoming an industry that invested approximately 10 billion euros into the country’s innovation ecosystem.

Today, this industry includes more than 14,000 innovative companies ^[1] – nearly 12,000 of which are startups – which in 2025 generated a production value of 10 billion euros and employed around 62,000 people. Of these, about a third work in startups that alone, last year, recorded a production value of about 2.8 billion euros.

“Today, we are looking at the evolution of an industry that, in Italy, barely existed a decade ago. We have moved from a handful of operators with limited resources and marginal impact to a venture capital ecosystem with solid foundations, consistently investing between 1 and 2 billion euros per year into the real economy” said Andrea Di Camillo, Founder and Managing Partner of P101. “The broader context has also changed dramatically: the era of incremental innovation is over. We are now facing a phase of deep technological discontinuity, with artificial intelligence and critical infrastructure reshaping capital allocation, alongside a growing awareness that digital sovereignty is no longer a choice, but a strategic necessity. Everything is moving faster, and if we want to keep pace, growing capital alone will not be enough—despite the support of institutional investors such as CDP and EIF, and players like Azimut. Corporate participation will be essential, as it remains limited to a few virtuous cases, along with a more efficient public capital market. Above all, what is needed is a truly international perspective: from funds, which must look beyond national borders; from companies, which must compete globally; and from investors, who must become increasingly international. In a continent that remains too fragmented, the future of this industry—central to innovation—will depend on strengthening venture capital as a European asset class. The ‘28th regime’ represents a first step in this direction.”

Evolution of investments: VC quadruples, but Italy slips in the European ranking

Over the past decade, the Italian VC has invested a total of about 10 billion euros in startups, 7.5 of which in the last 5 years. This growth trajectory has led to a fourfold increase in annual investment capacity, from 363 million euros in 2016 to 1.4 billion euros in 2025. Despite this growth, there is still ample room for further development. In fact, despite Italy being the fourth largest economy in Europe, per capita investments in VC remain disproportionately low: in 2025 they stopped at 127 euros, leading Italy to be overtaken by Lithuania and slip to third last place in Europe in this ranking, ahead only of Greece and Slovenia. At the European level, venture capital investments totaled approximately 370 billion euros over the past five years (around 530 in 10 years). The UK leads with 120 billion euros, followed by France (51 billion) and Germany (€50 billion), highlighting the maturity of the most advanced ecosystems.

Fewer deals, bigger tickets: 2025 marks the maturation of the market

In 2025, investments in Italy reached 1.4 billion euros, up 17% compared to 2024 despite a decline in the number of transactions to 637 (-35%). This trend reflects an increase in average deal size, with the median doubling to 1 million euros. In detail, Early-stage investments increased sharply, rising to 568 million euros (+186%), while late-stage investments declined by 20% to 606 million. Seed funding increased to 155 million euros (+9%), while pre-seed continued to decline, falling to 48 million euros (-32%). Italy’s growth contrasts with Europe, where total investments declined by 3% to 60 billion euros, alongside a 32% drop in deal volume (around 13,000 deals). Meanwhile, the US market expanded sharply, with investments rising 44% to 285 billion euros, despite a 13% decline in deal count (approximately 21,000 deals). Startup valuations in Italy have increased over time, from 1.8 million euros in 2016 to nearly 5 million in 2025. However, this remains roughly half of European levels and significantly below the US, where average valuations approach 49 million euros.

AI in the lead: capital shifts towards deep and strategic technologies

In 2025, artificial intelligence and machine learning dominated also the venture capital landscape, attracting nearly half a billion euros in investments—more than double 2024 levels and up 421% compared to 2021. Despite this growth, Italy still lags behind Europe where France is leading the way, investing 3.7 billion euros in the sector, followed by Germany with 3.3 billion euros. The gap widens significantly when compared to the US, where investments in AI and ML exceeded 155 billion euros in 2025, over 7 times the ammount invested in Europe (21 billion) and 300 times the capital invested in Italy. Returning to Italy, healthcare-related sectors recorded structural growth, with life sciences at 341 million euros (+99%) and HealthTech at 283 million euros (+127%). Big data recorded the most significant growth (+711%) attracting 260 million euros, followed by Cybersecurity at 197 million (+275%). Overall, 2025 confirmed a shift in capital allocation away from general digital sectors toward high-tech, strategic industries.

Central Italy accelerating, North-West remains the heart of the ecosystem

The growth in 2025 investments, which rose to 1.4 billion, is driven by Central Italy, where investments tripled to 435 million euros. The North-East drops to 97 million euros as does the North-West, which still remains the hub of the national ecosystem with 834 million euros invested. In the South and the Islands, activity remains limited, with the South standing at 69 million euros, and the Islands at 5 million euros respectively.

Exit: the structural bottleneck of public markets

In 2025, Italy recorded 22 exits, down from 31 in 2024 mainly due to lower corporate acquisitions (from 25 to 14 transactions). Buyouts increased from 6 to 8, indicating a growing role for financial investors. As in 2024, no IPOs were recorded for VC-backed companies. Over the last decade, only 22 IPOs in Italy have involved VC-backed companies, confirming the limited role of public markets in the industry. This trend is also visible in Europe where only 12 such IPOs were recorded in 2025 (out of 227 total), compared to 52 in the US. Across Europe, exit volumes remained broadly stable at around 1,000, while in the US they increased to approximately 1,500 (+13%).

Funding increased tenfold over the decade, slows down in 2025

In 2025, fundraising totaled nearly 400 million euros across 9 funds (-13% year-on-year), with the market heavily concentrated on smaller fund sizes and no vehicles above 150 million. Overall, over 8 billion euros were raised in Italy over the last decade through 123 funds ^[2]. Although Italy has doubled its fundraising capacity in ten years, it still accounts for a small fraction of funding in Europe which funding reached almost 11 billion euros, down sharply from 25 billion in 2024. Germany, and France (both at 32 billion euros) continue to dominate, each raising almost four times as much capital as Italy in the same period. Spain with 12 billion euros also surpasses Italy which stops at 8th place in the continent’s fundraising ranking. The growth in the size of funds, increasingly driven by institutional investors, will be critical to strengthen Italy’s innovation investment capacity and keep pace with the European countries that dominate the sector today.

Investors: institutional are growing, but domestic capital still dominates

Italian venture capital continues to depend heavily on domestic investors (71%). European (19%) and North American (4%) investors follow, while Asians are absent. A relatively high share of investors emerges from the Middle East (6%), making Italy the only country – among its peers – with a significant contribution from that region. While international diversification remains limited, the composition of Italian LPs is relatively balanced: direct investments account for 17%, banks 15%, and funds of funds 14%. Foundations (10%) and pension funds (9%) also play a significant role. Insurance companies (4%) and corporations (12%) remain underrepresented while accounting for 14% and 21% respectively in countries such as France. Spain stands out for the leading role played by economic development agencies (13%), a segment almost absent in Italy (1%). In general, the interest of institutional investors is growing, thanks to the support of investors such as CDP, EIF and Fondo Italiano – which have invested 63 times in Italian funds over the last 10 years – and Azimut, as well as driven by the new regulations aimed at incentivizing investments in VC. Today the challenge moves across the border: Italy will have to increase its attractiveness to international investors. 

Universities: Bocconi and Politecnico drive new entrepreneurship

In the last five years, startups founded by former students of leading Italian universities have raised over 7.3 billion euros, capital provided by the broader innovation ecosystem which, alongside Italian VC, includes business angels, private, foreign and corporate investors. Bocconi University (3.1 billion) and Politecnico di Milano (2.2 billion) lead the ranking, followed by the University of Bologna (1 billion).  LUISS (505 million), La Sapienza in Rome (338 million) and the Polytechnic University of Turin (196 million) contributed more modest, but still significant, investment flows.

[1] Companies founded after 2010, the year considered a reference year in the start of the structural development of the VC sector in Italy.

[2] The amount refers to funds that have started raising since 2016, while the amount invested over the decade, equal to 10 billion, includes funds whose funding had been started previously.