State of Italian VC: the report on the evolution of Italian Venture Capital

• Impressive growth trajectory over the decade in terms of volumes, investments, the establishment of innovative companies, and its impact on the economy.

• Approximately 8 billion euros invested in Italian startups over the past 10 years, reflecting a valuation of 67 billion euros in 2023.

• Italian startups and innovative SMEs collectively generated a turnover exceeding 9.3 billion euros in 2023.

• Investments in Italian startups reached €1.1 billion in 2023, with a notable increase in the prevalence of Growth Stage rounds.

• In the last 5 years, VC fundraising activity in Europe totalled EUR 108.7 billion; although 2023 witnessed a decline (-32% YoY), Italy defies the trend with a notable increase (+88% YoY).

P101 has delved into the evolution of its sector over the past decade, scrutinizing specific trends and aligning them with the broader European landscape.

The report, titled “State of Italian VC,” shines a light on the impressive growth of Italian Venture Capital (“VC”) in the last 10 years, acting as a catalyst for the nation’s innovation ecosystem. From 2013 to 2023, Italian VC has injected a substantial 8 billion euros into startups, witnessing a remarkable surge from 152.1 million euros in 2013 to a staggering 1.1 billion euros in 2023. This growth, averaging an impressive 644%, outpaces the European average of 492.5%.

Over the same period, the number of completed transactions has risen from 294 to 387, marking a 31% increase, compared to Europe’s 80%. This hints at a notable upswing in the average size of Italian deals. Despite 2023 macroeconomic uncertainties causing a dip in investments (-55% YoY) and in number of rounds (-30% YoY) in 2023, in line with European trends (-43% and -21% in France and -37% and -19% in Spain), the overall growth trajectory of the Italian ecosystem (+644% over the decade) remains robust.

The burgeoning investment pace has also contributed to the growth of over 13,000 startups and around 2,000 SMEs in Italy. In 2023 alone, these entities generated a turnover of over 9.3 billion euros, employing approximately 62,000 people. The valuation of the Italian Startup ecosystem, standing at around 67 billion euros (Enterprise Value), has increased 25 times over the past 10 years, more than double the European average, with accelerated growth in 2023 recording a 27% YoY increase (7% in Europe). This growth underscores the scalability of business models and the emergence of entities with further development potential, particularly in the technology sector.

While the value of Italian startups in 2023 is comparable to Spain in 2020, France in 2016, and Germany in 2015, indicating a temporal gap in development, the surge in the number of VC-backed companies in Italy (from 726 in 2013 to 2,983 in 2023, a +271% increase) sets the stage for accelerated development. The average valuation of Italian startups in 2023 surpassed 22 million euros, recording the highest compound annual growth rate (+19%) of the decade. Countries like Germany and France still showcase average valuations nearly twice as high as those in Italy, which is still in the early stages of development. However, the data highlights an ongoing maturation process within the Italian ecosystem.

In the last 5 years, European VC funds have raised approximately 109 billion euros, experiencing a 32% decline in 2023 (YoY). However, Italy stands out with an 88% year-on-year increase, with 3.6 billion euros raised by new VC funds. In addition to that, 2023 also witnessed a notable 71% increase in the average size of Italian funds. Despite being in a growth phase, the Italian market lags behind more mature ecosystems. Nevertheless, the consistent increase in the number of new VC funds (from 3 in 2019 to 11 in 2023) and their increasing average size signal a deepening and diversifying market, reflecting growing investor confidence and a broader range of investment opportunities in the country.

“We aim to conduct a comprehensive analysis to spotlight the remarkable journey undertaken by Italian Venture Capital and shed light on its potential for further growth,” remarked Andrea Di Camillo, Founder and Managing Partner of P101. “The overall growth trajectory over the past decade has been substantial, encompassing volumes, investments, the creation of innovative enterprises, and a significant impact on the economy. In 2023 alone, the 52 companies in which P101 has invested generated approximately 1.7 billion euros in revenue – contributing to a total of 5 billion over the decade – while providing employment to over 5,000 people. Industry insights affirm that the groundwork for the Italian Venture Capital ecosystem is now complete. We must look forward to the next decade, furtherly bridging the gap with leading European countries. More importantly, we must brace ourselves for the challenges the ecosystem will encounter as it evolves into a new phase of maturity, ushering in changing rules of the game. Opportunities and competition will escalate, with international players showing a growing interest in our country. Emerging drivers, such as Artificial Intelligence, will reshape investment trends, increasingly honing in on services for businesses. We expect an upswing in the sizes of funds, investments, and startups: companies that have thrived in the past decade now showcase the scalability of their business and stand poised for a dimensional leap that will frequently extend beyond borders. As Venture Capital players, our role is not just to navigate but to lead this transformative shift towards new business models, keeping in mind the core objective of the sector: contributing to the development of the Italian innovation ecosystem.”