Venture Capital Market in Italy

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The nature of the venture capital market is the same no matter what the economic climate of a region. However, entrepreneurs and venture capitalists like Efraim Landa understand that some regions are more conducive to the growth of the VC industry. There are many factors that come into play which can dictate whether an investment venture will be successful or not. Of course the goal of the VC industry in any region is to help provide incentives through investments so that entrepreneurship and innovative businesses can thrive. The VC firm provides funding to help start-ups and emerging businesses grow to the point that they are successful before they ever see a return on that investment. The venture capitalist can face a wide variety of challenges that must be met and overcome on the way to success, and the VC market in Italy is no different.

History of VC in Italy

Over the last 2 or 3 decades the venture capital industry in Italy has overcome many different challenges and survived a wide variety of changing trends. Of course the VC industry is affected by the same economic situations, cycles and factors that influence the entire region’s economy. Italy can boast of having a sort of informal type of a VC industry for nearly a century. Private investments were contributed by entrepreneurs so that new companies could be formed. But until about 1986 the VC market was used on a very limited basis and was not used across the board by entrepreneurs. This all changed in ’86 when the Italian Venture Capital and Private Equity Association was founded and the 15 panel board began to implement investments that were basic to the VC industry. They chose to instigate a “wave” of VC investments because of the success they had witnessed VC have in the US.

New Challenges

Italy was not quite ready in an economic sense for the VC industry which meant that the venture capitalists faced some major challenges. They made many investments, but far too many of them were not as successful as they had planned. They shifted their focus to later-stage investment opportunities where there were many more opportunities for success. Up until 1990, the Italian market kept their focus on private equity investments and concentrated on middle of the road companies which had experienced some success but lacked funding for more growth. The end result was that Italy became one of the top European countries in later stage investments. They continued investing in this way until about the first part of 2008 when the region fell into financial crisis.

Present State of the VC Market in Italy

The financial crisis continued to plague both the private equity and venture capital sectors up into the first half of 2010. Transactions which keep the VC market healthy declined nearly 50% from where it was previously. Even though later stage investments had slowed, the early stage sector had found some stability and was doing rather well in the VC industry. Even though some areas had slowed, others began to increase and experienced growth. As the investments began to diversify, some stability has returned to Italy’s venture capital market and there has been a significant increase in the early stage segment which includes both seed investments and start-ups. Divested investments have been up consecutive years. Exits are up and new capital is being raised. All indications are that the VC industry in Italy is going to make it and is slowly making a turn around. At present all of the latest facts virtually every sector is experiencing some sort of growth.

About Efraim Landa

My name is Efraim Landa I am an entrepreneur and an expert in venture capital. I am the co founder of Effi Enterprises, a venture capital firm as well as the co founder and CEO of Gluco Vista, a company that is in the process of developing a non invasive glucose meter for those with diabetes.

Posted on June 27, 2013, in Business Financing, History of Venture Capital, VC Firm, VC investments, Venture Capital, Venture Capital Markets and tagged , , . Bookmark the permalink. Leave a comment.

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