The state of VC in Italy

VC investment data can be useful to understand the maturity of an ecosystem and its development over time. In this article, we start local and consider the case of Italy.

A snapshot

2020 was the best year of the last five in terms of capital raised by Italian start-ups from Venture Capital funds, with 55% more investments with respect to 2019, according to EY VC Barometer. Despite a 37% reduction in the number of deals (111 vs 175), Italian start-ups raised €569 million in 2020 (+55% compared to 2019), evidence of the growing size of the industry. The average investment value increased from €2.1 million in 2019 to €5.1 million in 2020 and the number of rounds greater than €10 M rose from 7 (of which 4 above €20 M) to 14 (of which 4 above €20 M).

Sectors and regions in Italy

The most appreciated sector among venture capitalists in Italy during 2020 is Fintech, with 173.4 million raised by 15 Italian start-ups, followed by Health and Science (101.8 million), Food (66.1), Software and digital services (58.9) and Transportation-delivery (43.4 million).

Among Italian regions Lombardy has had the highest volume of investments, equal to €391.6 million and 68.8% of the national total, followed by Piemonte, with €46.6 million of capital raised (8.2%) and Lazio, with €29.3 million of investments (5.1%). The ranking shows that despite the creation of investment funds specifically for innovative start-ups in the area, VC in Southern Italy performs far behind the Northern regions.

Most active investors and biggest investments

According to Growth Capital’s VC Snapshot, CDP Venture Capital was the most active investor in Italy in 2020, followed by Italian Angels for Growth and LIFTT. Among the busiest the are also 360 Capital Partners, Vertis, P101 and United Ventures.

The greatest deals were Satispay’s (Fintech), with its €68 million’s Series C, followed by Aidexa’s round of €45 million (Fintech), and Cortilia’s of €34 million (FoodTech). Other large investments were Milkman and Enthera.

What do the numbers tell about the industry?

Perhaps the most insightful trend of the Italian VC industry in 2020 was the reduction in the number of rounds and the simultaneous increase in the average deal amount. As shown in the charts below (our analysis from CB Insights data), the reduction in deal counts affected investments at different stage almost equally, with the notable exception of VC-seed rounds.

The increase in mean value, on the other hand, seems to be affected by Series C rounds. However, according to CB Insights data, the median deal amount also increased from $ 850k to $ 1.49M (+75%). This is relevant, as it suggests that the increase in the average deal size was not entirely driven by a few extremely large rounds but rather by a shift of the whole distribution.

One possible explanation for this observation is that VCs are trying to double down on bets that have already proven some viability. One should not confound this signal with the idea that “Italian start-ups are getting better/bigger on average”, for at least two reasons. Firstly, such a variation is unlikely to be observed in two subsequent years. Secondly, if the mean quality of the underlying investment opportunities increased, one might reasonably expect an increase in both the deal count and total average deal value.

Consistent with the idea of an investors shift towards already validated opportunities, is the fact that the share of rounds with at least one follow-on investor increased from 16% in 2019 to 18% in 2020 and was 20% in Q1 2021 (again, our analysis of CB Insights data). It seems like investors are cherry-picking opportunities, favoring those with proven track-record and especially those winning bets they’ve identified in their portfolio.

But why are investors doing this? There are two possible interpretations. The first is that investors are having a risk-averse reaction to the Covid-19 crisis, basically diverting capital from riskier early-stage opportunities to less risky late-stage investments. In this sense, we could interpret the increase in the average deal value as a low-risk premium.

A second explanation is indicative of the health of the Italian VC industry. The shift towards bigger bets could be a sign of maturity of the VC industry. It may be that many VC funds are ageing and thus focusing more on preparing their portfolio company to exits.

Unfortunately, with little historical perspective, it is almost impossible to disentangle the effects of Covid and those of VCs' maturity.

Comparison with other European countries

Despite the COVID-19 and a drop in the deal’s number from 7,502 in 2019 to 5,883, 2020 has not been a disaster in Europe, with European start-ups raising $40 billion in what has ended up to be the second-best year over the last decade in terms of funding amount, down of just 4% from 2019's $41 billion. According to Crunchbase’s data, start-ups in Europe raised 13% of the global VC funding, against North American ones at 50% and Asian ones at 33%.

However, the Italian Venture Capital ecosystem seems to be still underdeveloped compared to the major European economies, with Italian start-ups raising only around 1.5% of the European venture capital last year. Pitchbook’s analysis shows that in 2020 UK was the leading country for VC investments in Europe, with British start-ups raising approximately $15B (37.5% of Europe’s total) and five new unicorns created. Immediately after UK, German companies raised $6.8B (17%), while start-ups raised $6.1B in France (15.3%) and $3.2B in Sweden (8%).

During the year, more than 3,500 companies raised seed-stage funding for $3.7 billion, while about 1,200 at the early-stage obtained $14.9 billion of funding. Furthermore, more than 300 European start-ups raised late-stage funding for $21.4 billion. Finally, in 2020 14 companies became unicorns, with the transportation, Fintech and Energy sectors leading the larger rounds.

A fair comparable

Although Italy’s VC ecosystem is lagging behind other European countries, another Southern European country - Spain - could serve as a useful benchmark. In the period between 2017 and 2019, the Spanish VC ecosystem grew to pass the threshold of $1 Bn investment, increasing the total funding from $731M to $1.1Bn. That growth was driven by an increase in average deal size, rather than in deal count. Over this period the number of deals actually decreased from 301 deals to 261, CB Insights data shows. This seems to be in line with the trend outlined above for the Italian market, and it is the type of anecdotal evidence that generates some enthusiasm around VC in Italy – expecting a peak in VC activity associated to the increase of mean tickets.

Clearly, however, the growth of the industry in the medium-to-long run depends on much more strutural factors than the considerations of aggregate measures.


2020 has been a busy year for the Italian VC ecosystem, with a growth in both the total investments value and in the average deals value. Clearly, the growth of the industry in the medium-to-long run depends on much more structural factors than considerations on aggregate measures. One interesting trend, in this sense, is the extent of Government intervention in the industry, especially through CDP Venture Capital, the most active Italian investor and a state-owned firm, which to date has €1.24 billion of AUM and €360 million of committed capital among 8 funds. On one hand, the government’s involvement has accelerated the growth of VC in Italy over the last years. However, an ecosystem in which public money makes the difference faces peculiar challenges over its development path. For example, the government’s short-term objectives may be misaligned with the long-term nature of VC investments, and variability in political sentiment may harm the ecosystem's stability.