Italy and Spain share more than just an acronym in the PIGS acronym. In addition to a deeply Mediterranean culture, and an abyss between the policies and customs of the northern European partners, they have a similar path in terms of entrepreneurial ecosystems. They are two worlds of startups that, despite sharing history, do not resonate in one of their closest neighboring countries. Regardless of Glovo’s expansion into nearby territory or Colvin’s purchase of a competitor, Italy’s startups are completely unknown to many outside the country.
“Many people talk about Germany, France, the United Kingdom, Estonia or even Spain, but nobody says ‘I’m going to Italy to start a business,’” analyze some international entrepreneurs familiar with the Italian scene. It is precisely what they want to look for in Italy at the moment. One that, Despite the turbulent political situation, go your way. The election of a far-right candidate, Giorgia Meloni, does not seem likely to change the path that Italy has been on since 2012.
Holding its first international startup event in the country, TechChill Milano, is one of the first seeds to grow an ecosystem about which little is known outside its borders. In fact, the meeting has origin in his pair of Latvia, where the goal is the same: to put the country on the map of European startups and attract talent and funding. “We need a platform, a space for people to create an ecosystem, and that is what we are doing in Italy,” says Annija Mezgaile, CEO of TechChill.
Startups from Italy, with a start similar to the Spanish one
Despite the lack of knowledge, the growth history of Spain and Italy is practically the same over time. About the year 2012, and with the crisis installed in Europe and more specifically in the southern countries, innovation and entrepreneurship were the answer to problems with much deeper depth. In fact, if there is something to recognize in the neighboring country, it is the creation of a Startups Law long before Spain. One that, now, celebrates 10 years of life. The so-called Startup Act was a model of tax reduction for entrepreneurs that, broadly speaking, had the objective of attracting money for investment. “In the end, it improved the situation, but it didn’t attract as much money as expected,” he explains to hypertextual Emil Abirascid, expert in the Italian entrepreneurial ecosystem. And that shows, the startups are not as big, nor is there as much offer as in other innovative meetings. But, they explain from the ecosystem, there is desire.
In the end, he says, the regulatory model was advantageous for Italian investors. And although a butterfly effect was expected, it was not as big as the ecosystem was looking for. “It was too slow,” he says.. And that left Italy behind ecosystems like the Spanish. The spirit of investors, even seeing the growth of neighboring countries, did not help too much either. “It was still a strange world for them, investing in start-ups was very risky for them,” he adds. Today, they tell us from the TechChill meeting, it is something that is changing.
With more than 5,000 million euros invested in the Italian ecosystem, of which 1,000 million correspond to the last year, the country has set a record in its entrepreneurial history. In the process, an essential change: the creation of a public fund –similar to ENISA in Spain– that would encourage a still lethargic ecosystem.
Startups from Italy, still with headquarters abroad
The Italian entrepreneurial ecosystem accuses one of the problems that has also had its replica in Spain. Locally created and based companies that, in order to access foreign capital, have had to open tax offices in Delaware, California or Cambridge. Originally Cabify, Travelperk, Domestika or Fever packed their tax bags to other regions due to shareholder demand. The same with Italy.
“The entrepreneurs here in Italy are as good as anywhere else, but the legal and bureaucratic framework is not very good,” says Abirascid. That, despite the Startup Act that sought to promote investment in the country. With everything, two very different sides are being created. That foreign capital go hand in hand with some local figure that takes away problems and efforts. Or that, on the contrary, it is requested to remove the tax office from Italy. To date, the latter is more popular at the moment for the local ecosystem expert.
Is it bad for Italy? Abirascid points out that local thought is something that should be eliminated from the Italian conscience. “Companies with fiscal headquarters outside the country have their employees in Italy and all their assets, so it is not such a serious problem,” he analyzes. “We need a change of mentality in that sense”culminate.
Like Spain –which still maintains a much larger ecosystem than the Italian one–, the region needs to have an international vocation. Unlike France, which resists as a power within its borders, the rest of the regions have to seek expansion to other markets. Together with the Baltic countries –which offer a common position to entrepreneurship– the PIGS should follow that path.
An ecosystem outside the capital
If Spain maintains the eternal fight Madrid vs. Barcelona, with Valencia and Malaga fighting for a place in the race, in Italy they have it clear: Milan is the center of business. It is indisputable. Rome would remain for the Central Governments and tourism. Due to its strategic position, in addition, the proximity to the rest of Europe comes with the same rules as Catalonia in the case of Spain.
“It’s where the money is,” says the expert. Also where is the stock market and international meetings. “You can create a startup anywhere in the country, but if you want to connect with investors, you have to come here.”
Mobility is, as in other countries in the European region, one of its strengths. Aehra is the Italian invoice company, of course, from Milan, which has the objective of compete against Tesla with a 100% electric SUV model which, now too, is trying to conquer the United States. But also businesses linked to science, pharmacy, biotechnology and health. As a final icing on the Italian ecosystem, the aerospace sector has also had a huge impact on the region. D-Orbit, founded in 2011 also in Milan, works with the business of launch structures.
However, there are few Italian unicorns on the national list. the country continues at the tail in volume of valuation companies of 1,000 million. Yoox –a Milanese startup dedicated, of course, to fashion–, Depop –a sort of local Wallapop– and the most recent Scalapay –fintech in the payments sector– are the only ones that can say they are in that group. The reason for this low number is, of course, fiscal policies.
The question of extreme left Italian politics
The world is going through a difficult moment. While in Brazil, the balance seems to lean towards Lula’s leftist policies, slightly above Bolsonaro’s, Europe continues its path in the conservative sector. And, in this, Spain and Italy maintain a similar path. At least this was demonstrated by the last and recent Italian national elections. Giorgia Meloni was the undisputed winner of the elections a little over a week ago. With conservative policy proposals on immigration or family concepts, the economic outlook has been the softest part of the presidential campaign.
Like the rest of the countries in the Euro zone, the inflationary crisis has settled in the country. For this reason, all the parties have limited themselves to subtle positions in this regard. In Meloni’s case, with a certainly negative view of foreign investment in the country, The voice has not been raised in excess about the plans for the national entrepreneurial territory.
For Abirascid, “it is still early to make forecasts, but the government’s plans should include promoting innovation.” Mainly with the question of public funds and the rapid growth of the technology sector in the relationship with China.
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