Italy is the first European country to publish a study on the development of the blockchain technology and the impacts on Italian start-ups and SMEs.
The study “Blockchain for start-ups and SMEs in Italy” (“Blockchain per startup e PMI in Italia”), published by OECD and the Centre for Entrepreneurship, SMEs, Regions and Cities (CFE), was sponsored by the Ministry of Economic Development (MISE), with the aim of analysing the state of art of Italian companies involved in developing applications and infrastructures, based on the blockchain technology.
The study consists in a detailed analysis on how the blockchain can contribute to the development of SMEs and start-ups in Italy, and therefore the creation of new business scenarios.
According to the report, the Italian economy is composed by a very large number of SMEs, operating in export-oriented industrial sectors, which could benefit from solutions based on the Distributed Ledger Technology (DLT).
Industries where the country of origin (the “Made in Italy”) is highly valuable, can greatly benefit from the features related to transparency, security and traceability offered by the blockchain technology.
According to the study, most Italian companies lack in-depth knowledge of DLT and blockchain applications.
In fact, according to a recent survey mentioned in the report, only 14% of Italian large corporations declare to have a profound knowledge of the technology, while 23% of them have a more superficial knowledge. This percentage decreases by considering SMEs (4% in-depth knowledge, 16% superficial knowledge). Moreover, only 2% of large companies and 1% of SMEs are carrying out projects with the blockchain. In Italy, there are several DLT projects under development within large corporations, but their large-scale applications remain unclear. Many of these projects are still at an experimental stage.
DLT experimentation by large firms in Italy
In 2019, Italian companies invested approx. € 30 million in blockchain projects, a 100% increase compared to 2018. Financial and insurance companies, which account for approx. 40% of total investments, are increasingly focusing on developing an infrastructure that could be accessible to all financial institutions. On the other hand, SMEs in the agri-food and textile industries, which represented 30% of total investments, are developing applications for the supply chain and product traceability.
Moreover, the research team identified and analysed 67 Italian companies developing DLT products for the market (excluding cryptocurrency exchange platforms and wallet providers). These companies are located mainly in Milan and Rome, on average 2.8 years old.
Most of these companies offer services for the public and private sectors (43%), followed by solutions for the financial and insurance industries (18%). Other target industries are: agri-food industry (10%), general supply chain (6%) – both key for the “Made in Italy” – IT (5%) and art and culture (4%).
The greatest part of the analysed companies develops B2B products, targeting SMEs (58%). In fact, SMEs could take advantage of the transparency, traceability, safety, immutability, timeliness and disintermediation features that the blockchain can offer.
However, a significant percentage targets large corporations (27%).
Most of the identified companies (63%) use various types of private blockchains with a central administrator that manages the network. The public blockchain has been chosen by over a third of the analysed companies, for ensuring disintermediation and transparency.
With regard to the stage of development, 53% of the analysed companies are already marketing their products, while the other 47% are expected to start their selling activities in late 2020 or early 2021. Most of the companies already on the market declare that their customers appreciate, in particular: the novelty of technology, the impact on their business processes, and the increased security offered by their products.
Regarding funding, 60% of analysed companies have used personal resources as their main source of financing, although more than 50% have raised capital from venture capital investors.
Italian blockchain companies have developed close relationships with research institutes and universities. They play an important role in the development of the Italian blockchain ecosystem, even if cooperation between companies is not very intense. They also collaborate with international blockchain consortia.
According to the study, compliance with regulations and the complexity of administrative procedures are the greatest issues to deal with, particularly in the areas of smart contracts, hash codes and digital signatures. Funding is the second greatest issue. Other less relevant issues are: presenting the new technology to customers, and hiring talents. The study ends with a series of recommendations, particularly in the following areas: education and awareness, data to support the definition of policies, delivery of public services to SMEs through a DLT infrastructure, financing of start-ups and innovative SMEs, and cooperation at the local, national and international level.
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You can find the full report at the following link: https://www.oecd-ilibrary.org/economics/blockchain-for-smes-and-entrepreneurs-in-italy_f241e9cc-en