Interview with Francesco Cerruti, General Director of VC Hub Italia, the Italian association of venture capital, investors in innovation, and innovative start-up and SMEs

Francesco Cerruti is the General Director of VC Hub Italia, the Italian association of venture capital, investors in innovation, and innovative start-up and SMEs.

After five years in the European Parliament, where he worked as Parliamentary Assistant and then as Head of Office, Francesco worked for the consulting firm TPA Research, where he led the European team.

Francesco graduated in International Sciences and European Institutions, and Political Science and Government at Università Statale di Milano, and received a Master in Global Politics from the London School of Economics.

Q1: Can you tell us about your professional experience and how you joined VC Hub and the innovation landscape?

Francesco: I am an unusual “creature” in the innovation landscape, in the sense that I come from “outside”, both geographically and thematically.

I had lived abroad for 7 years, first in London and then in Brussels, where I worked at the European Parliament for 5 years, dealing with international trade and industrial policies.

In May 2020, I returned to Italy, thanks to the opportunity offered by VC Hub, which fit perfectly into my personal and professional life. In fact, I am Milanese and I have a Milanese wife with whom I shared the desire to return to Italy. Furthermore, my professional ambitions were to relocate myself in Italy, in an interesting sector, without having to take steps backwards.

So, I returned to Italy with the desire to help to bridge the gap that Italy has compared to other countries, in one of the key sectors for the Italian society and economy, which is innovation.

In fact, it seems undeniable to me that the innovation sector is crucial for any developed economy in 2020; it always has been and it is even more in this period. This year, Covid-19 made all the actors operating in the universe of innovation even more central.

Unfortunately, our country lags behind the others. This means that, on one hand we have room for growth, and on the other hand our work is made easier because we can refer to what other countries have done and are doing, in order to minimize that gap.

Q2: How was VC Hub founded? What are the main activities of the association?

Francesco: VC Hub was created in the first half of 2019 as a venture capital association, with the idea of ​​dealing exclusively with venture capital matters.

In the first half of 2020, there was a qualitative improvement, which can be mainly expressed in two ways.

First of all, the membership base changed. VC Hub became an association supporting innovation, and now it includes not only venture capital firms, but also other investors in innovation, such as family offices and business angels. In addition, a number of innovative start-ups have joined the association. These are companies that have raised at least € 500k since their foundation [this is a key criterion for joining the association]. Therefore, today the goal of VC Hub is to be the association that represents the top players in making innovations in Italy (entrepreneurs and investors). In January 2020, VC Hub had 30 members, in May 2020 – when I joined it – 70 members, today we have 140 members.

The second element that contributed to the qualitative improvement is the creation of a full-time team. Until May 2020, the association was carried out by the founding members (VC firms) in their spare time. Now, a team working full speed is in place.

VC Hub deals with activities that we group into 4 areas.

1. Institutional relations. We dialogue with the Government and the institutions on innovation matters. We also make proposals for integrating and changing the regulatory ecosystem, by involving all operators in the sector thanks to thematic and sectoral working tables. Some of our proposals were implemented by the Relaunch Decree, and we are currently working on the Recovery Fund. Ours are proposals for the benefit not only of innovative investors and entrepreneurs, but in general of the Italian innovation ecosystem.

2. Communication and education towards public opinion, to make people understand how central innovation is in the Italian economy. An investment in an innovative company involves not only the entrepreneur and the investor, but makes the entire economy more resilient, modern, and dynamic.

3. Community engagement, through networking initiatives and sectoral working tables, to bring our members together.

4. Studies and insights, some of which are available to the general public, others exclusively to our members.

VC Hub has grown a lot as an association in just a few months. This was possible as a consequence of Covid-19 and the understanding of how important innovation is for the development of our country. But it was also possible because many innovative investors and entrepreneurs have realised that a more collaborative relationship with the public can help the private sector. The government’s approach to innovation issues is more open now, but we have noticed a change of attitude of the private sector too. The involvement of a person like myself, a man of policy “lent” to the private innovation industry, in my opinion has facilitated the positive collaboration between these two worlds that too often have not understood each other in the past.

Q3: How is VC Hub supporting the innovation industry, after the outbreak of the Covid-19 pandemic?

Francesco: Before my arrival, in March 2020, the members of the VC Hub Board of Directors proposed a very precise and concrete manifesto in 8 points that, in their opinion, were important for supporting innovation, given the devastating situation caused by Covid-19. It was an organic proposal, which included the views of both investors and entrepreneurs.

Starting from those 8 points, many things have happened. I only mention two main ones.

The first one is the enormous interest from the institutions regarding innovation topics, which was then reflected in the Relaunch Decree of May 2020. The Decree incorporated most of the 8 points of the VC Hub manifesto.

The second one is the fact that VC Hub has established itself as an important point of reference for the whole system. It is one thing to complain and protest, another to accompany the protest with a whole series of concrete proposals, easier for public institutions to put in place.

In particular, the Relaunch Decree provided a whole series of measures listed in art. 38, such as: the enlargement, both in terms of economic resources and penetration, of the Smart & Start program; the provision of € 200 million to the Venture Capital Support Fund. These are measures that reward innovative companies which was able to raise capital in the period ranging from November 2019 to today. The fund, in particular, follows a mechanism in which the private investor is central: every euro invested by a private investor is multiplied by 4 by the public.

Furthermore, the Relaunch Decree established the Enea Tech Foundation with a provision of € 500 million, according to art. 42. The Foundation – which is expected to become operative in the coming weeks – aims at supporting technology transfers and the exchange of best practices between research centres, universities, and private companies.

I have to say that we are concerned about the timing. In other countries, innovative companies have already had access to the emergency tools put in place by their governments. In our country, the art. 38, paragraph 3 of the Decree Law [VC Support Fund] has not yet entered into operation. This creates enormous problems in an emergency situation. We are doing our best to help unlocking these resources.

The field of action of VC Hub is not just about emergency measures.

In fact, we have put together a series of concrete proposals regarding the allocation of the Recovery Fund resources [€ 208-209 billion assigned to Italy by the European Union which will be released when our country presents a plan for the allocation of these funds]. It is a succinct but precise series of proposals, which includes the creation of funds of funds focused on the priority areas indicated by the National Recovery and Resilience Plan. These areas have to do with the innovation sector: strengthening digitisation and innovation in the country, moving towards a greener and more sustainable country, and creating jobs.

In my opinion, job creation is one of the great areas that innovative companies can help with. As shown in a research that we conducted together with EY (LINK HERE), 58% of the innovative companies that are part of our network have been able to hire employees between February and May 2020.

Another proposal is related to the review of the R&D tax credit, in order to facilitate those who decide to invest in innovation in Italy. In our country, the R&D tax credit is lower than in other European countries. In terms of investments, 1.47% of the Italian GDP is dedicated to R&D, compared to 3.1% in Germany, and a European average of about 2%.

Moreover, thanks to the sectoral working groups, we put together a series of proposals for integrating and changing the regulatory ecosystem, so that it is easier to operate in specific sectors. We just worked on the life science sector, we have started working in another key sector which is deep tech, and in particular on artificial intelligence, and early next year we will focus on horizontal tech transfer, fintech, and ecommerce.

Q4: So, after 6 months from your return to Italy, what do you think of the Italian venture capital industry?

Francesco: I believe that this is a positive period for the innovation landscape in relative terms, thanks to the great attention of the public institutions, the capital dedicated to innovative investments by both the public [almost € 2 billion were provided through CDP Venture, the Relaunch Decree, and the Enea Tech Foundation] and the private sector, the greater awareness of the centrality of innovation for the recovery of our country.

But we are still far behind compared to other countries. I believe (and hope) that the emergency measures, and above all the allocation of the resources of the Recovery Fund, can really help to close the gap with these other countries. It seems to me that there is a positive attitude, but having a positive attitude and acting are to different things. I want to be positive and trusting because I see that there is willpower and commitment in satisfying the needs of innovative companies.

If we want to use this “extraordinary” phase to narrow the gap and to truly make Italy one of the most innovative countries in Europe, we must do much more than what has been done until today. We need to accelerate, and above all we need to be faster in providing the resources that companies need to first exist, and then develop.


SUBSCRIBE TO THE SCALEUPITALY NEWSLETTER

For more info on VC Hub Italia, visit: https://www.vchub.it/