Interview with Matteo Cascinari, General Partner at Primo Space, the first Italian fund focusing on Space economy start-ups

Q: You are one of the few professionals who has got experience as manager, entrepreneur and start-up investor in Italy. Can you tell us more about it?

Matteo: I started my career as manager, mainly in media companies. The longest and most significant working experience I had was at Il Sole 24 Ore, where I worked for a total of 15 years.

In 1995/1996, I first started approaching innovation and innovative products. At that time, I was working at Il Sole 24 Ore as product manager. Internet arrived in Italy, and I was amongst the “young people” interested in this new technology. It was back then that I met some of the professionals who afterwards became pioneers of the venture capital in Italy. One of them is Gianluca Dettori, the chairman of Primomiglio SGR, one of the first venture capital firms ever established in Italy and management company of Primo Space fund.

In 2007, Il Sole 24 Ore was listed on the Milan Stock Exchange. That year, I participated in the development of the company’s business plan that was presented to the investors. The plan included a series of acquisitions of internet and digital start-ups, which allowed the company to have a more significant presence and a more proactive approach to innovation. At that time, I was in charge, among other activities, of “Internet”, and therefore I was involved in the scouting of potential target companies, and in the analysis of the start-ups’ business models. It was an activity that I really enjoyed. After the IPO of Il Sole 24 Ore, the financial crisis of 2008/2009 stroke, consequently the company decided to suspend the M&A activities.

Moreover, in 2007, I subscribed, as an investor, a share in one of first Italian venture capital funds ever established in Italy, the first fund of Gianluca Dettori. Thanks to that investment, I started learning about the dynamics of start-ups and venture capital.

I worked at Il Sole 24 Ore until 2009. I decided to leave because I wanted to be an entrepreneur. I didn’t have my own business idea, so I started looking around.

First of all, I joined the Italian business angel association IAG (Italian Angel for Growth). I wanted to make few investments, while I was searching for a start-up to support not only with capital, but also with my managerial competences. Then I found Blomming.

Blomming was a promising start-up, active in social ecommerce, a very innovative market at that time (2011/2012). Facebook was still at the beginning, and Blomming was targeting Facebook as social platform for its ecommerce activities. The company was founded by Nicola Junior Vitto, a young brilliant tech expert. We had complementary skills, he was a tech guy and I was a business professional. I joined Blomming as business angel and CEO. In 2013, we raised € 1.3 million, an important amount of money at that time in Italy. Our adventure ended a few years later, when we sold the company at a pretty low value.

In addition to Blomming, I made a series of investments, both indirect (i.e. in Primomiglio’s fund, in the US Mission and Market fund) and direct, in other 3/4 start-ups.

Among these, I co-founded DentalPro. I wasn’t an operating founder, I participated in the development of the company as member of the company’s Board of Directors, until the first exit to Summit Partners in 2015. Two years later, we had a second exit: BC Partners acquired the majority of the company. Today, BC Partners is still the majority shareholder, and we [the founding partners] still own a stake of DentalPro, through an investment vehicle. The vehicle follows the private equity investment logics, and invests in structured companies with turnover, positive EBITDA, and a consolidated reference market. Apart from DentalPro, we have a couple of other fully diversified investments, in companies operating in different sectors.

In addition to investments, I provided advisory services in the field of venture capital, thanks to my managerial background and the knowledge I gained with start-up investments. Currently, there are not many people in Italy of my age this double-sided experience.

Indeed, big corporates and start-uppers often struggle to understand each other. Traditional corporates do not fully understand the dynamics of a start-up; and, on the other hand, start-uppers are convinced that traditional corporates operate in an old-fashioned way. I have often found myself in circumstances when I act as an interpreter between these two worlds. Therefore, companies contact me for scouting for start-up investments and for making strategic reviews of start-ups.

Two years ago, the extraordinarily interesting opportunity to create a venture capital fund in the space economy emerged.

I was already working on the creation of a VC fund focused on B2B business models. In fact, I believed that B2C models are more complicated to establish in Italy, compared to other countries. This is mainly due to the fact that Italian investors and capital markets are less structured, and much less open for capital intensive B2C models.

But then the opportunity for an aerospace fund emerged. It was a great opportunity because one of the promoters is Agenzia Spaziale Italiana (Italian Space Agency), and because the sector is considered interesting by many classic institutional investors, such as European and Italian investment funds and foundations. Therefore, together with Giorgio Minola, we focused on this project, and on July 31st we reached the first closing of the fund.

Q: Now you are General Partner at Primo Space, the first Italian fund focusing on aerospace start-ups. You recently announced the first closing at €58 million, with European Investment Fund (EIF) and CDP Venture Capital SGR act as cornerstone investors. The fund’s target size is €80 million. How did the idea to focus on the space economy come about?

Matteo: Italy is historically one of the leading countries in the world in the space field. Italy was the third country, after the US and Russia, to launch a satellite into orbit, in 1964. The space sector involves several Italian companies in the production of satellite, launcher and orbital system production. The district of Turin is famous, strong and prestigious in the space industry. Additionally, we are the third contributor in the world for ESAvbudget.

The space economy is becoming interesting now because some fundamental elements have recently changed.

Up until 5-10 years ago, the space was accessible only to very large corporations and governments, because of the high capital requirements. Satellites were big, heavy, and complicated to build, and they were normally bound to one or more specific and pre-ordered missions. They were launched into orbit and then deorbited after 5 to 20 years, depending on the type of mission.

Nowadays, satellites can have very tiny dimensions (30cm x 30cm) low weight and they are used in groups, working together as a satellite constellation. A constellation of satellites, by combining the images produced by all satellites together, produces images similar to the ones of traditional big satellites, in terms of quality. Moreover, new generation satellites are sent into orbit at closer distances. Therefore, today satellites are accessible at much lower cost.

This gave rise to the creation of a whole new supply chain in the space economy: satellite manufacturers, materials, equipment, communications, etc.

Q: What kind of start-ups the fund is looking for? What is the fund investment strategy?

Matteo: Primo Space aims to develop the Italian space economy, and will target start-ups in three segments:

• Upstream, meaning technology that builds space infrastructure to be launched into orbit: rockets, satellites, materials for satellites, communication systems for satellites, AI software, electronics, robots, etc.
• Downstream, meaning earth-based applications enabled by space technology: communications, cryptography, geolocation and earth observation. There are various applications, among the most common: TV, mobile phone, and GPS, but there are many others that can be developed.
• Space related, meaning activities developed thanks to the available space technologies. Some examples: analysis from the space of irrigation levels in agriculture, analysis of the speed and routes of cargo ships, which do not require hardware anymore, etc.

Primo Space targets approximately 25 investments into technology spin-offs, start-ups and SMEs, according to two different investment tickets: a smaller ticket for early stage companies and technology spin-offs (we have an agreement with Politecnico di Torino, and we are in contact with other Italian research centres and universities); and a larger investment ticket, between € 1 and 5 million, for financing companies in their scaling-up phases. The geographic focus will be Italy, but a maximum of 20% of the capital could be invested in companies based in the rest of UE, the USA and Israel.

Q: One last question. What do you think of the Italian venture capital industry?

Matteo: The Italian venture capital industry has changed a lot over time.

In the last few years, many former entrepreneurs decided to become venture capital fund managers, and in my opinion this is very positive. Those are people who have launched successful start-ups, who are familiar with the dynamics both as a start-upper and as an investor, and who invest their own capital into VC funds.

Furthermore, the industry is more structured now. There are numerically more funds, and they are getting more and more diversified: vertical funds, such as funds on advanced materials (Eureka!), ours on space, on medtech (Panakes Partners); early stage funds, scale-up funds, etc.

The other element that has improved a lot is the attention of the corporate world to innovation and start-ups.

It is true that we are still far behind compared to other European countries, but that just means that we still have room for improvement.

From a regulatory point of view, I find that the actions that the Italian Governments have taken over the last few years are positive for the venture capital industry. In 2012, start-ups were institutionalised, and start-up investments incentivised. Also, the actions taken with the latest government decrees are in the right direction. Of course, there are some aspects that could be improved.

For more info: The measures of the “Relaunch” Decree to strengthen the Italian start-up ecosystem

I believe that venture capital can be developed only with a mix of public and private capital actions. The public sector should (and has already started doing so) incentivise the industry with capital and a legislative framework that supports start-up investments in various ways, such as with tax exemption on investments and on exit proceeds, procedural simplifications, etc. But then, it is the private sector that must follow.

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