Italian Tech Alliance and BizPlace produced the first report on the economic-financial performance of startups that raised capital through equity crowdfunding platforms in Italy.
According to the report, 23% of the companies that raised capital between 2014 and 2019 are growing in terms of revenues and margins. Of these, 40% have been listed on the stock exchange or acquired in M&A transactions.
The Report analyses and compares the economic-financial performance of 216 companies three years after the fundraising round.
The analysis shows growth in revenue for companies operating in the media, fintech, digital and software sectors with a CAGR of 240%, 144%, 71% and 44%, respectively. On the other hand, those operating in the life sciences and education & HR sectors register a drop in turnover in the three years following fundraising.
Companies operating in the fintech and software sectors reach the break-even-point (EBITDA) in the second year, whilst companies operating in the lifestyle, smart city and life sciences sectors from the third year.
Compared to the forecasts, the actual data show that only companies that raised Series A rounds (capital raised > € 1 million) – hence the more mature companies – manage to meet the expected growth rates on turnover (CAGR 106% vs 96% forecast). However, they still do not achieve the expected profitability results. On the other hand, companies that raise pre-seed capital (< € 200k) and seed capital (between € 200k and € 1 million) grow at a much lower CAGR of 27% and 36%, respectively.
The comparison between expected and actual performance reveals a general lack of forecasting ability on the part of target companies in all sectors, with the median deviation from projected turnover three years after fundraising ranging from -51% for companies operating in the media sector to -94/95% for companies operating in the lifestyle, life sciences, smart city and education & HR sectors. However, lifestyle and life sciences companies achieve better actual EBITDA results one year after fundraising.
The Italian ecosystem has recently had several success stories. Several companies that raised capital through equity crowdfunding platforms have achieved outstanding economic-financial performance. In some cases (10% of the total), these companies have been acquired by large operators in their reference sector or listed on the stock exchange (exited).
An analysis of the year-on-year growth rates of turnover and post-fundraising margins shows that 13% of the target companies grew in revenue. Of these, 64% (top performer) grew with more than 20% growth rates per year, reaching profitability in the 3 years following the fundraising.
The remaining 36% grew in revenues, albeit at lower rates and with negative margins (stable growth). In contrast, 9% of the total target companies have liquidated the company between 2014 and 2019 (out of business), and 15% have declining revenues and negative EBITDA (risk of failure).
Most target companies register a progressive revenue decrease while maintaining positive margins (poor performer).
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For more details, the Italian Tech Alliance and BizPlace‘s report (in Italian) can be downloaded at the following link: https://www.bizplace.it/scarica-il-report-ecf-italia-22/