According to the “State of Italian VC” report realised by P101 in partnership with Dealroom, in the last 10 years, from 2013 to 2023, Italian VCs have injected €8 billion into startups, with an increase from €152.1 million in 2013 to €1.1 billion in 2023. This growth, averaging 644%, is higher than the European average of 492.5%.
Over the same period, the number of completed transactions rose from 294 to 386, an increase of 31% compared to 80% in Europe. This indicates a trend towards larger deal sizes in Italy. Despite macroeconomic uncertainties in 2023 leading to a downturn in investments (-55% YoY) and the number of rounds (-30% YoY), the overall growth trajectory of the Italian ecosystem (+644% over the decade) remains robust.
The valuation of the Italian startup ecosystem is estimated at approx. €67 billion (enterprise value) has soared 25 times in the past 10 years, more than double the European average. The average valuation of Italian startups is projected to exceed €22 million in 2023, demonstrating the highest compound annual growth rate (+19%) of the decade.
Over the last 5 years, Italian VC funds have raised €3.6 billion, marking an 88% year-on-year increase, with the average size of Italian funds in 2023 growing by 71%.
Despite being in a growth phase, the Italian market trails behind more mature ecosystems. Nevertheless, the steady rise in the number of new VC funds (from 3 in 2019 to 11 in 2023) and their increasing average size indicate a deepening and diversifying market.
Round analysis
According to the report, Italian venture capital recorded €3.7 billion in early-stage investments over the past decade, a fivefold increase from €102.4 million in 2013 to €515.5 million in 2023. Early-stage investments remain the focal point of Italian VC, comprising 94% of total rounds in 2023, compared to 88% in Europe. However, their prevalence gradually decreases, coming closer to the European average of 88%.
Over the decade, approx.€2.2 billion was invested in the growth stage, accounting for 5.6% of total rounds in 2023.
Late-stage rounds remain rare in Italy, with €205 million invested in 2023. Only 12 deals were finalised in this category over the decade, with a concentration observed in the last 5 years.
Industry analysis
In 2023, there was a shift in investment from sectors that experienced explosive growth during the pandemic, such as fintech and healthtech, to emerging and sustainable technologies, such as space and energy. Enterprise software, traditionally a focus for investors, claimed the top spot in the Italian ranking in 2023. Investments in startups related to the Sustainable Development Goals (SDGs) increased by 1.6 times compared to 2019.
In 2023, investments in B2B startups increased significantly, accounting for 82%. Investment concentration remained high, with the top 5 sectors in Italy attracting over 50% of total funding and the top 10 industries securing more than 80%.
Exits
Exits increased significantly over the decade, mainly through mergers and acquisitions, with acquisitions rising by 16 and reaching an all-time high of 234 in 2023 (+47% year-on-year) and buyouts increasing by 10 over the same period. On the other hand, Italian IPOs remained modest and volatile, in contrast to a more dynamic European landscape.
Investors
Italian investors continue to dominate the domestic VC landscape (69% of total VC investors in 2023). The presence of European and North American investors has increased, accounting for 19% and 8%, respectively, in 2023. The presence of Asian and other global investors is minimal. The data confirms a positive correlation between the size of funding rounds and the participation of foreign investors.
Innovation Ecosystem
The Italian innovation ecosystem is experiencing strong development: in the last five years, the value of Italian university spin-offs (incubators, accelerators and venture capital networks) has quadrupled, reaching approximately €2 billion in 2023, with 907 registered spin-offs. European programmes, such as Horizon 2020 and Horizon Europe, have been an important source of funding for Italian universities, contributing to the ecosystem’s growth. From 2014 to 2023, around 7,500 Italian university projects have received a total of €2.83 billion. This trend is expected to continue, contributing significantly to the country’s economic growth and technological progress.
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For more info, the report is available at this LINK