According to Dealroom, funding for Italian startups is on the rise, but Italy still ranks eighth in Europe in terms of VC investment.
The newly created Italian Entrepreneurs' Fund (IFF) hopes to help catch up in terms of both quantity and quality. It has invested €50 million in 25 companies, positioning itself as a sector-agnostic, founder-friendly fund that understands the challenges of entrepreneurs.
IFF's portfolio already includes four companies, with a fifth deal in the works. Two have been revealed so far. Prior to customer research platform Glaut in April, IFF led the 2023 funding round for HR technology startup Jet HR.
“IFF is solving the challenge for early-stage founders in Italy to find high-conviction key investors at the pre-seed and seed stages,” IFF founding partner Lorenzo Franzi (third from right in photo above) told TechCrunch. said.
Some may disagree with the diagnosis. VC firms already active in Italy include CDP Venture Capital, Exor Ventures, LVenture Group, Milano Investment Partners, Pariter Partners, Primo Ventures and United Ventures.
But Franzi believes this still leaves a gap in early-stage capital. And either way, IFF emerges as a new source of capital in a market where startups receive significantly less funding than in France, for example, despite the two countries having similar population sizes.
IFF is also a complement to accelerators like H-FARM and a step forward from the angel investments that Franzi and other entrepreneurs have served as backers.
The former CEO of laundry startup Laundrapp has become a partner at Global Founders Capital until the end of 2022. He said the “unstructured” approach inherent in angel investing can lead to a number of problems, such as limited analysis, complex caps and small funding rounds. IFF can not only bring about the structure of the fund during the investment process, but also participate directly after the investment.
For example, IFF has been able to help portfolio companies with key hires, commercial expansion and strategic partnerships, Franzi said. Marco Ogliengo, CEO of Jet HR, agrees, noting that IFF's added value comes from the fact that it is “fundamentally backed by all successful Italian startups.”
That might be an exaggeration. But according to Franzi, about 100 of IFF's backers are actually Italian entrepreneurs. He added that although they come from different generations and sectors, they have a common goal. That makes Italy one of the best places in Europe to set up a company.
This is a particularly ambitious goal. Especially since some issues are beyond the IFF's purview. There isn't much a private VC firm can do to balance high taxes and paperwork. Recent years have seen increased public efforts to boost the country's attractiveness and technology sector. However, unlike CDP Capital, which is backed by a state agency, IFF is entirely privately funded.
In the absence of public funds or institutional LPs, IFFs are free to invest where they see fit. Using this geographical flexibility, we will also support Italian startups operating abroad and foreign startups interested in entering the Italian market.
International connections go both ways. IFF aims to enable foreign VC funds to co-invest in its portfolio in initial or follow-on rounds. It will also help that some of the LPs are foreign-funded GPs and plan to support Italian startups with global ambitions.
Global Italian startups include Bending Spoons, owner of popular apps and services such as Evernote and Meetup, which is valued at $2.55 billion. And as a string of Italian entrepreneurs return to their home country to pursue their next ventures, it seems fitting that they now have a founder-led fund to back them.
IFF will be managed by KOINOS Capital, a private equity fund expanding into VC, and CEO Marco Morgese cited examples of founder-led funds in other markets, such as the Founders Fund in the US and, more recently, Galion. In France, exe.
IFF’s adoption of this model in Italy is another sign that the ecosystem is maturing. For venture capital, the numbers are improving, but there is still more work to be done. “In Italy, it is essential to challenge the status quo on processes, speed and an entrepreneurial mindset,” Franzi said.
