Inside the Italian tech boom in 2022

This piece is a companion to our recently released ranking of Italian startups and stopovers to watch out for in 2022.

A late development among Europe’s VC-backed ecosystems, Italy’s tech scene has been riding a wave of exceptional growth in 2022.

Things started to heat up in February of this year, when a momentous $497 million B-series round crowned buy now, pay later fintech Scalapay as the country’s first unicorn after the dot-com boom. Then a second head grew when the payment provider Satisfy reached a valuation of more than $1 billion in September. The likes of Casavo, VEDRAI, Tinaba and Everli have also scored some healthy checks in 2022.

But beyond the headline-grabbing raises, Italy’s success at every level of the pyramid has sparked a long-awaited glass-half-full attitude in the country’s tech ecosystem.

A brief history of Italian technology in 2022

The “boot” of Europe is one of only four countries (the others are France, Switzerland and Belgium) to have maintained a positive growth rate through the first three quarters of 2022. Some $1.8 billion has been invested in Italian start-ups so far this year, just 12 months after investment broke the $1 billion ceiling for the first time.

Aside from the Scalapay round, the first half of the year featured a relatively stable funding environment, mainly on the back of some good traction gained in 2021.

But Q3 2022 – a record quarter for the country – has been particularly fruitful, receiving more than $830 million in new venture capital funding during a bleak time for European technology. You could feel the positivity at the first edition of TechChill Milano in September, when news of megaarounds sparked chatter and wide smiles in the packed meeting rooms.

Deal types and sizes have also changed during 2022. Fewer but larger rounds are being signed: Sifted research found that the average deal size increased from $2.9 million to $6.7 million over the past year, indicating more checks great in later stages, and in line with figures seen from the best in Europe.

There is still room for improvement

Current trends have decisively pushed the country into the top 10 European ecosystems of the year, but Italy still lags behind other European countries in several key dimensions.

It still has one of the lowest ratios of startups per capita in Western Europe, about half that of Spain and only a quarter of those in the UK, plus a paltry $30 in venture capital funding per capita.

Although on the rise, it still has a meager number of active investors across the board: around 450, compared to almost 2,800 in the UK and around 1,300 in France and Germany. CDP VC has led the pack of late, along with LVenture Group, LIFTT, Primo Ventures, Startup Wise Guys, and crowdfunding platform Mamacrowd.

It’s also not very well dispersed across the country, with financial center Milan accounting for an overwhelming share of all deals: Sifted estimates that around 43% of rounds in the last two years have been signed there, followed by the capital Rome (11 %)), Turin (9%) and Bologna (2%).

It’s no coincidence that fintech outperforms all other sectors by far when it comes to VC investment, followed by healthcare, food and real estate. The fashion industry, highly revered in the country, surprisingly floats near the bottom.

But the promising growth patterns are a sign that things are progressing at different institutional levels. While not immune to criticism, the government-backed CDP VC fund has pledged plenty of resources for direct and indirect investment over the next five years. The venture capital arm of Intesa Sanpaolo Neva Sgr´s The €250 million fund was followed by promising multi-stage fund announcements.

National accelerators are also emerging, both inside and outside major universities, such as Bocconi’s B4i, Politecnico di Milano’s PoliHub, Luiss’ Enlabs, DigitalMagics or Depop’s H-Farm.

based in London founders factory It has also recently established itself in Milan, a sign of increased international interest in Italian startups. US fund activity has risen by 14 percentage points over the past two years, while Asian VCs have topped a record 7% share of total funding in 2022 so far. At 78% in 2016, domestic investment has dropped to about 38% so far this year.

So what’s next for Italy?

When Sifted asked Italian tech leaders about the current state of the country’s scene, many blamed an “old” and “safe work” mentality issue for their current position vis-à-vis other European countries. Others pointed to a mismatch between dry powder and founders and between different regions and cities. Others spoke of brain drain, pessimism and a general lack of faith in the ecosystem.

Although the fourth quarter has so far settled in calmer waters, the country’s storied entrepreneurial spirit may finally be paying off in the broader tech space, and the enthusiasm is palpable among its operators.

Federico Scolari is an intelligence analyst at Sifted. Ruggero di Spigna is a startup analyst at Sifted

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