Participants at this Aspen Italia National Interest event recognized from the outset of their discussions the crucial role that start-ups could – given the right conditions – play in increasing Italy’s economic competitiveness. The formation of new businesses in highly innovative sectors was acknowledged as not only helping to renew the economic fabric of the country, by opening up new market niches, but also as offering opportunities to younger workers, a group heavily penalized by the current crisis. In this regard, it was considered telling that in the US, where there is a more vibrant start-up scene, 90% of new jobs are created by firms that have been in existence for less than 5 years.
While the situation in Italy is very different to that in America, it was suggested that the Italian economy nevertheless also has some firm foundations on which to build in encouraging the emergence of young businesses. Indeed, the recession has failed to make a dint in what remains a positive net difference between business start-ups and closures. It was conceded, however, that the country still has some way to go to reduce its accumulated lag in fostering innovation. For instance, despite a research sector that has managed to stay competitive (and in fact offers lower costs when compared with other European countries), difficulties persist in transferring new ideas to the market and cultivating their growth and development.
In addition, it was stressed that the advances made – even at the legislative level – towards encouraging the creation of new businesses are not yet sufficient. In particular, start-ups do not only need to be got going (the “start” bit of their moniker) but also developed (the “up” portion). In this regard, it was viewed as important to create an ecosystem in Italy that encourages the growth of specialized institutional investors and facilitates the process of pulling out of investments, which would represent a real step towards creating a vibrant venture capital environment capable of reaching a sufficient critical mass. Moreover, a reliable system of early-stage venture capital funding within the country would help support businesses through their initial period to make it to further rounds of funding from international sources.
Furthermore, having a virtuous cycle of venture capital in place would also lead to better-structured and fruitful investment. Indeed, in order to take a gamble on start-ups, aside from an adequate supply of capital, sector-specific expertise is also required, given that such businesses span a range of industries that are very different from each other in terms of lead times and modes of investment. Venture capitalists must thus not only be finance experts, but people with entrepreneurial skills, as investment in the growth of a firm consists not just of an injection of financial resources, but also know-how.
Taking a cue from the US market (one of the most active on the venture capital front) and bringing Italian firms to the attention of US investors could offer great opportunities, including by reason of the greater availability of dedicated funds in the United States than in Italy and many other European countries. It was also highlighted that having strong linking mechanisms between new Italian firms and business networks, research centers and American venture capital funds would enable a virtuous cycle to be triggered that allows skills to be retained in Italy, while business activities would be heavily internationalized by coming into regular contact with a more structured and competitive market.
It was suggested that in order to raise the profile of Italian start-ups abroad, it is essential to take advantage of the strengths of the Italian system, starting with its stock of human capital, and tapping into mechanisms that are already available, such as international training and exchange programs. In this regard, it was seen as crucial to take steps to avoid the risk of brain drain by creating a regular flow of skilled individuals in and out of Italy to serve as a vehicle for a systematic transfer of know-how.
Finally, it was acknowledged that to maintain expertise and innovation levels in Italy, there is also a need for an institutional sea change apt to bridge the communications gap between the hitherto distant worlds of academia and industry. Indeed, there has all too often been a lack of adequate training in entrepreneurial disciplines within Italian universities. Teaching young researchers how to also be business-minded would enable them to broaden their horizons and provide them with all those tools – such as the ability to formulate a business plan – that are crucial when seeking to transform an idea into a saleable product on the market.