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The start-up ecosystem: strategies for innovation, competitiveness and growth

Hybrid format - Monza, 04/07/2022, Annual Conference for the Friends of Aspen

Although far from the levels of other advanced economies, Italy’s start-up ecosystem has made considerable strides over recent years. Italy now has an opportunity to press forward and to make up for delays in the generation of innovative enterprises. The challenge is not only an economic one; it is one that concerns the entire society in light of the fact that Italy has the highest levels of youth unemployment in Europe. Creating opportunities and fostering a culture favorable to business and risk thus becomes an investment in the nation’s future. In addition to the social value associated with the incentive to create start-ups, venture capital also maintains its importance among alternative investments. While betting on a single start-up can be risky, the overall sector is recognized as a safe asset class capable of generating significant returns over time.

The legislative undertakings of recent years and efforts at building a support system for innovative enterprises remain incomplete. Public funds have provided some advantages but the national private market is still in need of institutional investor contributions.

To make this final leap, Italy should take its cue from other countries that have applied varying degrees of pressure to urge such actors to invest in venture capital. A contribution by institutional operators, combined with the creation of endowed funds capable of attracting greater amounts of international capital, would help the Italian innovation ecosystem rise to the levels of the principal European markets.

Fundamental to placing Italy on the radar of funds that struggle to find investment opportunities on its still too small and fragmented market are external communication and promotion of the country’s image. It must also be kept in mind that creating an effective start-up support system calls for investments along the entire financial sector value chain: from the seed that nurtures the raw idea to the creation of exit opportunities that facilitate investments and disinvestments, supporting the firm’s growth in size along the way.   

Efforts of this sort call for a multitude of actors – from universities and technology transfer centers to the financial world – with the contribution of public operators. Firms, for their part, must interact with constancy and according to innovative strategies. Only through the involvement of the entire start-up ecosystem, will Italy succeed in closing the gap with other markets and thus reap the exponential growth benefits that innovative sectors are enjoying around the world.