Tech Scaleup Italy – September 2023

The “cool factor” surrounding startups is largely gone (finally!). We need to start looking at startups as a backbone of our economy. The first immediate question is how large is Tech Scaleup Italy? What is its actual contribution to GDP and employment?
As of December 2022, Italy is home to 557 mature tech companies, able to raise $7.3B in capital (equity). They generated approximately $4.4B in revenues (about 0.2% of Italy’s GDP) and directly employed 18,000 people (0.08% of total employment). Nothing particularly exciting. Yet there is a but. Or rather, three.
These companies are growing in a non-linear way.
In the past 2 years, their revenue showed a 50% year-over-year annual increase despite the Covid-19 pandemic and the current economic climate of uncertainty.  This high-growth group of companies is becoming larger every year.
About 100 new scaleups per year are joining the Italian tech scene determining a 20% annual increase in headcount.
These companies (the scaleups) represent only the tip of the iceberg.

Below the surface we estimate about 10,000 startups that haven’t yet reached scaleup status. For them the GDP contribution is probably still modest. But they are relevant in terms of employment (the overall estimated headcount is about 20-30 thousand people, though not all of them full time) and – even more so – with their entrepreneurial mentality.
If we do some simple math, the $7.3B invested into the Italian scaleups are already generating more than $4B in revenue every year. This means that every dollar invested in the Italian Venture Capital produces half a dollar of GDP per year (growing) and returns in less than 2 years.

Then it sounds pretty obvious that it is not only safe to invest into the startup economy but it is also the only way to go. Because the alternatives are established Italian companies that show on average limited or negative growth and are – at the end – net job destroyers.

We need to invest even more than the few billion dollars we are currently pouring into the Italian scaleup ecosystem. Because what we are doing is not enough to close the gap with the other ecosystems. 
Our data shows that Italy invests the equivalent of 0.24% of the GDP in scaleups, far below the European average (1.3%). Here, Italy is underperforming not only compared to Silicon Valley, Israel, and the UK, but also versus its neighbors France invests 1.5% of the GDP, Germany 1.2%, Spain 0.8% and Portugal 0.5%. 
Last year (our best year ever) we invested $2.2B, while Spain put $4.7B on the startup table, France $10.8B, Germany $14.4B, and the UK $40.5B.
The world of innovation is not waiting for us.