Report to Parliamenton the implementation of policies in support ofinnovative startups and SMEs

Federica Guidi
Italian Minister of Economic Development

September 2015

Annual Report on Innovative Startups and SMEs – 2015

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Introduction
In March 2014, when I took over as Minister of Economic Development, I inherited a wide rangeof challenges, opportunities and emergencies from previous administrations. Recalling theprocess of exploration and fast learning that I experienced in my first week in office, I remember
with pleasure that one of the acts with which I started my term in office was the submission to
the Italian Parliament of the first annual report on the implementation of the policy on
innovative startups.
Based on an express provision of the law, I was required to report on regulatory developments
and the first impact analyses of legislation that at the time resembled nothing so much as a large
building site. Faced with a legislative package that was starting to take off, about a subject, thatof promoting new innovative business ventures, which I thought was essential for strengthening
the competitiveness of the national economic fabric, I favoured a gradual approach based oncontinuity with ongoing actions. The months that followed the submission of the first reportwere characterised both by a consolidation of existing initiatives as well as by a growing
expansion of the range of measures to support new innovative business ventures.
With regard to the former, there was a continuation of hidden but vital work based onmonitoring the signals coming from the ecosystem. This included discussions with market
participants and replies to requests for information from citizens and companies. It was possible
to resolve interpretative doubts raised by a number of parties in relation to the legislation –through the drafting of circulars, guides and explanatory documents and the development ofprocedural simplifications. This was a natural result of legislation characterised by strong
innovative elements and its widespread communication throughout the regions, often incollaboration with the Chambers of Commerce. Solid, meticulous, comprehensive and continuous
work.
However, we needed to implement new initiatives to raise the level of ambition, to accelerate theprocess of catching up with our international competitors that our ecosystem has undertaken inrecent years, and to implement its own original features.
The Italia Startup Visa and Italia Startup Hub programmes date back to June and December
2014 respectively. These programmes revolutionised – by simplifying, accelerating and putting
them online – the procedures that allow the attraction and retention of talent from outside
Europe to our country. Those who choose our country to start their innovative enterprises canopen up and enrich our ecosystem.
Then, the "Investment Compact" Decree-Law, which was converted into a law in March 2015,
introduced the new procedure that allows entrepreneurs to establish innovative startups online.
This can be done without the need to use external professionals, with lower costs and digitally
signed articles of incorporation. The same measure also enhanced the programme on innovative
startups, bringing the period for which the subsidies are applicable up to five years.
However, it was through another provision of the Investment Compact that public action tostrengthen the innovations ecosystem achieved the most significant breakthrough since theGrowth Decree 2.0 at the end of 2012. This was the provision related to innovative SMEs. This
provision extended a large part of the measures already provided for the benefit of innovative
startups to a potentially much broader target, comprising all small and medium-sizedcompanies operating in the field of innovation, regardless of their date of establishment,
formulation of corporate purpose or level of development. With this sort of legislation aimed at
stimulating new businesses, startups and innovative SMEs are just two evolutionary stages of asequential and coherent process. Through it, the Government wishes not only to facilitate the
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starting phase but also, after two years, to accelerate the strengthening and growth in size of allcompanies with a strong focus on innovation among the SMEs, which form the backbone of oureconomy.
Having reached the second edition of this report, I am therefore firmly convinced that in recent
months, public actions in favour of the national ecosystem of innovative business ventures havegained further strength and effectiveness. The rapid and sustained growth of innovative
startups, of which ample evidence is given in the following pages, will allow the reader to assess
this evaluation objectively and scientifically.
At the end of August 2015, there were 4,511 innovative startups, 1,391 more than at the end of2014 and 2,792 more than the number recorded at the end of February 2014 in the previous
report to Parliament. Figures like these illustrate the high level of attention that the innovation
ecosystem is paying to the policy, its increasing appearance in public discussions about
innovation, and its gradual dissemination through the regulatory instruments used to promote
investment in innovations.
This is a growing recognition, which is clearly perceptible all over Italy, when one considers that,on average, 40 new innovative companies are set up each week from Milan to Palermo, whichfurther expand the number of companies in the special section of the Registry that gives access tothe incentives system. Eight provinces are now giving a permanent home to over 100 innovative
startups. The figures show three particular areas of concentration, in the cities of Turin, Romeand Milan, the latter now being able to proudly stand up to competition with major European
cities. There is also a significant presence of innovative startups in the South, where the provinceof Naples ranks fifth among the provinces of Italy in terms of startup numbers.
This phenomenon, it should be added, has started to show figures that are significant, including
those for employment trends and, more generally, in terms of size as well. According to datafrom the Chamber of Commerce, on 30 June 2015, innovative startups employed 20,800 workers(16,861 shareholders – one may assume that the shareholders are directly involved in theircompanies – and 3,924 employees). This was about 2,900 more than in the previous quarter andover 5,800 more when compared to late 2014.
Between 2013 and 2014, we have also witnessed an increase in the number of companies with
employees (from 634 to 1,010), accompanied by an increase in the average number of employees(3.2 to 3.4).
Also as at mid-2015, 461 startups were able to attract bank loans using the simplified and free
procedure provided by the Guarantee Fund for SMEs, for a total amount of €198 million. This
was an average of €306,000 per loan, a particularly high figure considering that they are highrisk companies and that traditional companies are having continuing difficulties in accessing
credit.
Encouraging signs also came from the data on tax incentives for investments in startup equity. In
2013, the first year of operation, 844 taxpayers (individuals and companies), directly or
indirectly, invested resources amounting to €28.2 million. This data shows a good start for one of
the main tools of the "startup package". I am confident that the next report, which will analyse
the transactions in 2014 (the period when the number of startups achieved higher figures), will
confirm a significant impact on the equity investment market. Further impetus will also beoffered by the enhancing of the rules about incentives, with a broadening of the range ofinvestments eligible for subsidy and a simplification of procedures. This development was madepossible by the new European Commission guidelines on state aid, which were published in thesummer of 2014.

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Despite the great efforts that have been made and these very encouraging figures, many
challenges persist. Three challenges remain above all:
1. To internationalise the Italian ecosystem of innovative entrepreneurship, make it more
attractive to the international flow of human and financial capital, and improve its
recognition globally. I have already mentioned the Italia Startup Visa and Hub programmes,
which revolutionised the procedures for granting visas and residence permits for selfemployment to the advantage of talented people from outside Europe who want to starthigh-tech companies in our country, but that is far from all. The recent launch of acollaboration between the Italian Investment Fund and the European Investment Bank, theagreement signed with France in May 2015 for the submission of joint investment projects
under the Juncker Plan, the Italian contribution towards creating a Single Digital Market for
the European Union, membership of initiatives such as the Policy Tracker Startup Manifesto,
a valuable mapping of national strategies on innovation, and the Startup Europe
Partnership, to encourage cooperation between large companies and innovative startups,
are the most vivid examples of the international drive that increasingly characterises
Government action in the field of innovation.
However, in order to move faster, team spirit and commitment from everyone is required toenhance recognition of the good progress that Italian innovative entrepreneurship has madein the last three years, both in Italy and overseas. Although the Italian innovation ecosystem
has now gained self-awareness and the many scattered centres of excellence are finding
cohesion thanks to the policies implemented in the last three years, some media debates
about startups continue to view the phenomenon as a passing fad. On the contrary, in aworld where value chains are increasingly global, a country’s ability to generate newcompanies and push them towards the frontier of innovation is bound to be one of the main
determinants of competitiveness.
2. Strengthening the venture capital investment market. Although tax incentives forinvestment are showing slightly encouraging signs, despite the intensification of the actionin terms of venture capital by the Italian Investment Fund, despite Italy being one of the firstmovers with equity crowdfunding legislation, the figures for equity investment in new
innovative companies are not yet up to standard for a large industrialised country. So manyof the talented people who create innovative companies are not able to attract the capitalthat would allow their companies to grow, and are forced to lower their ambitions. At aregulatory level, the strengthening of tax incentives for investment in startups and measures
to ease the regulations on equity crowdfunding are currently underway. The recent creationof a €50 million venture capital fund, managed by Invitalia and able to mobilise the sameamount of resources from the private sector, testifies to our commitment to achieve ourgoal. However, even in this case, we need a strong commitment from everyone, especiallyfrom the private sector, which is called upon to have a greater tolerance of risk and to
devote more attention to productive investments in research, development and innovation.
3. To multiply and improve the links between research and industry, and between traditional
companies and innovative companies. This is not a leitmotif or empty rhetoric, but acommitment that the Ministry of Economic Development has been pursuing via tangible
steps. I refer not only to the aforementioned investment incentives for venture capital, which
also affect companies, but also to the new tax credit system for research and development
launched by the Stability Law of 2015, which provides significant tax benefits for companies
doing research and innovation by cooperating with research centres, laboratories andstartups. Large companies, which could innovate entire supply chains by drawing from thepool of innovations contained in startups, continue to view the latter with indifference, if notsuspicion. We need a paradigm shift that would be able to create a dynamic synergy
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between mature companies and a new generation of startups, and to promote acquisition
and acqui-hiring processes.
To conclude, a great deal of work has been carried out since March 2014, and the path that hasbrought us this far has been arduous but continuous. Our commitment to supporting andstrengthening the entrepreneurship of a new generation is unchanged. Strong public investment
and regulatory effort is not only justified for economic reasons – such as the pursuit ofsustainable development, strengthening the competitiveness of the economy and the creation of
new jobs based on the centrality of innovation, which is unanimously recognised by international
economic experts as a fundamental driver of economic growth – but also in terms of metaobjectives of a social and cultural nature.
The very publication of this report signals a change in attitude compared with the past. The
Government's intention is not only to "claim victory" when things are going well, but above all, toallow transparency in relation to the effects of the policies it is pursuing, to make data and facts
available to the public, to judge and be judged. I believe that this trend toward decisions that are
as evidence-based as possible is essential for identifying errors, correcting and learning fromthem. Only in this way, can the use of public resources – not only financial but also in terms of"political capital" for the benefit of a cluster of enterprises we think it is our duty to believe in –be truly responsible.
To identify the meta-objectives underlying our policy effort, we will briefly remind you of thesalient features of the startup phenomenon. A startup is a new innovative company that, bydefinition, aspires to grow rapidly and is not content with a local market. Instead, it is driven bya strong international ambition, is based on a team with diverse skills, has a strong drive
towards innovation and grows not by improvisation but through a structured and continuous
planning process.
Thus, startups metaphorically embody a change that is very desirable, not only in business but
also, in a broader sense, at the cultural and social level.
The ambition to face the toughest challenges, awareness of what is happening in the world andone's own role in it, the ability to bring together talent and build on collective intelligence topursue common objectives, the willingness to find new solutions to old problems and the ability
to take decisions that are planned, not improvised. Are not these characteristics that we want for
Italy?

The Minister
Federica Guidi

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

This report was produced by the Technical Secretariat of the Ministry of Economic Development
and Division VII "SMEs, innovative startups and enterprise networks" of the Directorate Generalfor Industrial Policy, Competitiveness and Small and Medium Businesses (DGPICPMI).
Its contents were agreed with the "Technical Committee for monitoring and evaluation ofpolicies in favour of startups and innovative SMEs", set up at the Ministry of Economic
Development (MiSE) under the Ministerial Decree of 27 May 2015.
The Committee is chaired by Stefano Firpo, Director General for Industrial Policy,
Competitiveness and Small and Medium Businesses. Patrizia Iorio, head of the Division VII of
DGPICPMI, is a permanent member in accordance with the law.
The following are temporary members, nominated by their respective organisations:
Gerardo Baione, Mattia Corbetta and Enrico Martini, representing MiSE;
Fabio Bacchini, Alessandro Faramondi and Caterina Viviano, representing Istat;
Silvia Carbone, representing the Consob;1
Antonio Benfatto and Domenico Mauriello, representing the Chambers of Commerce;
Luca Grilli, Associate Professor at the Polytechnic University of Milan, as an independent expert.
The report was prepared by Carla Altobelli, Paolo Carnazza, Mattia Corbetta and Enrico Martini.
We thank the following for their cooperation: Fabio Bacchini, Alessandro Faramondi, Marco
Ventura, Caterina Viviano (ISTAT); Luca Grilli (Politecnico di Milano); Silvia Carbone, Davide
Zaottini (Consob); Stefano Casagrande, Marco Conte, Caterina Pampaloni, Giuseppe Salonia,
Pierluigi Sodini (Unioncamere); Antonio Benfatto, Luigi Marangon (Infocamere); Emanuele
Baglioni, Gianpaolo Bruno, Rossana Ciraolo, Ferdinando Gueli, Marco Saladini, Silvana Stella(ICE); Alfredo Bruni, Lina D'Amato (Invitalia); Salvo Mizzi (Invitalia Ventures), Cristina Bini,
Luigi Tommasini, Giacomo Valentini (Fondo Italiano d’Investimento), Massimo Mamberti,
Alessia Marchione (Comitato Leonardo); Maurizio Cuppone, Eleonora Egalini, Alberto Pela
(GSE); Anna Amati and Dario Mazzella (Meta Group).

1 The public authority responsible for regulating the Italian financial markets.

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Table of Contents
Summary of the report .................................................................................................................................... 11
1.

The Investment Compact and other regulatory developments .............................................................. 17
1.1 The Ministry of Economic Development survey about the investment strategies and innovation of"excellent" SMEs.......................................................................................................................................... 30

2.

Innovative startups, certified incubators and innovative SMEs: the main evidence .............................. 35
2.1 Innovative startups ................................................................................................................................ 35
2.1.1 Human capital, enterprise data, geographical and sectoral breakdown ....................................... 35
2.1.2 Startups – Registrations and Closures ............................................................................................ 51
2.1.3 Alternative innovation requirements ............................................................................................. 54
2.1.4 Innovative startups with a social goal or high technological value in the energy sector............... 58
2.1.5 Analysis of the main economic indicators ...................................................................................... 62
2.2 Certified incubators ............................................................................................................................... 74
2.3 Innovative SMEs .................................................................................................................................... 77

3.

The main facilitating measures in favour of innovative startups ............................................................ 79
3.1 Reduction in costs related to starting business activities .................................................................... 79
3.2 Access to tax credits for hiring highly qualified staff ............................................................................. 81
3.3 Free and direct access to the Guarantee Fund for SMEs ...................................................................... 83
3.4 Tax incentives for investments in equity ............................................................................................... 88
3.5 Equity crowdfunding ............................................................................................................................. 97
3.6 Internationalisation services of the ITA and ItaliaRestartsUp ............................................................. 105

4.

Further actions to benefit the innovative startups ecosystem ............................................................. 110
4.1 The Smart&Start programme .............................................................................................................. 110
4.2 The performance of innovative startups with regard to the Horizon 2020 SME Instrument ............. 121
4.3 Italia Startup Visa and Italia Startup Hub ............................................................................................ 123
4.3 The Fondo Italiano d’Investimento and the Fondo Italia Venture I ..................................................... 130
4.4 Leonardo Startup Award 2014 ............................................................................................................ 135
4.5 Global Entrepreneurship Congress 2015 ............................................................................................. 137
4.6 Contamination Lab (CLab) ................................................................................................................... 140
4.7 CleanStart ............................................................................................................................................ 144
4.8 Support by the Chambers of Commerce ............................................................................................. 147
4.9 Online communication and promotional activities ............................................................................. 150

Statistical tables............................................................................................................................................. 151
Methodological Appendix ............................................................................................................................. 155
Database sources and information content .............................................................................................. 155
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Towards the Annual Report 2016: methodology for an impact analysis .................................................. 161

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Summary of the report
Now in its second edition, this report aims to show the regulatory changes that have been partof the Government's strategy to support the ecosystem of innovative companies from March2014 to date (Chapter 1). It describes the "demographic" dynamics of innovative startups,
which form the main focus of this edition, as well as of the certified incubators and innovative
SMEs registered in the special sections of the Register of Companies (Chapter 2). It also
analyses the initial results generated by the policy instruments that make up the Italian"Startup Act" (Chapter 3), and highlights additional initiatives for the ecosystem that wereintroduced after the Growth Decree 2.0 (Decreto crescita 2.0) (Chapter 4).
In this period, the Government's commitment to supporting innovative businesses reached an
important turning point with the enactment of the "Investment Compact" decree-law, which
extended some of the support measures provided to innovative startups to a new range ofenterprises, that is, innovative SMEs. This covers all small and medium-sized businesses
operating in the field of technological innovation, regardless of their date of incorporation andtheir corporate purposes.
The relatively short time that has passed since the start of Growth Decree 2.0 (whose
conversion into law dates back to December 2012, while the establishment of the special
section of the register dates to February 2013) does not allow a thorough assessment of the
impact of the various measures. However, the figures that will be presented highlight the
emergence and gradual consolidation of a national innovation ecosystem that can stand up tointernational competition and provide an inspiration for the modernisation of the Italian
entrepreneurial model.
As of 30 June 2015, there were 4,206 innovative startups registered in the special section of
the Companies Register of the Chambers of Commerce, including over 3,000 created after the
Growth Decree 2.0 came into force: 18% in 2015, 35% in 2014, 23% in 2013 and only 24%
before 2013. Each week, from Milan to Palermo, on average, 40 new innovative businesses are
established and added to the special section of the Register that gives access to the system of
supports. Eight provinces now have, on a stable basis, a quota of at least 100 innovative
startups (Milan, Rome, Turin, Bologna, Naples, Modena, Florence and Trento). Startups all fall
into the ‘small’ and ‘very small’ size categories. In fact, only 1,275 startups have any
employees, and of these, 95.7% are micro-companies (belonging to the 1-9 employees size
category).
The phenomenon is also having a noteworthy effect in terms of employment. According todata from the Chambers of Commerce, again on 30 June 2015, innovative startups employednearly 20,800 workers (16,861 shareholders – presumably directly involved in the company
as partner-workers – and 3,924 employees), about 2,900 more than in the previous quarterand 5,800 more than at the end of 2014, when there were 14,862 shareholders and 3,025
employees.
By analysing the human capital factor more deeply, we can see that a quarter of the overall
number of startups on the register are made up of businesses controlled by young people(aged under 35). This is more than double the percentage for all businesses (12%) and fourtimes the figure for joint-stock companies (7%). This gap is significantly greater if we take
into account all the companies in which there is at least one young person amongst theshareholders or on the Board of Directors (41% for startups vs. 13.6% for joint-stockcompanies).

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Amongst the innovative startups, a significant number of (782) of companies declared thatthey possess a means of protecting intellectual property.
The geographical distribution of innovative startups reflects a balance that, on a larger scale,characterises the national economy. The South of Italy is now home to 22.3% of theinnovative startups in the country, the Central regions have 21.4%, and there are 56.3% in the
North (30.7% in the North-West, 25.6% in the North-East). The Italian region that forms ahome to the highest proportion of innovative startups is Lombardy (21.8%), followed byEmilia-Romagna (11.9%), Lazio (9.8%), Veneto (7.5%) and Piedmont (7.1%). Amongst theregions in the South, Campania and Sicily stand out, respectively in seventh and eighth placein the national rankings, with 5.8% and 4.3% of the total number of startups.
By analysing data relating to registration trends, it emerges that – excluding the initial peak inearly 2013, shortly after the start of policy – there has been an almost linear growth over thelast two years, although these have been characterised by a severe and widespread recession.
The upsurge of startup companies therefore appears to contrast with the overall figures for
new registrations of Italian companies, which in recent times has seen a slow but steadydecline. Since the policy came into force, the average number of innovative startup
registrations has risen from 79 per month in 2013 to 122.7 in 2014 and 127 in the first half of2015.
A second pillar of the legislation aims to promote the creation of certified incubators. These
are businesses that host, support and accompany the development of entrepreneurial
startups from conception through to early development, by offering training, operational
support and management. They provide tools and workplaces and facilitate contacts between
investors and business ideas that are believed to have a high potential for financial return, butwhich are, as yet, not attractive to market capital.
At the end of June 2015, 30 certified incubators were registered, almost three-quarters ofwhich were located in the North, about 25% in the Centre and only one in the South (inSardinia). These employed a total of 322 employees, an average of 11 per company, with thelargest having 71 employees .
Last year's value of production (the 2013 or 2014 figures, depending on the case) shows thatthe certified incubators have an average turnover of €1.6 million, with a maximum of nearly€7 million. The share capital of these companies is €1.9 million on average, with a maximum
capitalization of nearly €10 million.
On the regulatory front, the last 18 months has been marked by important innovations thathave boosted the number of measures aimed at supporting the emergence and expansion of
innovative startups. A second generation of incentives was added to the legal instruments
introduced in late 2012 with Growth Decree 2.0, including a reduction in costs for businessstartups, simplified, direct and free access to the Guarantee Fund for SMEs, and an equity
crowdfunding tool for the online raising of broadly held capital and incentives for capital
investment in startups. These new incentives were aimed at completing the subsidy
framework aimed at growing the national innovative entrepreneurship ecosystem. The Italia
Startup Visa and Italia Startup Hub programmes are aimed at facilitating the attraction andretention of talented people from outside Europe that are interested in starting an innovative
business in Italy. The following elements were added to their programmes: soft loans withinterest subsidies awarded by Invitalia under the Smart&Start programme, a new and free-ofcharge online procedure for establishing innovative startups using standard articles ofincorporation and articles of association with a digital signature, and a time extension, from 4
to 5 years, for innovative startup status.
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As already mentioned, the benefits for innovative startups provide for lower initial costs
related to starting companies and the formalities required by the Registrar of Companies,
with a tangible impact on the costs of setting up businesses. Once they are registered in thespecial section of the Register, innovative startups and certified incubators"... are exempt fromthe payment of stamp duty and administrative fees for obligations concerning registration in the
trade register, as well as payment of the annual fee to the Chambers of Commerce" (Article 26,
Section (8) of Decree-Law 179/2012, as converted by Law 221/2012). These benefits result
in appreciable savings, particularly for companies that are generally very small. If we examine
the 888 companies already in existence on 18 December 2012 and that were only selfcertified as innovative startups after the special section of the Register was established(February 2013), it is estimated that if these businesses could have benefitted from such
exemptions from the time they were founded, they would have achieved average savings of€525 each in the first year of registration on the Register of Companies, and €435 for thefollowing four years.
The Guarantee Fund for SMEs is also showing figures that are particularly encouraging.
This fund was created to facilitate access to credit and the development of micro, small andmedium businesses by granting a public guarantee in relation to loans granted by banks.
With reference to innovative startups and certified incubators, the Fund intervenes withoutcharge, covering 80% of the loans issued by banks, without performing creditworthinesschecks additional to those already performed by lenders. This preferential access is resulting
in very solid figures.
646 applications for support from the Fund in favour of innovative startups were approved
between 26 July 2013 and 30 June 2015. In this context, the Fund has granted nearly €156
million in guarantees, which in turn have generated about €198 million in credit. 461
innovative startups have had access to these benefits, of which 110 (24% of the total) were
for more than one financing agreement.
The level of funding granted amounted, on average, to €306,000 per transaction, a muchhigher value than that recorded in 2014 for all SMEs (€134,000).
The most representative category size, for the entire period under review, is the category forloans with a monetary value of between €100,000 and €300,000 (32.2% of the total). Loans
exceeding €500,000 represent 13% of the overall loans guaranteed by the Fund, and 7% arefor more than €1 million.
To strengthen the venture capital investment market, Article 29 of Growth Decree 2.0
provides that individuals investing in innovative startups with cash contributions are entitledto a deduction from the gross tax on their income of 19% of the amount invested, up to a
maximum amount of €500,000. Companies are granted a deduction from taxable income of
20% of the amount invested in share capital, subject to a maximum of €1.8 million. The
deduction rate for natural persons increases to 25% and the rate for companies increases to
27% for investments in innovative startups with social goals, or those that exclusively
develop and market innovative high technology products or services for the energy sector.
The figures for the first year of operation are showing encouraging signs: in 2013, when thenumber of innovative startups was still very small, there were 844 taxpayers, both individuals
and businesses, who had made investments of €28.2 million, directly or indirectly, in relation
to 463 innovative startups.
In particular, investments by individuals amounted to €14.5 million (of which €0.9 million
was as indirect investments) and involved 338 innovative startups. Deductions from taxable
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income for income tax of almost €2.9 million were granted. Investments by companies thatwere eligible for tax concessions reached the sum of €13.7 million (€1.5 million as indirect
investments) and involved 126 innovative startups. Deductions from taxable income for IRES
corporation tax of almost €3 million were granted.
Furthermore, according to AIFI2 data for 2013, ‘early stage’ investments amounted to €81
million. The share of investments subsidised by this measure was almost a third of themarket's total.
With regard to angel investment, the latest IBAN3 Survey calculated a total amount invested instartups of €46 million for 2014, up 45% compared to 2013. These figures give a glimpse of adense undergrowth of different investors emerging, and we expect a strong increase insubsidised investments from 2014 onwards.
Equity crowdfunding is an innovative system for raising widely-held capital using online
platforms, and it is showing signs of some vitality. By 31 August 2015, 17 portals had beenentered onto the register managed by Consob, of which 16 were authorised by the latter and
one was operating as an investment firm with prior authorisation to provide investment
services. 8 of the registered portals are currently operational.
The range of offers available via online portals is still quite limited. Up to 31 August 2015, a
total of 25 offers had been made available on these portals. On average, the capital requested
amounted to approximately €342,000 per project, with a minimum of €80,000 and amaximum of €750,000. The average share of venture capital on offer was 23.74%.
Of the 25 available services, 8 ended up operating successfully (36.4%), whilst of the other 17,
14 were shut down without success and 3 were still in progress. The total funds requested by
the startups that have published their offers via these portals amounted to €8,545,976, whilst
the amount actually subscribed, which is a first estimate of the potential for raising capitalthrough online portals, amounts to little more than €2.3 million, equal to 33.3% of the overalltargeted capital raising for the completed offers.
In addition to the provisions of Growth Decree 2.0, the Ministry of Economic Development has
committed itself to other programmes in support of the innovations ecosystem. In particular,
in collaboration with the Ministry of Foreign Affairs, the Ministry of Interior and the Ministryof Labour and Social Policies, it has started a visa policy aimed at innovative entrepreneurs
from outside the EU, as a strategic lever for attracting and retaining highly qualified humanresources to our country.
Launched by the Ministry of Economic Development on 24 June 2014, the Italia Startup Visa
programme introduced a centralised fast-track mechanism, with a minimum of bureaucracy,
for granting entry visas for the self-employed to applicants who intend to establish an
innovative startup in our country.
On 23 December 2014 the Italian Startup Hub was launched, based on the blueprint for the
Italia Startup Visa, which extended the fast-track procedure to non-EU citizens who alreadyhave a valid residence permit (obtained, for example, for study purposes) who want to remainin the country after expiry of the permit in order to establish an innovative startup. In thisway, they could convert a residence permit to a "self-employment startup permit" without
having to leave Italy, as well as benefitting from the same simplified procedures that are
applicable to the granting of startup visas.
2 Italian Private Equity and Venture Capital Association
3 Italian Business Angels Network

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As of 31 August 2015, 37 applications had been received in relation to the Italia Startup Visa
programme (18 of which arrived in 2014, and the remaining 19 in 2015). There were 15
countries of origin: mainly Russia, with 10 applications, followed by Ukraine (5), Pakistan (4)and Japan (3). Of the 37 applications, 24 were successful (65%), 11 were rejected due to theweakness of the business plan or lack of innovation and 2 were considered inadmissible dueto the requirements not being met.
With regard to the Italia Startup Hub programme, again as of 31 August 2015, a joint
application from two Koreans citizens, and an application from an Iranian citizen alreadyresident in Italy for study purposes had been received (all of whom had obtained 5-year
university degrees).
Another subsidy instrument showing consistent results has been the Smart&Start measure,which provides for the granting of zero-interest loans by Invitalia. The first wave of subsidies(between 16 February 2015 and 29 July 2015) involved 131 innovative startups at a total of€65.8 million of benefits provided. It is expected that the startups will trigger investments
exceeding €63.2 million, of which nearly 75% will be for companies located in the CentreNorth of the country.
More recently, further initiatives have given even stronger support for the development of thenational innovation ecosystem.
In particular, to support venture capital investments in firms with a high growth potential, theDecree of the Minister of Economic Development of 29 January 2015 allocated a share of theresources in the Fund for Sustainable Growth of €50 million to a fund named "Italia VentureI", which is managed by Invitalia Ventures SGR S.p.A.
At the same time, activities carried out by the Chambers of Commerce all around Italy, aimed
at supporting innovative startups have been significant; in particular, a roadshow of 7
meetings was held in the final months of last year, coordinated with the Ministry of Economic
Development, to publicise the whole structure of regulations in favour of innovative startups
at a local level.
The need to organise these meetings was linked to an appreciation that many businesses
knew very little about the industrial policy measures recently implemented by theGovernment.
This information gap was also reflected in a survey carried out in May 2015 by the Ministry of
Economic Development, on a sample of 1,000 "excellent SMEs", defined based on a number ofparameters including their investments in R&D and innovations.
The primary purpose of the survey was to measure the performance of innovative Italiancompanies and facilitate the emergence of a niche of "excellent" businesses, with potential forplaying a strategic role in reviving the national productive system.
Research shows signs of a significant recovery in the economy, with particular reference tothe forecasts for 2015 for turnover and employment, and a degree of computerisation that, on
the whole, is satisfactory.
There was a significant commitment by the vast majority of excellent businesses to makeinvestments, that were mainly innovative in nature. In particular, just over 80% declared they
had made investments in 2014 and intended to do so in 2015 as well. In addition, 96.7% and95.4% of the sample indicated, for 2014 and 2015 respectively, that they supported or would
support investments in product, process and organisational innovation. These data areespecially important after many years when investment activities have effectively been “onstrike”.
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Annual Report on Innovative Startups and SMEs – 2015

Finally, a high proportion of excellent SMEs (just over 56%) reported that they had carriedout overseas transactions in the period 2012-2014, which bears witness to the fact that, quite
often, innovation and internationalisation strategies go hand-in-hand.
The survey by the Ministry of Economic Development confirmed the results of many otherstudies and research highlighting the fact that innovative businesses perform better thanthose that are not particularly innovative, above all in regard to the main company indicators(turnover, employment and investment).
Therefore, targeted support of this group of successful companies may be a further stimulus
for economic growth.
Bringing on models of excellence and success and triggering positive emulation processes are
two key challenges in the context of industrial policy, concerning which the Ministry of
Economic Development intends to step up its efforts in the coming year.

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Annual Report on Innovative Startups and SMEs – 2015

1. The Investment Compact and other regulatory developments
WHY PROMOTING INNOVATIVE ENTREPRENEURSHIP MATTERS

The promotion of innovative entrepreneurship is one of the main objectives of the Ministry of
Economic Development's industrial policy.
Before discussing the regulatory changes that have occurred since the previous edition of thisreport, we would like to recall the main theoretical paradigms that underlie them.
That technological innovation is a harbinger of better performance at a macro level is an
assumption recognised in literature as early as Solow, who in his 1957 classic – "Technical
Change and the Aggregate Production Function" – calculated how much technologicaladvances had contributed to the 87.5% growth of the US economy from 1909 to 1947. 4
The most recent economic literature also attributes to new innovative companies, compared
to existing ones, a greater impact on overall levels of output and employment (Enrico Moretti,"The new geography of work", 2013) and emphasises the importance of public intervention in
support of innovation (Mariana Mazzucato, "The Entrepreneurial State", 2013.)
The views of economic theorists on the central role of innovation in development processes istherefore a major source of inspiration for the policy on innovative startups. The economic
literature, which emphasises the role of new businesses in the dynamics of growth and job
creation, runs parallel to this line of research.
In “Science, Technology and Industry Scoreboard 2013", the OECD, in focusing on 15 major
world economies, estimated that over the past decade, excluding the financial sector, recent
businesses (established in the last 5 years), while only employing 20% of the overall workforce, generated almost half of the new jobs. Moreover, during the last recession, there was agreater loss of employment from companies that had been running for over 5 years, whilst net
employment growth remained positive in recently established businesses.
Furthermore, a study by the Kauffman Foundation in 2010 showed how, from 1977 to 2005,
the net growth in employment in the US occurred only through companies that had only been
in business for less than a year. The study revealed that, on average, existing companies had
lost about a million net jobs each year. In contrast, new companies had added an average ofthree million jobs. The study also highlighted that trends in the expansion of both startups
and existing companies were pro-cyclical, but while the ability of startups to create jobs
remained more or less stable during recession years, the net loss of jobs in existing businesses
was very significant and sensitive to the intensity of the economic cycle.5
The above helps explain why, in the regulatory process undertaken by the Ministry of
Economic Development since 2012, attention has focused on innovative new or newly
established businesses - innovative startups. However, certain statistics on the structure of
the national economic fabric show why, through the Investment Compact (2015), theGovernment's strategy has aimed to extend the scope of assistance to all small and medium
companies with clearly innovative characteristics, including those that were not recently
The endogenous growth models: [Romer (1986), Romer (1990), Aghion and Howitt (1992)] follow theSolowian model.
4

5 The studies on this topic included, of note: Haltiwanger et al. (2013), Kauffman Foundation (2010), OECD

(2013).
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17Annual Report on Innovative Startups and SMEs – 2015

established and have a more consolidated turnover than startups, these are the innovative
SMEs.
First, SMEs are the backbone of the Italian economic system.
According to the latest official data provided by Istat on nearly 4.4 million SMEs, mediumsized companies are only 0.5% of the total number of businesses, whilst large businesses
account for only 0.1%.
The contribution towards generating overall added-value by the three main size segments ofbusinesses is quite balanced: 30.8% by micro-companies (with fewer than 10 employees),
37.7% by small and medium sized companies (10-249 employees) and 31.5% from large
companies (250 or more employees).
Table 1.1 Structure of industrial companies and services – 2012 data
The sizeof companies

1-9 employees (Micro)
10-49 (Small)
50-249 (Medium)
SMEs> 250 (Large)
Total

Number ofcompanies
currently
trading
4,140,639
185,852
21,134
4,347,625
3,393
4,351,018% of totalcompanies%of the
value
added

95.2
4.3
0.5
99.9
0.1
100.0

30.8
37.7
68.5
31.5
100.0

Source: based on ISTAT data

The significant role of SMEs in the Italian economy is also shown by their contribution interms of exports. About 54% of total exports involve this segment, and of the 211,000 Italiancompanies that export, almost two-thirds have fewer than 10 employees.
Moreover, 80.6% of employees are employed in SMEs, 47.5% in the micro companies. It is asegment that, even during the most acute phases of the recent recession, has "held" better interms of employment levels than that of large companies. 64% of new jobs created in Italy inthe decade from 2001 to 2011, net of public authorities and agriculture, is attributable tomicro, small and medium size businesses. Thus, they have played not only an economic role
but a social one for our country too, in the longest and deepest period of recession since theeconomic recession of the 1930s.
Second, within the Italian SME sector, there is a sub-set of innovative businesses with better
performance in terms of turnover, employment and investment, etc. compared to noninnovative businesses. Supporting excellent businesses with more developed innovation andinternationalisation strategies can therefore be a further stimulus to economic growth.
A large amount of research and numerous analyses confirm the existence of this "qualitative
difference" in the Italian and European business world, and support the concept of thestrategic importance of excellent businesses.
For example, according to the European Commission's European Competitiveness Report
2014, companies that produce innovations create more jobs than non-innovating companies
do, at all stages of the business cycle. More specifically, the study showed that companies
involved in product innovation create more jobs than companies that innovate in other fields.
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18Annual Report on Innovative Startups and SMEs – 2015

In addition, product innovation contributes to employment growth, particularly during thephases of expansion, whilst in times of recession it contributes to maintaining employment at
relatively stable levels. Finally, the research underscored the importance of supporting
investment in innovation activities, especially during recessions, since this trend tends todecrease when companies anticipate stagnant demand.
The report presented by Intesa Sanpaolo at the last Small Industry Forum of Confindustria,
based on a survey of about 43,000 companies, confirmed that SMEs that innovate are able tomitigate the negative effects of a recession. Between 2008 and 2013, the decrease in net sales
was 9% for companies that did not take out patents and only 3% for those that innovated.
There were about 4,000 companies that innovated and had at least one patent application
during the reporting period. These companies were able to promote the development of theirsubcontractors through the transfer of knowledge, technologies and the exchange of
personnel and technicians. In addition, companies that developed new products and services
in 2013 hired more young people up to 29 years of age (10.3% in construction, 13.6% inservices, 15% in industry, excluding construction, 5.5% in agriculture and 37% in public
utilities) compared to non-innovative companies.
A recent survey conducted by the MET economic policy research centre based in Rome on asample of 25,000 companies showed that, between the pre-recession period and 2012, thedifference in performance increased between two extreme types of businesses. The firstincluded excellent businesses, with an export share of turnover exceeding 25% and an
investment in R&D and innovations; the second included businesses geared to the domestic
market, which lacked innovation or internationalisation strategies. More specifically, the"excellent" segment fared better economically, with a widening gap compared to staticcompanies over the aforementioned period. In addition, an analysis of 2012 profitability
levels, showed “a trend that was generally in favour of the most dynamic segment".
Innovation, promotion of new entrepreneurship, enhancement of excellent companies and the
diffusion of excellent SME models are of central importance. These are the policy objectives
forming the background to the changes in legislation that have continued over the lasteighteen months, and which are explained in more detail in the next section.

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SYNOPSIS OF REGULATORY CHANGES FROM MARCH 2014 TO SEPTEMBER 2015
Table 1.2 Overview
Date of Regulation:

Description

1

20 March 2014

Publication in the Official Gazette of the Ministerial Decree of 30 January 2014
concerning tax concessions for investment in innovative startups.

2

11 June 2014

Publication of Circular 16/E by the Italian Revenue Agency, giving details about the tax
aspects of the "startup package".

3

24 June 2014

Launch of the Italia Startup Visa programme.

4

11 December 2014

Launch of the Decreto Flussi (Flows Decree) 2014, whose explanatory circular introduces
the Italia Startup Hub programme.

513 November 2014

Publication in the Official Gazette of the Ministerial Decree of 24 September 2014
refinancing, as well as changing certain structural features, of the Smart & Start
programme.

624 March 2015

Approval of Law 33/2015 converting Decree-Law No. 3 of 24 January 2015 (Investment
Compact), introducing new benefits for innovative startups (6.a.), launching the policy on
innovative SMEs (6.b) and other measures applicable to both categories (6.c.).

727 May 2015

A decree from the Minister of Economic Development introduced the TechnicalCommittee for the monitoring and evaluation of policies in favour of startups andinnovative SMEs.

8

22 June 2015

A decree of the Directorate General for Market Competition, the Consumer, Supervisionand the Technical Regulations of the Ministry of Economic Development changed theregistration procedures for companies by introducing the special section of the Registerof Companies dedicated to innovative SMEs and a new simplified mechanism forconverting innovative startups into innovative SMEs.

An exhaustive and detailed analysis of the eight regulatory steps listed in the table is given
below.
1. With the Ministerial Decree of 30 January 2014, published in the Official Gazette of 20
March 2014, the Minister of Economy and Finance in collaboration with the Minister of
Economic Development, established the method for implementing tax concessions forinvestments in innovative startups (Article 29 of Decree-Law 179/2012). This identified thestakeholders, types of investment and the nature and means for benefitting from the tax
subsidies, providing important details on the subject. This implementing act was approved
following a Community notification procedure, which was adopted pursuant to Article 29,
Section (9) of Decree-Law 179/2012. This concluded with the European Commission's
decision of 5 December 2013 C (2013) 8827, which considered the aid measure compatible
with the internal market pursuant to Article 107, Section (3) c) of the Treaty on the
Functioning of the European Union.
2. In addition to providing some clarification about tax incentives on investments in the equityof startups cited in the above section, Circular 16/E from the Agenzia delle Entrate (Italian
Revenue Agency) of 11 June 2014 reiterated that innovative startups are not subject to therules that apply to shell companies (both those that are trading and those systematicallygenerating losses). Throughout the period in which a company is eligible to qualify as aninnovative startup it is therefore not necessary to undergo a test to show it is trading. In
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addition, for the purposes of applying the rules for companies making systematic losses, the"three-year period of observation" takes effect from the tax year following the year in which
they cease to qualify as innovative startups.
Another prerogative of startups concerns the ability to allocate shares of equity capital as anadditional form of remuneration, in order to encourage retention and provide incentives tomanagement teams, employees and suppliers, startups and incubators. The income arisingfrom allocating these financial instruments does not contribute towards formation of the tax
base, for either tax or social security payment purposes.6
In this regard, the circular specified that casual workers are not eligible for this tax
concession, because they are income earners who do not comply with the provisions of Article
67, Section (1) l) of the Income Tax Code.
In other words, innovative startups and certified incubators are permitted to use tools such as
stock options and ‘work for equity’ under even more favourable terms than larger listed
businesses.
The circular clarified in particular, that there are significant differences compared with theprovisions of Article 51 of the Income Tax Code, in terms of requirements and applicableconditions, and specified that the incentives applied to financial instruments granted after 19
December 2012, the date Law 221/2012, converting Decree-Law 179/2012, came into force.
Professional services provided by the directors of innovative startups or certified incubators
also fall within the scope of Article 27, Section (4), that is, the consideration for these, which
income is regarded as self-employment income. However, this does not include services
rendered by people whose remuneration falls within the scope of income from employment
or similar.
The Ministry of Economic Development has prepared a concise guide to the use ofshareholder and ‘work for equity’ plans and a commented model of the equity-based incentive
plan.
Finally, the circular favours a broad interpretation of exemption from tax charges relating to
the registration of documents with Chambers of Commerce. This will be referred to in section
3.1.
3. Article 3 of the Decree of the President of the Council of Ministers of 25 November 2013
regarding the "Temporary planning of entry flows of non-EU workers for non-seasonal workin the State for the year 2013" (the "Flows Decree 2013") introduced a new category for entry
in Italy for reasons of self-employment, in other words, "foreign nationals who set up
innovative startup businesses". On 24 June 2014, the Ministry of Economic Development,
together with the Ministry of Foreign Affairs, the Ministry of the Interior and the Ministry ofLabour and Social Policies, presented the Guidelines and a website outlining the procedures,
documentation and requirements needed for a new visa to be issued. Compared to ordinary
visas for self-employment, as part of the Italia Startup Visa programme, this process is focusedon a single organisation – the Ministry of Economic Development – is completed online and issignificantly simpler, which leads to a definite outcome for the applicant within 30 days.
4. In order to transform Italy into a true global hub for innovation, the subsequent "Flows
Decree 2014" of 11 December 2014 facilitated residence permits in our country for talented
individuals from outside of Europe who want to start a new innovative business. In particular,
the Circular of 11 December 2014 from the Ministry of the Interior and the Ministry of Labour
6Article 27, Sections (1) to (3) of Decree-Law 179/2012.

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Annual Report on Innovative Startups and SMEs – 2015

and Social Policies introduced the ability to obtain the conversion of a residence permit (forexample for reasons of study) into a self-employment permit to found an innovative startup,
by following the same simplified procedures used for the Italia Startup Visa programme.
5. The Ministerial Decree of 24 September 2014 from the Minister of Economic Development
launched the new Smart&Start programme. The new Smart&Start programme is based on abudget of about €200 million for subsidised loans. The subsidies are extended to all Italianregions and not, as was the case in the previous edition, only to southern regions and areas of
the Aquila earthquake zone. The instrument is intended for innovative startups – registered in
the special section of the Register of Companies – established not more than 4 years ago, or
for individuals who wish to establish an innovative startup. It is no longer possible to apply
for the benefits of the previous Smart&Start programme (Ministerial Decree of 6 March 2013).
6. Decree-Law 3/2015 (the so-called "Investment Compact"), amended and converted into
Law 33/2015 of 24 March, is certainly the most important new law in the field of innovative
companies since the launch of Growth Decree 2.0, which concerned measures relating tostartups.
In Article 4, the decree introduces important new measures for innovative startups andintroduces the concept of the ‘innovative SME’.
6.a.

Here are the main developments in favour of innovative startups:
 Extension of the status to 5 years (section 11-ter)
A company can maintain its innovative startup status for the first 5 years after its
establishment, instead of the first four years as previously permitted. The applicabilityof the benefits associated with these special arrangements was therefore extended by
one year.
 Establishment and statutory changes according to standard models, with digital
signatures (section 10-bis)
The Investment Compact gives the opportunity to establish a company using the digital
signature of the legal representative following an online process focused on a standard
form and articles of association. In fact, this procedure eliminates the involvement of anotary. In the light of this development, a company’s deed of incorporation and its
amendments can be made in two ways: the traditional way with a public document,
and an innovative way, using a document with a digital signature, pursuant to Article
24 of Legislative Decree 82 of 7 March 2005 (Digital Management Code). Its
implementing decree is currently awaiting the signature of the Minister of Economic
Development.
 Changes in the procedures for the reimbursement of VAT credits (section 11-novies)
With the introduction of the exemption from the obligation to affix the compliance visa
for the clearing of tax credits of up to €50,000, compared with the ordinary thresholdof €15,000, startups will receive significant benefits in terms of liquidity during what is
usually a lean innovation phase for innovation investments.
Over the years, the institution of horizontally offsetting VAT credits has been used
extensively by companies wishing to acquire liquidity quickly. However, the law thatprescribes affixing the compliance visa for compensation on the F24 VAT credit forms
for more than €15,000 has hampered the use of this institution, especially bycompanies that are consistently in a credit position. This situation is typical for
innovative startups that are faced with initial investments that can be enormous (andrelated costs, which tend to generate VAT credits) and still have very low turnovers.
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 Admission of European innovative startups
In accordance with the new EU rules on state aid in respect of risk capital, a change has
also been made to the requirement relating to a company’s registered offices. Thisclarifies that the scope of the legislation is not limited to companies resident in Italy,
but extends to companies resident in another Member State of the European Union or
the European Economic Area, providing they have a production site or branch locatedin Italy (section 11).
6.b. Article 4 of Decree-Law 3/2015, concerning urgent measures for the banking andinvestment system (the "Investment Compact"), amended and converted into Law 3/2015,
introduced the new concept of ‘innovative SMEs’, to which many of the planned measures infavour of innovative startups were extended by Decree-Law No. 179 of 2012.
The decree defines innovative SMEs as companies that:fall within the parameters established by Community recommendation
2003/361/EC (less than 250 employees, annual turnover not exceeding €50
million or an annual balance sheet total not exceeding €43 million);i.

are resident in Italy or in one of the EU Member States (or in one of the States thatare parties to the Agreement on the European Economic Area) provided at least
one production site or branch office is located in Italy;ii.

have had their last financial statements and any consolidated financial statements
have been certified by an auditor or an auditing firm entered in the register ofauditors;iii.

are not listed on a regulated market;iv.

are not listed in the special Companies Registry dedicated to innovative startups;v.

are in possession of at least two out of the three innovation indicators:
a. volume of spending on research, development and innovation is equal to or
greater than 3% of the highest amount between the cost and total value of
production;b. use of a highly skilled workforce. Thus means that at least 1/5 of staff are inpossession of a doctorate or are studying for an Italian or foreign PhD, or hold adegree and have been involved, for at least three years, in research at certified
public or private research institutes, in Italy or abroad, or a percentage of atleast 1/3 of the staff hold a master's degree;c. ownership of industrial property rights or rights in regard to original software.

The Investment Compact prevents an overlap between the two schemes, providing that
innovative SMEs must not be registered in the special section of the Register of Companies
dedicated to innovative startups.
As already mentioned, companies meeting the legal requirements for innovative SMEs may
benefit from many of the measures provided for by the innovative startups regulations,
including:

exemption from the stamp duty payable to the State for entry in the Register ofCompanies;
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Annual Report on Innovative Startups and SMEs – 2015



exemption from the regulations regarding shell and dormant companies;

derogations from the corporate regulations regarding loss of share capital,
intended to enable the company not to take into account losses that occur
physiologically;

the possibility for innovative SMEs established as limited liability companies tocreate classes of shares that provide rights other than those provided by thegeneral rules regarding this type of company, as well as the possibility of the shares
being subject to an offer to the public of financial products and company
transactions in regard to their own shareholdings;



the possibility of remunerating employees and contractors with equity incentive
plans subject to favourable tax rules;the possibility of free access with simplified procedures to the Guarantee Fund for
SMEs for an amount equal to 80% of bank loans;innovative SMEs trading for not more than seven years may also benefit from thetax incentives related to investments in innovative startups. For those that havebeen trading for more than seven years after their first commercial sale, theseincentives may be applicable if they are able to submit a plan for development of
new or substantially improved products, services or processes compared to thestate-of-the-art in the area concerned;the possibility of raising venture capital on the market through online portals(equity-crowdfunding);

reductions in the costs of assistance services provided by the Italian Trade Agency
for the promotion abroad and internationalisation of Italian companies.

For access to this system of benefits, innovative SMEs must register in the special section of
the Register of Companies created specifically with the Chambers of Commerce(http://startup.registroimprese.it/pminnovative/index.html). Similar to the procedure forinnovative startups, registration is recorded electronically on a local basis by sending a selfcertification form to the relevant Chamber of Commerce, declaring that the company meetsthe requirements set out above,.
This "new" flexibility is balanced by three counterweights:

the checks carried out by the relevant authorities on the actual possession of therequirements
the obligation to annually update (deadline 30 June) the data required for registrationin the special section, in order to facilitate widespread monitoring. This data mainly
concerns the type of business conducted, with particular reference to the characteristic
elements related to technological innovation;
within 30 days of approval of the financial statements and in any case within six
months after the close of each financial year, the legal representative of an innovative
SME must certify that the requirements have been maintained, and file this declaration
with the office of the Register of Companies, on pain of forfeiting their innovative
startup status.

In the same way as with the innovative startups, the special register of innovative SMEs ispublished in electronic format and updated on a weekly basis by the Chambers. This is inorder to publicise and promote widespread monitoring and a qualified and objective debate
on the impact the new legislation is having on economic growth, employment and innovation.
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Annual Report on Innovative Startups and SMEs – 2015

The following table gives a summary, and allows comparison, of the regulatory requirements
for innovative startup and innovative SME status.
REQUIREMENTS

INNOVATIVE STARTUPSINNOVATIVE SMES

(ARTICLE 25, SECTIONS (2) AND (3) OF
DECREE-LAW 179/2012)(ARTICLE 4, SECTION (1) OF DECREE-LAW
3/2015)

Limited companies, also established
as cooperatives

Yes

Yes

Resident in Italy, or in the EU or in aState party to the Agreement on theEuropean Economic Area, with aproduction unit or branch in Italy

Yes

Yes

Not quoted

Yes (it must not be listed on aregulated market or a multilateral
trading facility)

Yes (it must not be listed on aregulated market, but it may belisted in a multilateral trading facility)

Time limits

Yes (new or trading for less than five
years; special system for establishedcompanies that at 18 December
2012 had been incorporated lessthan 4 years ago)

No (there are no time limits, but thecompany must have at least one
certified balance sheet and therefore
it is not applicable to newly
incorporated companies)

Size limits

Less than €5 million in annual
turnover from the second tradingyear

SMEs within the meaning ofRecommendation 2003/361/EC (lessthan 250 employees and an annual
turnover of less than €50 million orbalance sheet assets of less than €43
million)Prohibition regarding profit
distribution

Yes

No

Limits to the company purposeIt
must
concernproduction,
development and marketing ofinnovative goods or services of ahigh technological value

No

Optional criteria to identify thenature of technological innovation

At least 1 out of 3 of the following:

At least 2 out of 3 of the following:1.

15% of the greater amountbetween costs and total
value in relation to R&D
activities;

1.

15% of the highest figure
between costs and total
value in relation to R&D
activities;

2.

team with 1/3 of the staff
possessing a PhD, students
studying for a PhD or
researchers with three
years' experience; or a teamwith 2/3 of the staff who
hold a degree2.

team with 1/3 of the staff
possessing a PhD, students
studying for a PhD or
researchers with three
years' experience; or a teamwith 2/3 of the staff who
hold a degree3.

An owner or licensee ofindustrial property rights, orowner of registeredsoftware3.

An owner or licensee ofindustrial property rights, orowner of registeredsoftwareItalian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

The table below compares supportive measures applicable to the two categories. Article 4,
Section (9) of Decree-Law 3/2015 constitutes "bridge legislation" which grants innovative
SMEs many of the benefits already attributed to innovative startups with Decree-Law
179/2012. This is why the relevant articles and sections in Decree-Law 179/2012 areindicated for each measure listed in the relevant table.
It is important to emphasise that the subsidies provided for the benefit of innovative startups
apply for 5 years from their establishment, while the benefits granted to innovative SMEs
have no time limits.
SUPPORTING MEASURE

REFERENCEINNOVATIVE STARTUPSINNOVATIVE SMES

Yes

Yes

startup.registroimprese.it

pminnovative.registroimprese.it

ARTICLE IN DECREELAW 179/2012

Creation of a special section of
the register of companies,
accessible through selfcertification, subject tofulfilment of periodic
requirements and a special
advertising procedure tofacilitate widespreadmonitoring and control

Article 25,
Sections (8) to(10)

Flexibility in applying the rulesof the civil code onrecapitalization for losses

Article 26,
Section (1)

Yes

Yes

Article 26,
Sections (2) and
(3)

Yes

Yes

Non-applicability of the rules
governing shell companies

Article 26,
Section (4)

Yes

Yes

Exemption from stamp duty
and administrative fees for the
obligations concerning entries
in the Register and the annual
fee due to the Chamber ofCommerce

Article 26,
Section (8)Yes

The exemption only applies tostamp duty. It does not apply toadministrative fees in relation toregistration obligations, or theannual fee due to the Chamber ofCommerce

Exemption from stamp duty
and administrative fees for thefiling of any document with
the Chamber of Commerce

Article 26,
Section (8)

Yes

No

Possibility of creating
asymmetric voting rights(broad interpretation
provided by Italian
Revenue Agency Circular
16/E of 11 June 2014)

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SUPPORTING MEASURE

REFERENCEINNOVATIVE STARTUPSINNOVATIVE SMES

ARTICLE IN DECREELAW 179/2012

option of remuneration withequity-based incentive plans
with exemption from incometax (taxed as capital gains
only)

Article 27

Yes

Yes

Fast-track access and reservesin the limits for the tax credit
for hiring highly qualified staff
carried out in the 2012-2014
three-year period

Article 27a

Yes

No

Regulations regarding fixed
term employment (possibilityof using temporary contracts
lasting a minimum of six
months and a maximum of 36
months, renewable without acontinuity option, for a
maximum period of 48
months; possibility of part ofthe salary being variable)

Article 28

Tax incentives for investmentsin equity

Article 29

Increase in investment
incentives for companies witha social goal or in high techenergy industry

Article 29,
Section (7)

Yes

Yes

Article 30,
Sections (1) to
(5)

Yes

Yes

Access to the Guarantee Fundfor SMEs (free guarantee
granted under a simplifiedbank loan arrangement)

Article 30,
Section (6)

Yes

Yes

Ad-hoc support ofinternationalisation processesby the Italian Trade Agency

Article 30,
Sections (7) and
(8)

Yes

Yes

Equity Crowdfunding(the innovative SMEs regulations
are subsequent to the temporalapplicability of the measure)

Yes

No(although Decree-Law 34/2014 isapplicable, not dissimilar to theregulations regarding fixed-term
contracts applicable to innovative
startups)

Yes

Yes(In different ways depending onwhether the innovative SME had
its first commercial sale less ormore than 7 years ago)

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Annual Report on Innovative Startups and SMEs – 2015

SUPPORTING MEASURE

REFERENCEINNOVATIVE STARTUPSINNOVATIVE SMES

ARTICLE IN DECREELAW 179/2012

Fail-fast (exemption from theordinary bankruptcy rules)

Article 31,
Sections (1) to
(3)

Yes

No

Mechanism for monitoring andevaluation of policies, annual
report to Parliament

Article 32,
Sections (2) to
(7)

Yes

Yes

All the above measures are already in place, and can be used by innovative SMEs entered in
the special section of the register, with two exceptions.
The intervention of the Guarantee Fund needs an implementation decree from the Minister of
Economic Development, in consultation with the Minister of Economy and Finance: themeasure is ready to be signed by the Ministers.
The Investment Compact requires a decree from the Minister of Economy and Finance, in
consultation with the Minister of Economic Development, to be published for the
implementation of tax relief on investments in innovative SMEs. For companies operating on
the market for less than seven years from their first commercial sale, this measure applies
under the conditions and limitations provided for by Article 21 of Regulation no. 651/2014 of
the European Commission dated 17 June 2014. However, innovative SMEs that have been
trading for at least seven years require notification to the Commission for verification ofcompatibility with the Community rules on state aid.
The following extra measures of Growth Decree 2.0 provided for startups are not applicable toinnovative SMEs:


incorporation using a standard form with digital signature (Article 4, Section (10a) of
the Investment Compact; the implementing decree is currently being defined);

exemption from the obligation to affix the compliance visa for compensation of tax
credits up to €50,000 (Article 4, Section (11-novies) of the Investment Compact);the new edition of the Smart&Start programme launched on 16 February 2015. To
summarise, over €200,000 have been allocated for zero-rate financing and deadlines
for the return of credit of up to eight years for up to 80% (of which 20% on a nonrecourse basis for startups from convergence regions) of investment plans ranging
from €100,000 and €1.5 million realised by innovative startups located throughout
Italy (Ministerial Decree of 24 September 2014);



the Italia Startup Visa and Italia Startup Hub programmes that, by introducing asimplified, centralised and computerised process, are designed to attract and retain
innovative and talented people from countries outside of the European Union who
wish to establish an innovative startup in Italy. This treats visas and residence permits
as tools for economic development. Using this procedure, even innovative startups thathave already been incorporated can attract working partners within their team.

6.c.
Equity Crowdfunding extended to investment companies and other specialised
measures
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Annual Report on Innovative Startups and SMEs – 2015

Article 4, Section (10) extends beyond innovative SMEs, it also applies to collective
investment bodies (UCIs) and other companies that invest mainly (70%) in innovative
startups and SMEs, giving them the opportunity to raise capital by equity crowdfunding
campaigns using online portals.
Moreover, subscriptions and sales of shares in companies offered on portals may be carriedout, as an exception to the ordinary rules, in an electronic manner through intermediaries
authorised to provide investment services. Authorised intermediaries complete thesubscription or purchase of shares in their own name and on behalf of the subscribers or
buyers who have accepted the offer through the portal, thereby reducing costs andsimplifying the procedures.
The Ministry of Economic Development will develop a portal dedicated to storing all the
documents and information needed to access public and private tender notices in favour ofstartups and innovative SMEs. The portal will aim to collect all the rules that govern
innovative startups, as well as a regional section, which will list all the references to local andregional tender notices (sections 10-ter and 11-bis).
Finally, the decree has postponed submission of the annual report from the Ministry of
Economic Development to Parliament from March to September each year. This is to enable
the monitoring Committee to assess the impact of the legislation, pursuant to Article 32,
Section (2) of Decree-Law 179/2012, and to analyse information related to financial
statements filed by companies in the previous year (section 11-7).
7. Following the coming into force of the Investment Compact, and particularly of thelegislation in favour of innovative SMEs, with Ministerial Decree of 27 May 2015 issued by the
Ministry of Economic Development, the Directorate General for Industrial Policy,
Competitiveness and SMEs, launched the "Technical Committee for monitoring and evaluationof policies in favour of innovative startups and SMEs." This Committee will replace the"Technical Committee for monitoring and evaluation of policies in favour of the innovative
startups ecosystem", established by the Ministerial Decree of 31 January 2014.
In this way, policy on innovative SMEs will be combined with the "evidence-based" approachthat inspired legislation on startups, in order to collect, through analysis, empirical data usefulfor correcting the impact of the measures, and thereby enhance them.
8. The Directorial Decree of 22 June 2015, issued by the Directorate General for Market
Competition, the Consumer, Monitoring and Technical Regulations in the Ministry of
Economic Development, approved the new procedures introducing the special section of
innovative SMEs and amended the information relating to innovative startups. In particular, a
new code will be introduced that, in certain circumstances, allows deletion from the special
section dedicated to innovative startups and simultaneous registration in the section reservedfor innovative SMEs. This conversion will only be possible if the company loses one or more of
the requirements for innovative startup status, but meets the requirements provided forinnovative SMEs. In this way, since there are no continuity measures, maintenance ofsubsidies compatible with both systems is protected.

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1.1 The Ministry of Economic Development survey about the investment
strategies and innovation of "excellent" SMEs
The strategy pursued in recent years by the Ministry of Economic Development (MiSE), whichis expressed in a wide range of instruments such as the policy on startups and innovative
SMEs, the tax credit for investment in R&D, the tax concessions on income from exploitationof forms of intellectual property (Patent Box),7 was founded on the assumption that
innovative businesses make a greater contribution to economic development than traditional
companies, as they display better performance in terms of turnover, employment andinvestment.
To reinforce this theoretical framework, in May 2015, the Ministry of Economic Development
conducted a survey on a representative sample of 1,000 "excellent" small and medium-sizedcompanies – oriented towards international markets and engaged in organised innovation
strategies – to highlight their main characteristics and performance. Looking back over thelast 10-15 years, there has been an intense process of economic restructuring in Italy, partly
in response to the severe effects of the 2008 recession, which saw the gap between successful
and unsuccessful companies increase. This was because the business activities of the latterare based on local markets, leaving them open to suffer the effects of sluggish domestic
demand.
The survey was undertaken by sampling companies from a population of about 61,000 (withbetween 10 and 250 employees) with a turnover of between €2.5 and €50 million. 1,000
companies were selected with at least two of the following three requirements: having
invested in R&D in the period 2012-2014, having a fair level of management skills (at least
three executives/middle managers), and having carried out innovative investments in 2014or planned them for 2015.
We summarise the preliminary results of the survey below.
INVESTMENT STRATEGIESThe commitment of the surveyed companies to investment strategies was significant: 83.7%of the companies stated they wanted to make investments during 2015. This proportion
increased significantly for bigger companies, and was particularly high in manufacturing andpersonal services.
The high propensity towards investment is worth highlighting since it has occurred after
several years of an investment “strike”.8
Most of the investment consisted of the acquisition of machinery (64% of the sample; 74.2%
for companies in the manufacturing sector), software and patents (37.9%), and training of
7 For a detailed analysis on the latest measures taken by the Government, see the report on the Small Business

Act prepared by MiSE (August 2015).
8 Between 2007 and 2014, the decline in accumulated investments amounted to about 30% and was attributable

to the interplay of a number of factors including weakness of demand, uncertainty about the economic outlook,
restrictions in the availability of credit (Bank of Italy, July 2015). There seem to be signs in the first half of 2015of a partial recovery in GDP and investments related to a series of favourable external factors and to a set ofmeasures in support of technological innovation and investment spending, repeatedly mentioned in this report,
including, in particular, the "New Sabatini" (CSC (Centro Studi – Confindustria), August 2015 and EnterpriseFoundation, August 2015).
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Annual Report on Innovative Startups and SMEs – 2015

staff (31.6%). The share of investment in product innovations and processes was about 30%,
whilst the share of expenditure on capital goods aimed at achieving greater energy efficiency
was about 11%. The ratio of investment to turnover was about 8%.
With regard to the main financing channels, a significant recourse to self-financing andmedium-long term debt emerges. This last item has a significant impact on excellent SMEs
compared to other companies, indicating better planning, and more balanced and forwardlooking financial strategies.
75.5% of the sample of companies surveyed did not use any kind of public incentive to financetheir investments (this share tends to fall with an increase in the size of companies). The
possible causes include a lack of awareness about existing subsidies, the lack of a need to usethem, a negative outcome in regard to checks and a lack of State and/or regional financial
resources. About 9% stated they used subsidies of a fiscal and financial nature (low interest
loans and/or grants with no obligation to repay the funds).
Assuming that public sources were more efficient and/or available, 47.7% of excellent SMEs
declared they would prefer to continue not using them, whilst a proportion of companies of acertain size (31.8%) indicated they would tend mainly to use financing with no obligation to
repay the funds.
INNOVATION STRATEGIES
Almost all of the companies surveyed (96.7%) made innovative investments in 2014 andindicated they planned to make investments in 2015 (95.4%).9
Most innovations seem to focus on processes (62.1%; 73.9% for manufacturing businesses),followed by products (54.4%; 64.1% in manufacturing), and finally organisational innovations(50.5%).10
The companies that intended to make process innovations were mainly focussed on theacquisition of new machinery, process automation and improved management of orders. A
certain level of attention also emerged for interventions aimed at reducing consumption interms of environmental impact.
With regard to product innovation, the majority of the replies focussed on strategies aimed at
improving the quality of existing products; a significant level of "effort" by companies tochange their production lines (aimed at manufacturing products already on the market) andto create innovative products to be marketed also emerged.
Organisational innovations seemed mainly to involve changes concerning organisational
structures and marketing activities.

9 A comprehensive analysis on recent innovation strategies adopted by Italian companies is contained in the SBA(Small Business Act) report prepared by the MiSE (August 2015). This analysis shows, also based on othersurveys (Eurostat, 2012 and January 2015), studies and research, that there is a certain recent "technologicalawakening" by many Italian companies.
10 A recent survey conducted by Eurostat on innovation strategies implemented by European companies in theyears 2010-2012, shows that in Italy, rather similar percentages of companies achieved product and process
innovations: respectively, 29.1% and 30.4%. What seems to emerge from the MiSE survey is instead a prevalenceof companies focused on process rather than product innovation. Individual results are not yet comparable since
the Eurostat survey was of a representative sample of SMEs, while the MiSE survey was based on a sample of
1,000 excellent SMEs.
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Annual Report on Innovative Startups and SMEs – 2015

When making innovations, almost 90% of excellent SMEs did not resort to any public financial
support. Public resources came mainly from local or regional authorities; the role of central
government appeared to be more modest.
Significant administrative burdens and red tape were the main obstacle to innovation. This isfollowed by difficulties in accessing credit and the lack of non-banking financial resources toinvest in entrepreneurship. Just over ¼ of the sample also declared that no obstacles wereencountered.
The survey showed another element of weakness regarding the high degree of isolation that
seems to accompany many companies in their innovation activities: in particular, 79.6% of thesample reported that it did not collaborate with other "parties" (this share dropped to 76%
amongst companies with 50-249 employees and 60.1% among those who provide services topeople). The low degree of collaboration in our innovative companies was confirmed by arecent OECD study (2014), which emphasised the need, in Italy, to strengthen types ofcollaborative research (businesses – universities - research centres) that are widely used in
the main European countries.
As regards businesses that do collaborate, a greater degree of involvement particularly
related to competitors or other companies in the same industry, universities and companies
within the same group. The use of network agreements appeared modest, despite theenhancements in this new industrial policy instrument in recent years.
It is also worth noting that 27.1% of the sample reported not having encountered any
obstacles to innovation.
EXPENDITURE ON R&D
The survey allowed the extraction of interesting information about the expenditure of
excellent SMEs in research and development. First, it emerged that in the period 2012-2014,
almost 65% of the sample (with a peak of just below 82% in manufacturing) made this kind ofinvestment. Almost a quarter of the companies also reported that such expenditure exceeded
3% of turnover. This percentage increased with company size.
On average, the number of people working full time, or almost full time, in research anddevelopment, amounted to 2.4. In this case, the size of the companies also was an importantfactor.
The main reasons leading companies to invest in research are attributable mainly to the need
to follow technological changes in their industry (60.8% of replies) and the mission thatcharacterises their business activities (31%), this seems to play a particularly prominent role
among medium-sized companies (43.7%). These were followed – at some distance – byseeking the most profitable market segments and exploiting occasional opportunities.
Approximately 58% of the sample also reported having invested in the training for staff
engaged in R&D, at levels ranging from just over 48% for companies with 10-19 employees to63.2% for medium-sized companies (50- 249 employees).
Expenditure in research was also accompanied by patent activity, though this was a lesspronounced feature. More specifically, 8.6% of the companies filed patents in the 2012-2014
period, with greater commitment among the larger companies, while the figures were slightly
more modest for the companies that established brands (7.5%; 10.3% among medium-sized

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Annual Report on Innovative Startups and SMEs – 2015

companies) and, above all, drawings and models (just 1.2%, 2.6% among those with 50 to 249
employees).11
The survey also allowed comparisons to be made between companies that had registeredpatents in the 2012-2014 period and those, on the other hand, which did not register any. The
comparison showed that the former type of company appears to be characterised in generalby better economic performance and more developed strategies for R&D, technologicalinnovation and internationalisation.12
Table 1.3 Clusters of companies: performance comparison (in %)companies that
registered patents% of companies that achieved a rise in turnover in 201443.1

companies that
did not register
patents
29.7

Total
companies% of companies that expect an increase in turnover in 2015

45.1

24.2

26.0

% of companies that hired more staff in 2014

22.0

19.5

19.7

% of companies that expect an increase in the number of staff in 2015

17.3

14.0

14.3

% of companies that has never been in recession

24.4

26.3

26.1

% of companies whose expenditure in R&D was more than 3% ofturnoverNumber of people (on average) dedicated to R&D (full-time or almost)

28.4

24.7

25.2

4.6

2.1

2.4

% of companies that believe that they are very competitive (morethan adequate)% of companies that increased investment in 2014

30.1

28.3

28.4

84.8

84.5

84.5

% of companies that expect to increase investment in 2015

94.1

82.7

83.7

% of turnover represented by investment% of innovative investment compared with overall investment (2014)

9.9
97.4

7.8
89.0

8.0
96.7

% of innovative investment compared with overall investment (2015)

87.7

96.2

95.4

% of companies that had received public support for innovation
activities

22.0

10.3

11.3

% of companies that invest in training their R&D staff

64.1

56.9

57.8

% of companies that have been involved in overseas activities in the
2012-2014 period% of exports compared with sales revenue in the period 2012 – 2014

82.5

53.8

56.3

46.4

33.2

34.8

% of companies that exported to new markets in the 2012-2014 period

46.5

37.2

38.3

of which: EU Areaof which: non-EU Area

42.3
100.0

60.8
78.7

57.9
82.0

30.9

Source: MiSE survey, May 2015

11 Based on the most recent data from the Ministry of Economic Development (MiSE), 2014 saw an increase inpatent applications for the first time in three years (of 2.8% compared to 2013). The figures are lower in theSouth (only 412 applications), but there registrations have accelerated by 10.5%.
12 The better performance of companies with patents compared with those without patents (in terms of labour

productivity, employment, wages, etc.) was confirmed by a recent extensive study of to the European production
system (Office for Harmonization in the Internal Market, June 2015).
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Annual Report on Innovative Startups and SMEs – 2015

ReferencesP. Aghion and P. Howitt, A Model of Growth Through Creative Destruction, Econometrics, Vol.
60, No. 2, pp. 323-351, March 1992.
Ambrosetti Club, Finance for growth, March 2015.
Banca d’Italia, Investment dynamics in Italy: financing constraints, demand and uncertainty
Quaderni di Economia e Finanza: Occasional Paper, No. 283, July 2015.
CSC, Dopo il crollo nella crisi, gli investimenti ripartono. Cruciale sostenerli per avere una
crescita più robusta, August 2015.
Eurostat, Community Innovation Survey, 2012.
Eurostat news release, The proportion of innovative companies fell below 50% in the EU in 2010
to 2,012, January 2015.
Fondazione Impresa, Indagine sull’innovazione nella piccola impresa manifatturiera, August
2015.
Global Strategy, Osservatorio PMI – L’importanza del fattore umano, 15 June 2015.
J. Haltiwanger, R.S. Jarmin and J. Miranda, Who creates jobs? Small versus Large versus Young,
Review of Economics and Statistics, Vol 95 (2), pp. 347-361, 2013.
Intesa Sanpaolo, L'innovazione, un fattore di crescita durante la crisi, 2014.
Kauffman Foundation Research Series, Firm Formation and Economic Growth, the Importanceof Startups in Job Creation and Job Destruction, July 2010.
M. Mazzucato, The Entrepreneurial State, Anthem Press, 2013.
MET, Le strategie per la crescita - Imprese, mercati, Stato, Meridiana Libri, 2015.
Ministry of Economic Development, Small Business Act. Support initiatives for micro, small andmedium enterprises implemented in Italy in 2014 and in the first half of 2015, August 2015.
E. Moretti, The new geography of jobs, Houghton Mifflin Harcourt 2012.
OECD, Science, Technology and Industry Scoreboard 2013.
OECD, Studies on SMEs and Entrepreneurship, Italy, key issues and policies, 2014.
P.M. Romer, Increasing Returns and Long-Run Growth, The Journal of Political Economy, Vol.
94, No. 5, pp. 1002-1037, October 1986.
P.M. Romer, Endogenous Technological Change, The Journal of Political Economy, Vol. 98, No.
5, Part 2: The Problem of Development: A Conference of the Institute for the Study of FreeEnterprise Systems, pp. S71-S102, October 1990.
R.M. Solow, Technical Change and the Aggregate Production Function, The Review of
Economics and Statistics, Vol. 39, No. 3, p. 312-320, August 1957.

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Annual Report on Innovative Startups and SMEs – 2015

2. Innovative startups, certified incubators and innovative SMEs: the mainevidence
This edition of the report focuses on the analysis of innovative startups, for which support
policy has now become relatively consistent. The conversion into law of Growth Decree 2.0
dates back to December 2012 and the special section of the register was established in
February 2013.
In the coming months, studies of this subject will acquire further depth with the conduct of asurvey which aims to shed light on aspects like the academic and professional background of"startuppers", the presence of entrepreneurs in their family environment, fluctuations in thelevel of income following the start of entrepreneurial activities, their level of knowledge of the
support policy, their assessment of the quality of the various measures, etc.
For their part, certified incubators will be the subject of a study aimed at measuring theirimpact on the growth process of startups, to classify types according to the services provided
and to formulate recommendations to the legislature about possible further support
measures.
Finally, innovative SMEs currently represent a very limited area of investigation because of
the brief period of the time that has elapsed since the introduction of the policy.

2.1 Innovative startups
2.1.1 Human capital, enterprise data, geographical and sectoral
breakdown
THE STARTUPS CATEGORY: DATE OF ESTABLISHMENT AND TYPES OF COMPANY
As of 30 June 2015 there were 4,206 innovative startups registered in the special section of
the Register of Companies of the Chambers of Commerce, including over 3,000 after the entry
into force of Decree-Law 179/2012 (20 October 2012). In particular, 18% were established in2015, 35% in 2014, 23% in 2013, and the remaining 24% before 2013.
Taking into consideration the innovative startups formed after the conversion of the decree,
the average lead-time between the date of establishment and registration in the special
section of the register was 103 days (the median value was 0 days).
The prevailing type of company is that of a limited liability company (Srl): almost 80% of
innovative startups are this type of company; a further 16.7% chose to become simplified
limited companies, including those with a sole shareholder and reduced capital, 2.1% ascooperatives and, finally, 1.4% as public limited companies (SpA). There is also a company
incorporated as a limited company in accordance with the laws of the United Kingdom.

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Table 2.1 Innovative startups by type of company
TYPE OF COMPANY
LIMITED LIABILITY COMPANY (Srl)
SIMPLIFIED LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANIES WITH A SOLE SHAREHOLDER
COOPERATIVES
PUBLIC LIMITED COMPANIES (SpA)
LIMITED LIABILITY COMPANIES WITH REDUCED CAPITAL
LIMITED LIABILITY CONSORTIAJOINT-STOCK COMPANIES WITH A SOLE SHAREHOLDER
SOCIAL COOPERATIVESCOMPANY INCORPORATED UNDER THE LAWS OF ANOTHER STATETOTALNUMBER
3,349
555
129
90
58
16
6
1
1
1
4,206

%
79.6%
13.2%
3.1%
2.1%
1.4%
0.4%
0.1%
0.0%
0.0%
0.0%
100.0%

Source: based on Infocamere data

HUMAN CAPITAL AND NUMBERS AT WORKOne of the key factors for this type of company is the quality of the human capital of thefounding members. This refers to all the personal characteristics of the partners, such as
gender and chronological age, the type of education received in connection with thepossession of certain qualifications (degree, second-level masters, doctorate) and previous
work experience, general or specific (e.g. academic, research assignment positions,researcher, associate or ordinary professors, also researchers at national research
institutions). Mastering adequate skills and knowledge may on the one hand, ensure thesuccess and survival of the startup. On the other hand, it may attract potential investors who
consider the human capital of the founding team as much a key asset as the innovative idea
itself. Thus, by trying to trace the profile of the new entrepreneur, we note that it concerns
people who are, on average, 40 years old and are mainly graduates with primary degrees.
However, there are also many startuppers with a doctorate, although intuitively one mightsuspect that those with a high-level educational background may be more likely to share suchinformation publicly.
As is clear from a recent survey conducted by the University of Padua,13 the founders ofstartups are people with previous management experience in 46% of cases, and of these, 41%
have gained at least 10 years' management experience. In 31% of cases, there was alsoprevious entrepreneurial experience.
A survey conducted in 2015 by Milan Polytechnic University,14 limited however to the
manufacturing sector, shows that the founders of startups are highly educated (37% have a
research PhD), mainly in technical areas (58% have a technical-scientific master’s degree)and, on average, have already gained considerable experience working in fields related to thatof the startups (11 years on average). This figure is very reassuring, considering the close ties
highlighted by the scientific literature between the human capital of founders and theperformance of innovative startups.15

13 Muffatto and Sheriff (2015).
14 Sesana (2015).
15 See, for example, Colombo and Grilli (2005) for the Italian context and Grilli (2014) for a review of the mainevidence at European level.
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Annual Report on Innovative Startups and SMEs – 2015

For a complete picture of Italian innovative startups, we observe, with reference to the data
published by the Chambers in the report on the second quarter 2015, that about a quarter ofthe overall number of startups in the registry was composed of enterprises controlled byyoung people (under 35). This is more than double the percentage for all enterprises (12%)
and four times the figure for joint-stock companies (7%). This gap is significantly greater if wetake into account all the companies in which there is at least one young person among theshareholders or on the Board of Directors (41% for startups vs. 13.6% for joint-stockcompanies).
As for the presence of females and foreigners, the values in relation to innovative startups arelower than that for joint-stock companies.
The percentage of females in the organisational structures of innovative startups isapproximately 13%, compared to 16% in joint-stock companies; 1,883 companies employed
at least one woman (44.3% of the total startups, a lower level but not far from that of jointstock companies, which is 50.1%).
As for businesses controlled by foreigners, they are about 2.5% in startups, against 3.9% forjoint-stock companies. 533 innovative startups have at least one foreigner among theshareholders, 12.6% of the total, and the percentage is higher than that of joint-stockcompanies in which there are less foreigners (10.2%).
From an employment perspective, the 1,363 startups with employees recorded at 30 June2015 employ a total of 3,924 people (an increase of 899 employees compared to the end of
March, up 29.7%), an average of 2.9 employees per company, while at least half of startups
with employees have no more than two employees.
At the same point in time, there were 16,861 shareholders in the 4,144 innovative startups
with at least one shareholder (an increase of 1,999 shareholders compared to the end of
March, up 13.5%). It can be assumed that the shareholders are directly involved in theircompanies. On average, every startup has 4.1 shareholders; half of them have no more than
three. These figures are higher overall than those of joint-stock companies.
VALUE OF PRODUCTION AND SHARE CAPITAL
The average value of production confirms the small size of Italian startups, with about€122,000 per company, compared with about 3 million on average in joint-stock companies.
Half of the innovative startups produce less than €27,000. The cumulative production for the
2,281 companies for which figures are available is approximately €280 million.
The 44 companies with a share capital that exceeds €1 million are located in the Centre andNorth, especially in Lazio, Emilia-Romagna, Lombardy, Liguria and Veneto. 64% of Italianstartups had an initial investment of no more than €10,000. This type, by far the mostwidespread in Italy, is distributed fairly evenly over all the regions in Italy. The aggregate
value of the share capital for the 4,118 companies for which data is available is just under€210 million.
SECTORAL BREAKDOWN
From a sectoral perspective, the majority of innovative startups (over 80%) work in the
sector of private services to households and companies.
Excluding the sectors of tourism and trade, it emerges that 76% of Italian startups provide
services to companies. In particular, the activities that are clearly the main ones are those
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related to consultancy and software production (about 42% of the total number of startups).
Scientific research and development and professional and technical activities are next (28%).
Only 18% of innovative startups operate in the manufacturing and construction industries.
Finally, trade accounts for only 4% of the total.
Within the manufacturing sector, the main activities are the manufacturing of computers andelectronic and optical products, machinery and equipment and electrical and non-electricalequipment for domestic use.
Chart 2.1 Innovative startups in the key economic sectors
4%

2%
42%

18%
Servizi informatica e software
Servizi R&S e attività professionali
e tecniche
Altri servizi alle imprese
Industria e costruzioni
Commercio
6%
Altro

28%

Source: based on Infocamere data

GEOGRAPHICAL DISTRIBUTION AND INCIDENCE OF TOTAL NUMBER OF COMPANIESThe South is home to 22.3% of the innovative startups in the country, the Central regions have
21.4% and the North has 56.3% (30.7% North-West, 25.6% North-East).
The Italian region with the highest percentage of innovative startups is Lombardy (21.8%),
which is also where the biggest number of companies currently trading are located (18.3% of
the total), followed by the Emilia-Romagna region, with 11.9% of startups (8.5% of the total
number of companies that are trading), Lazio, with 9.8% of startups (9.4% of companies thatare trading) and Veneto with 7.5% (9.1%).
Among the southern regions, Campania and Sicily lie in seventh and eighth place in thenational rankings with 5.8% of the total number of startups (and 7.8% of companies currently
trading) and with 4.3% of startups (and 6.1% of the number of companies), respectively. In
particular, three regions in South Italy (Sicily, Sardinia and Apulia) have some of the largest
startups in terms of the number of employees (in Italy, there are only 11 startups in the 20-45
employees category). Other innovative startups in this size category are located in two central
regions (Lazio and Marche) and in three northern regions (Lombardy, Piedmont and Friuli
Venezia Giulia).

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.2 Ranking of Italian regions by percentage of the total number of innovative
startups
LOMBARDIAEMILIA-ROMAGNALAZIOVENETOPIEMONTETOSCANACAMPANIA
SICILIA
MARCHEPUGLIA
TRENTINO-ALTO ADIGESARDEGNA
FRIULI-VENEZIA GIULIACALABRIA
ABRUZZO
LIGURIA
UMBRIA
BASILICATAMOLISE
VALLE D'AOSTA

21,8
11,9
9,8
7,5
7,1
6,0
5,8
4,3
4,3
3,9
3,4
2,9
2,8
2,4
1,9
1,6
1,3
0,6
0,4
0,3
0

5

10

15

20

25

Source: based on Infocamere data

It is interesting to note that the geographical distribution of innovative startups in relation to
the total number of companies currently trading in the Italian regions reflects, at least in part,the distribution of graduates in technical and scientific subjects per thousand young residents
between 20 and 29 years of age.
The phenomenon seems to indicate, in line with the results of the surveys described above,
how the type of degree obtained by young people can be correlated with the ability ofgraduates between 20 and 29 years of age to set up an innovative company.
In most regions – with the exception of Trentino Alto Adige and Valle d'Aosta – the figures forthe two indicators are on a par. In particular, the figures were significantly lower than the
average for Italy – for both indicators that were used – in the southern parts of the Adriatic
coast and in Sardinia.

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.3 Innovative startups per thousand currently trading companies (Italy index =100): (http://www.istat.it)

0% to 74.5%
74.5% to 88.0%
88.0% to 123.5%
123.5% to 133.5%
133.5% to 142.2%
Source: based on Infocamere data

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.4 Graduates in technical and scientific subjects per thousand inhabitants aged
20-29 years (Italy index = 100)

(http://www.istat.it)

0% to 88.9%
88.9% to 89.3%
89.3% to 93.1%
93.1% 119.1%
119.1% to 178.4%
Source: based on ISTAT data

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

A study of the provincial distribution of Italian innovative startups shows that Milan is, inabsolute terms, the province with the largest number of startups: 609, accounting for 14.5%of the total. Rome is next with 362 (8.6%), Turin 226 (5.4%), Bologna 135 (3.2%) and Naples
125 (3%). Modena, Florence and Trento also have more than 100 startups.16
Chart 2.5 Ranking of the top twenty Italian provinces by number of innovative startups
MilanoRomaTorinoBologna
NapoliModenaFirenze
TrentoPadovaBari
Cagliari
AnconaBrescia
Bergamo
TrevisoPalermoVerona
Pisa
Reggio Emilia
Genova

609
362
226
135
125
111
103
102
88
85
85
77
71
71
68
64
57
57
56
55
0

100

200

300

400

500

600

700

Source: based on Infocamere data

The map below shows that high-tech startups are mainly concentrated in the larger Italian
cities, particularly in those reached by the high-speed railway.

16 The complete provincial statistics are attached to this report.

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.6 The number of innovative startups in each Italian province

Note: the territorial breakdown does not take into account the following provincial boundaries: Barletta-AndriaTrani, Carbonia-Iglesias, Medio Campidano, Ogliastra, Olbia-Tempio.
Source: based on Infocamere data

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

After analysis of the indicators related to innovative startups in absolute terms and in relation
to all the companies currently trading in the Italian regions, the ratio to the total number ofjoint-stock companies was analysed, which essentially represents their reference point.
The distribution thus obtained shows a significantly diversified picture. At the level of thegeographical areas, there is not that much variation. The nationwide average of the indicatoris 27.8 startups for every ten thousand joint-stock companies. This is higher in the North-East(40.8) and the North-West (30.8), slightly lower in the Centre and South.
The rankings for the individual regions, however, show wide variations. Trentino-Alto Adige
is the region with the highest ratio of startups relative to joint-stock companies, with 78.9
startups per ten thousand companies. This is followed, but with a wider gap, by Friuli Venezia
Giulia, with 50.9, Valle d'Aosta with 48.7, Marche with 47.7, and Emilia-Romagna with 45.9.
The leading southern region is Sardinia with only 37.2 startups per ten thousand companies.
Lombardy ranks only in ninth place, with a ratio of 29.1, while Lazio is last in the rankings,
with a ratio of only 16.3.
Chart 2.7 Ranking of Italian regions relative to the number of innovative startups per
ten thousand joint-stock companies
TRENTINO-ALTO ADIGEFRIULI-VENEZIA GIULIA
VALLE D'AOSTAMARCHEEMILIA-ROMAGNAPIEMONTE
SARDEGNACALABRIA
LOMBARDIA
MOLISEVENETOUMBRIATOSCANAABRUZZOBASILICATAPUGLIA
LIGURIA
SICILIA
CAMPANIA
LAZIO

78,9
50,9
48,7
47,7
45,9
41,5
37,2
32,6
29,1
28,4
27,8
26,5
25,4
25,2
25,1
21,5
21,4
21,0
16,8
16,3
0

10

20

30

40

50

60

70

80

90

Source: based on Infocamere data

If the provincial data is considered, Trento is in first place with 107.7 startups per ten
thousand companies, followed by Trieste with 102.1, Ancona with 73.9, Ascoli with 57. The
highest-ranking southern province is Cagliari, in 7th place with 54.9. Milan and Rome are notamong the top twenty provinces: the former is in 25th place with 37, and the capital is in 73rdplace with 16.8.

Italian Ministry of Economic Development

44Annual Report on Innovative Startups and SMEs – 2015

Chart 2.8 Ranking of the top twenty provinces for innovative startups per ten thousand
joint-stock companies
TrentoTriesteAnconaTorinoAscoli Piceno
Pordenone
Cagliari
ModenaBologna
Pisa
FerraraMacerata
Aosta
BolzanoGorizia
Reggio Emilia
Ravenna
Piacenza
Novara
Parma

107,7
102,1
73,9
57,0
56,6
55,9
54,9
52,7
52,1
51,3
50,9
48,9
48,7
47,4
46,2
44,2
43,7
43,6
41,6
40,2
20

30

40

50

60

70

80

90

100

110

120

Source: based on Infocamere data

Apart from the particularly positive performance of some smaller territories, the data
regarding the major metropolitan cities shows that these vital areas of the country still havesubstantial potential for the creation of new innovative companies.

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.9 The number of innovative startups per ten thousand joint-stock companies by
Italian province

Note: the territorial breakdown does not take into account the following provincial boundaries: Barletta-AndriaTrani, Carbonia-Iglesias, Medio Campidano, Ogliastra, Olbia-Tempio.
Source: based on Infocamere data

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

CORRELATION BETWEEN THE DISTRIBUTION OF INNOVATIVE STARTUPS AND PATENTS
An analysis of the degree of technological innovation conducted at regional level with themost recent data confirms the persistence of an innovation gap between the Centre-North andthe South. It also allows an analysis to be made as to whether there is a correlation with thelocation of innovative startups.
Lombardy in particular, with 172 patents and trademarks per 100,000 inhabitants, is in firstplace in the rankings, followed by Emilia-Romagna (about 145 patents and trademarks), Lazio(140) and Piedmont (about 138). There is a significant gap compared to with the southern
regions, with Calabria having just 20 patents and trademarks per 100,000 inhabitants, thelowest region in the ranking.
The comparison between 2003 and 2013, however, shows a widespread innovative effort,
especially by the southern regions. The indicator on patents and trademarks in all thesouthern regions shows a significant increase while two northern regions (Lombardy andPiedmont) have seen a decrease in the ratio of patents compared with the number of
inhabitants.
Considering three other indicators regarding the degree of competitiveness/innovation of acountry (exports as a percentage of GDP, ratio of companies using services with their website
over the total number of companies with more than 10 employees, and finally graduates inscience and technology per thousand inhabitants), significant and widespread improvements
at regional level can be seen during the period specified above. The latest data confirms thegap between the northern and southern area although it is worth noting the effort made by
the southern regions that, with the exception of Molise and Calabria, have an increased
propensity to export, and all of them show an increase in the number of computerised
companies and science and technology graduates.

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Table 2.2 The degree of innovation in the Italian regions
2003

2013

Patents andTrademarks (per100,000
inhabitants)

2003

2013

2003

Exports over GDP ratio

2013

Servicescompanies with a
website

2003

2013

Graduates in scienceand technology (perthousand inhabitants)

2015

Total
number of
Innovative
Startups

Percentage
of totalinnovative
startups
comparedwith thetotal for
Italy

North-West
Liguria

21.9

59.4

9.6

15.5

41.8

54.3

10.2

16.4

60

2.29

Lombardy

288.1

172.1

27.5

32.6

48.6

75.4

8.2

16.6

865

18.3

Piedmont

214.1

137.8

27.0

31.9

54.7

64.6

8.6

16.7

285

7.06

5.8

28.9

10.6

13.4

47.5

59.6

0.1

2.4

11

0.3

Emilia-Romagna

62.4

144.7

27.0

35.1

49.7

72.3

11.3

18.8

476

8.5

Friuli Venezia Giulia

39.2

100.1

26.7

31.9

48.9

70.6

8.1

16.5

115

1.9

Trentino Alto Adige

26.8

84.6

16.7

19.5

56.8

83.1

9.7

9.3

133

1.9

Veneto

75.5

118.5

30.5

34.9

47.4

71.2

7.7

11.8

293

9.1

Lazio

233.7

139.6

7.4

10.6

46.2

57.9

9.2

18.4

381

9.4

Marche

35.0

121.9

25.0

25.7

42.2

65.3

7.2

15.2

166

3.0

Tuscany

25.9

105.8

23.0

30.6.

47.0

70.1

12.1

18.0

246

7.5

Umbria

8.6

78.1

12.9

18.3

43.7

62.5

6.1

13.2

51

1.6

Abruzzo

9.1

53.5

21.6

23.0

39.1

59.2

6.5

10.7

76

2.3

Basilicata

1.3

30.5

16.3

11.0

34.8

53.2

3.1

5.3

25

0.8

Calabria

3.5

20.2

1.1

1.1

29.7

50.1

4.8

10.9

94

2.5

Campania

10.3

42.9

8.1

9.9

43.3

55.3

6.1

10.7

232

7.8

Molise

1.9

32.6

9.2

5.9

24.1

57.9

0.6

4.5

16

0.5

Apulia

11.4

43.6

9.1

12.6

46.4

59.8

3.7

6.9

158

5.8

Sardinia

5.7

28.8

8.7

19.3

35.9

62.9

5.5

8.8

113

2.4

Sicily

2.3

27.4

6.8

15.4

32.8

53.6

4.7

8.0

168

6.1

Valle D'Aosta
North-East

CentreSouth

Source: based on Infocamere, Istat and MiSE data

Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

When data related to innovative startups (in terms of regional startups as a percentage of thetotal) is cross-referenced with that for patents and trademarks per 100,000 inhabitants, ahigh correlation is observed (the correlation coefficient is equal to 0.69). The startup
phenomenon is especially focused on the more "innovation-oriented" regions (Lombardy,
Lazio, Veneto, Emilia-Romagna) confirming that good infrastructural facilities and technology
tends to facilitate the creation of new and highly innovative entrepreneurial companies. In
addition, cross-referencing the ratio of innovative startups over the total number of startups
with the other variables confirms a high degree of correlation.
There are, however, two exceptions regarding the regions of Campania and Sicily, which arecharacterised by a moderate incidence of innovative startups in a production system that,
despite the changes between 2003 and 2013, is still modest in terms of innovation.
Chart 2.10 Correlation between the incidence of innovative startups and patents andtrademarks
20
Lombardia

18

Incidenza startup innovative sul totale

16
14

12
10

VenetoEmilia Romagna

Toscana

Campania8

Lazio

Piemonte

6
Sicilia

Puglia4
Liguria2

Trentino Alto Adige
Abruzzo

Sardegna

Calabria Basilicata
Molise00Valle D'Aosta

50

MarcheFriuli Venezia Giulia

Umbria100
Brevetti e marchi ogni 100mila abitanti

150

200

Source: based on Infocamere, Istat and MiSE data

TRENDS IN REGISTRATIONS
Turning, finally, to the analysis of data on the trend of innovative startup registrations, wenote that – excluding the initial peak of early 2013 shortly after the law came into force – analmost linear growth has been recorded during the last two years, which were marked by aserious and widespread recession.
The phenomenon of growth of startup companies thus appears in contrast to the overall
establishment of Italian companies, which in recent times has seen a slow but steadydecrease. Since the policy came into force, the average number of registrations has passed
from 79 per month in 2013 to 122.7 in 2014 and 127 in the first half of 2015.
Italian Ministry of Economic Development

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Annual Report on Innovative Startups and SMEs – 2015

Chart 2.11 Monthly registration trends in respect of innovative startups (January 2013
– June 2015)
200
181

180

157

160

148
139
132

140
120

111
99

100
84
80

99

90

88

78

128
109

91

97

90

83

80

72
62

55

60

130 130
122 120

126
119
112

51

40
20

gen-13feb-13
mar-13
apr-13
mag-13
giu-13lug-13
ago-13
set-13ott-13
nov-13
dic-13gen-14feb-14
mar-14
apr-14mag-14
giu-14lug-14
ago-14
set-14ott-14nov-14dic-14gen-15feb-15
mar-15apr-15mag-15
giu-150

Source: based on Infocamere data

If this rate of growth continues in the second half of 2016, the number of Italian innovative
startups could exceed 6,000 units.
Chart 2.12 Total number of innovative startups at the end of each quarter (March 2013
– June 2015)
7.000
6.000
5.000
4.206
4.000

3.711

3.179
3.000

2.630
2.227

2.000
1.000

1.486
893

1.784

1.131

479

2013

2014

2015

dicembresettembre

giugnomarzo

dicembresettembre

giugnomarzo

dicembresettembre

giugnomarzo

dicembresettembre

giugno

marzo

0

2016

Source: based on Infocamere data

Italian Ministry of Economic Development

50Annual Report on Innovative Startups and SMEs – 2015

2.1.2 Startups – Registrations and Closures
REGISTRATIONS AND CLOSURES IN 2014

An essential component of the analysis of the startup phenomenon regards the measurementof the trend in closures, which may be a significant indicator of the rate of innovation incompanies and their appetite for risk.
The population of innovative startups increased appreciably in 2014. The positive balance
between registrations and closures was 1,643 units and the growth rate in the number ofregistered companies is 111.2% compared to 2013.
In 2014, there were 1,699 new registrations, a result that was higher than that of the previous
year. Of these, 1,180 (70%) were firms established in 2014.
There were just 56 deletions from the special section of the register, of which 25 were due tothe cessation of trading (45%). The rest of the companies lost the requirements for innovative
startups as defined by Decree-Law 179/2012.
The number of companies at year-end stood at 3,120 units compared to 1,477 in December
2013. Of these, 1,421 confirmed their registration of the previous year (46% of the total).
In 2014, all areas of the country showed a positive balance compared to 2013, the largest in
absolute terms was the North-West (511 more), followed by the South (411 more). The
highest growth rate in startups was recorded in the South (154.3%). The rate was slightly
above average in the North-West (114.1%). The figures for the North-East and Centre were
below the national average.
The sectors that, more than others, contributed to the growth of the number of startups
concerned services. In absolute terms, the biggest increases were, in fact, related to services(1,241 more), followed at a considerable distance by industry (304 more). The growth rate ofstartups, however, was higher than average in other sectors, such as agriculture and tourism(225%), trade (135.8%) and industry (113.3%).

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Annual Report on Innovative Startups and SMEs – 2015

NORTH-WEST

NORTH-EAST

CENTRENUMBER OF STARTUPS
AT THE END OF 2013
REGISTERED

1,477

447

425

340

265

264

1,148

53

12

1,699

523

412

346

418

303

1,292

77

27

- ESTABLISHED IN 2014

1,180

345

290

247

298

195

912

51

22

- ESTABLISHEDEARLIER
DELETED FROM THE
SPECIAL SECTION- CLOSED

519

178

122

99

120

108

380

26

5

56

13

26

8

9

4

47

5

0

25

4

17

1

3

0

22

3

0

- LOSS OF THE
REQUIREMENTS
NUMBER OF STARTUPS
AT THE END OF 2014
DIFFERENCE

31

9

9

7

6

4

25

2

0

3,120

958

809

677

676

568

2,389

122

41

1.643

511

384

337

411

304

1241

69

29

111.2%

114.1%

90.8%

99.4%

154.3%

113.3%

108.4%

135.8%

225

1,421

435

397

331

258

260

1,101

48

12

GROWTH RATE (*)
CONFIRMEDTRADESERVICES

SOUTH

INDUSTRYTOTALOTHER SECTORS

Table 2.3-Innovative startups - Registrations and Closures – 2014(*) The growth rate is the ratio between the difference between registrations and closures recorded in the period
and the number of startups on the register at the beginning of the period considered.
Source: based on Infocamere data

STARTUPS ESTABLISHED AND CLOSED IN THE FIRST HALF OF 2015
The innovative startups system continued growing at great speed in the first six months of2015. Compared to the end of 2014 the positive difference between startups established andclosed was 1,086 units, representing a growth rate in the number of registered companies of
34.8%.
In the first half of 2015, there were 1,249 new registrations in the special section of theRegister, of these 748 (60%) were established from January to June 2015.
There were 163 deletions from the special section of the Register, although only 34 were due
to a cessation of business (21%). The rest of the companies lost the requirements forinnovative startups defined by Decree-Law 179/2012.In particular, 77 companies establishedbetween 20 October 2008 and 19 October 2009 were deleted from the lists held by the
Chambers of Commerce.
There were 4,206 startups as of 30 June 2015 compared with 3,120 in December 2014, of
these, 2,957 confirmed their registration.
In the first half of this year all the areas of the country registered a positive differencecompared to 2014, the largest in absolute terms was in the North-West (318), followed by theNorth-East (284). The highest growth rate for startups was recorded in the South (38.6%).
The rate was slightly above average in the North-East (35.5%). The figures for the North-West
and Centre were below the national average.

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Annual Report on Innovative Startups and SMEs – 2015

The service sector was the sector that contributed most to the growth of the number ofstartups. The biggest differences in absolute terms were in the services sector (817), followed
at a considerable distance by industry (195 units). The growth rate of startups, however, washigher than the overall average in the trade sector (54.1%) and in other sectors such as
agriculture and tourism (51.2%).

NORTH-WEST

NORTH-EAST

CENTRENUMBER OF STARTUPS
AT THE END OF 2014REGISTERED

3,120

958

809

677

676

568

2,389

122

41

1.249

360

338

260

291

221

933

72

23

- ESTABLISHED IN 2015

748

216

206

158

168

132

565

35

16

- ESTABLISHED EARLIER

501

144

132

102

123

89

368

37

7

DELETED FROM THE
SPECIAL SECTION- CLOSED

163

45

51

37

30

32

123

6

2

34

6

10

10

8

2

30

1

1

129

39

41

27

22

30

93

5

1

4,206

1,276

1,093

900

937

763

3,206

183

54

- LOSS OF THE
REQUIREMENTS
NUMBER OF STARTUPS
AT 30 June 2015
DIFFERENCETRADE

SERVICES

SOUTH

INDUSTRYTOTALOTHER SECTORS

Table 2.4 - Innovative startups - Registrations and Closures – First half of 2015

1,086

318

284

223

261

195

817

61

13

GROWTH RATE (*)

34.8%

32.9%

35.5%

32.9%

38.6%

33.3%

33.9%

54.1%

51.2%

CONFIRMED

2,957

916

755

640

646

536

2,266

116

39

(*) The growth rate is the ratio between the difference between registrations and closures recorded in the period
and the number of startups on the register at the beginning of the period considered.
Source: based on Infocamere data

The number of innovative startups that have been closed down appears to be modest: just 59
in the last year and a half. This is in sharp contrast with the indications in the literature(Kauffman Foundation) and a recent survey conducted by Confindustria and Cerved(Southern SMEs Report 2015, June 2015) which shows that, three years from establishment(between 2009 and 2012), the survival rate of companies in Italy is equal to 44.2% (48.3% in
the South).
The low number of innovative startup closures could be attributable, in addition to the
influence of the policy, to the fact that many of these companies are establishing their variouslines of business without having yet actually entered the market. It could also be understoodas an indicator of reduced propensity to innovation and risk. The recent nature of the policy
and its empirical manifestations do not, at present, allow an unequivocal conclusion. These
aspects will be discussed further in a qualitative survey on innovative startups that will be
carried out in the coming months and whose main results will be presented in the Minister'sreport to Parliament next year.

Italian Ministry of Economic Development

53

Annual Report on Innovative Startups and SMEs – 2015

2.1.3 Alternative innovation requirements
To be classified as an innovative startup, as well as satisfying a number of cumulative
conditions (Article 25, Section (2) b) to g) of Decree-Law 179/2012), a company must also
meet at least one of the following "Alternative" requirements, aimed at specifically identifying
how innovative the company's activities are (Article 25, Section (2) h):a. a minimum of 15% of expenditure on R&D on the greater figure between turnover andtotal annual costs;
b. 1/3 of the workforce (employees in any capacity) composed of PhD students, post-docs
and researchers with at least three years’ research experience or 2/3 of the workforce
composed of people in possession of 5-year degrees;c. a company that is the proprietor, custodian or licensee of a patent or industrial
property rights or the proprietor of registered software.
Analysing the data from Infocamere updated at the end of June 2015 relating to selfcertifications submitted by innovative startups, 86% stated that they complied with one
requirement, 12% two requirements and only 2% comply with all three innovation
requirements.
The number of companies with at least two of the three innovation requirements may belower than expected. For example, a corresponding presence of highly educated staff would
be expected in companies that have a substantial investment in R&D. The results do notsupport this assumption, even if, on the other hand, the fact that the legislation has
established the possession of one of the requirements as a sufficient threshold for recognition
may have prompted employers not to select a higher number.
Chart 2.13 Innovative startups per number of requirements
2%
12%

UN REQUISITODUE REQUISITITRE REQUISITI

86%

Source: based on Infocamere data

The distribution by number of requirements has no significant differences based on macroeconomic sectors and geographical areas.

Italian Ministry of Economic Development

54

Annual Report on Innovative Startups and SMEs – 2015

Chart 2.14 Innovative startups per number of requirements, industry and geographical
area
100%

2%
14%

12%

84%

87%

2%

14%

0% 6% 1%

11%

1%

2%
14%

12%

85%

86%

1%

2%
12%

80%

60%

40%

86%

93%

88%

86%

TRE REQUISITIDUE REQUISITIUN REQUISITO

20%

0%

Source: based on Infocamere data

Of the companies that only satisfied one requirement, in 63% of cases, these spend over 15%of their turnover or total costs on R&D, 23% employ sufficiently highly qualified staff toexceed the thresholds set by the legislation. In 14% of cases, they possess industrial property
rights or registered original software.
Chart 15.2 Innovative startups that satisfy one requirement
14%

R&S
PERSONALE ALTAMENTEQUALIFICATO
PROPRIETA' INDUSTRIALE
23%63%

Source: based on Infocamere data

The ratio of companies in possession of industrial property rights or software is relatively
higher in industry and commerce, and, at regional level, in the North-East, where theincidence of the companies investing more than 15% of turnover in R&D is lower than in therest of Italy.

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Chart 2.16 Innovative startups that satisfy one requirement per sector andgeographical area
100%

17%

14%

17%

20%

24%

20%

80%

10%

24%

14%

23%

17%

12%

23%
23%

14%

24%

60%
PROPRIETA' INDUSTRIALEPERSONALE ALTAMENTEQUALIFICATO

40%
63%

63%

63%

66%

64%

60%

66%

62%

R&S

20%

0%

Source: based on Infocamere data

Of the companies indicating they satisfied two requirements, 59% spend over 15% ofturnover on R&D and also employ highly skilled staff. 30% exceed the thresholds ofexpenditure on research and are in possession of industrial property rights or registeredoriginal software. The remaining 11% of cases have qualified staff and at least one industrial
property right.
In 90% of cases, these companies exceed the minimum requirement for spending on research,
70% comply with the thresholds for qualified personnel, and 40% have at least one industrial
property right or registration of original software.
Chart 2.17 Innovative startups satisfying two requirements
11%

R&S-PERSONALE
R&S-PROPRIETA'
INDUSTRIALE30%PERSONALE-PROPRIETA'
INDUSTRIALE
59%

Source: based on Infocamere data

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At the sectoral level, the percentage of companies that spend over 15% of turnover on R&D
and at the same time employ highly qualified staff is higher in the trading sector, while theratio of companies that have significant research expenditure and are in possession of anindustrial property right or original software is significantly lower.
At national level, the percentage of companies that spend over 15% of turnover on R&D and at
the same time employ highly qualified staff is relatively higher in central Italy, where there isa slightly lower ratio of companies with qualified staff and at least one industrial property
right.
Chart 2.18 Innovative startups satisfying two requirements per sector and geographical
area
100%
11%

11%

7%

13%

9%

28%

33%

5%
15%

15%
80%
31%

50%

30%

32%
26%

60%
PERSONALE-PROPRIETA'
INDUSTRIALE
40%

R&S-PROPRIETA' INDUSTRIALE

78%
57%

59%

59%
50%

58%

63%

59%

R&S-PERSONALE

20%

0%

Source: based on Infocamere data

Finally, 69 companies have self-certified possession of all the above innovation requirements.
52% of these are located in the North (25% in the North-West, 28% in the North-East), 29%
in the South and 19% in the Centre of Italy. 80% are involved in the services market, 19% in
industry.
A study recently conducted by the Office for Harmonisation in the Internal Market – the EU
agency responsible for administering the Community trade mark and Community registered
designs and models – highlights how, in Europe, companies with patents perform better thancompanies without patents in terms of labour productivity, employment and wage levels.17
It is therefore worth pointing out that among the 4,206 innovative startups registered up toJune 30 there is a large number of companies (782) that declared ownership or licenses oftools to protect intellectual property, selecting the third requirement exclusively or combinedwith one or two of the other alternative innovation requirements.

17

Office for Harmonisation in the Internal Market, "Intellectual property rights and firm performance in Europe: an
economic analysis", June 2015.
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2.1.4 Innovative startups with a social goal or high technological value inthe energy sector
The definition of innovative startups Decree-Law 179/2012 (Article 25, Section (2) does notprovide for limitations related to business sectors, because the main aim of the scheme is topromote technological innovation in all productive sectors.
The only prescribed differentiation in the definition covers innovative startups with a "social
goal" (SIAVS). Pursuant to Article 25, Section (4), SIAVS have the same requirements as other
innovative startups, but they operate in certain specific areas that Article 2, Section (1) of
Legislative Decree 155/2006, which governs social enterprise, considers to have significant
social value.
Since SIAVS by definition pursue goals related to the welfare of the community, as well as
having a business logic, they may be less "attractive" on the market, which results in a returnon investment that is lower than that generated by other companies. To correct thisasymmetry, Article 29 of Decree-Law 179/2012 has awarded increased tax benefits for
operators investing in this particular type of innovative startup.
Together with innovative startups with a social goal, another type of innovative startup isprovided with the same particularly advantageous tax benefits. These are the companies that
exclusively develop and market innovative products or services of a high technological value
in the energy industry.
While this second type of startup is identified by checking whether its main and secondary
activities are included in a restricted list of relevant Ateco 2007 codes (Italian version of theEuropean nomenclature, NACE Rev. 2),18 recognising SIAVS requires a more flexible
procedure, adapted to the needs of businesses that are taking on a double feature: they
undertake activities which not only make use of technological innovation, but also pursue
social goals.
WHY ESTABLISH AN AD-HOC PROCEDURE TO IDENTIFY INNOVATIVE STARTUPS WITH A SOCIAL GOAL?
Circular 3677/C issued by the Ministry of Economic Development on 20 January 2015
introduced a new structured procedure for recognition of SIAVS.
Technology is often associated with impersonality, with indifference to the effects produced
on individuals and the community. The encouragement of recognition of innovative startups
with a social goal is aimed at weakening this old cultural stratification and highlighting thateven new high-tech companies can positively impact on the welfare of a community, or by
examining the issue from another perspective, that social enterprises do not have a monopolyon activities with a social impact.
Indeed, it should be stressed that, although they refer to the list of sectors drawn fromlegislation on social enterprises, the legal concept of SIAVS does not also require registrationin the register of social enterprises. However, their connection to the world of social

18 The Decree of 30 January 2014 of the Ministry of Economy and Finance, in consultation with the Ministry of

Economic Development, defined the scope of application of the increases in favour of innovative startups thatdevelop and market innovative products or services exclusively with a high technological value in the energy
industry, with an attached list of Ateco 2007 codes.
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entrepreneurship is clear, and the new procedure was also designed to inspire theLegislature, which is currently engaged in redefining the regulations for social enterprises.
It is necessary to ensure that SIAVS and operators who decide to invest in their activities canbenefit from an adequate level of certainty about the presence or omission of this special
status. However, as mentioned above, a recognition system based on correspondence with agiven list of Ateco 2007 codes, as it is the case for high technology innovative startups
operating in the energy sector, does not seem the most appropriate solution. Not surprisingly,
the implementing decree on incentives for startups does not provide a list of strict Ateco
codes for SIAVS: in fact, these enterprises often operate across the board, generating “hybrid"
activities that focus on different areas, defying rigid classifications.
For example, "Pedius", an innovative startup which provided the first example of how to ofcomplete the "Social impact description document" in compliance with the new procedures(see the last pages of the completion guide), has the following Ateco code: "J61
Telecommunications". This codification, which is not in any of the areas listed in Article 2,
Section (1) of Legislative Decree 155/2006, would have excluded the applicability of its status
as a SIAV. However, when the activities carried out by Pedius are examined in more detail, itturns out that they relate to a mobile application that allows deaf people to make normal
telephone calls. By using vocal synthesis and recognition technology, which converts text tospeech and speech to text, the company in question operates in the field of technologicalinnovation, like all innovative startups, and at the same time has an impact on the community.
The procedure created in January 2015 may help to bring to light many other possible "false
negatives" hidden in the special section of innovative startups. They can then give an accountof their own identity as companies that generate a social impact by operating in one of theareas covered by legislation on social enterprises, adherence to which, as we have seen, is arequirement inherent in the legal concept of SIAVS.
At the same time, the completion by the enterprise of a document describing the expected or
actual social impact may facilitate the activities pursued under Article 31, Section (5) of
Decree-Law 179/2012 in relation to the checking of the requirement to operate in one ormore of the fields covered by Legislative Decree 155/2006. This is necessary for theattribution of SIAV status and for the lawfulness of any increased benefits granted to theinvestors.
As is obvious, the procedure aims to lubricate the mechanisms of interaction that develop
between companies entitled to benefits and the authorities involved in supervisory functions
concerning the legality of these benefits, using a simple and flexible communication tool likethe one described below.
Simple: since it is not too burdensome for the company called upon to comply with it.
Flexible: by being adaptable to the specific case, not subject to rigid and unchanging
parameters.
A FLEXIBLE PROCEDURE, BASED ON A DESCRIPTION OF THE SOCIAL IMPACT
Going into detail on the new procedures for recognising SIAV status, this consists first of all ofa self-certification, through which the enterprise:
1. declares that it is operating exclusively in one or more of the sectors listed in Article 2,
Section (1) of Legislative Decree 155 of 24 March 2006;
2. identifies the sector or sectors in question;
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59Annual Report on Innovative Startups and SMEs – 2015

3. declares that it is pursuing, whilst working in that area/those areas, an aim that is in
the public interest;
4. undertakes to provide evidence of the social impact that it generates.
This last point is embodied in the drafting, once a year, of a "Social impact description
document", to be completed in accordance with the guidelines provided in the
aforementioned guide.
SIAVS are required to draft and electronically transmit, to the competent Chamber ofCommerce, the "Social impact description document", upon submission of the selfcertification referred to and, in subsequent years, on the occasion of the annual confirmationof the requirements of Article 25(15) of Decree-Law 179/2012.
The "Social impact description document" covers:
an expected impact in the case of startups or in any case not yet achieved at the time
the first financial statements are filed;

an impact generated in the case of enterprises that have already filed their first
financial statements.

It needs to be clarified that, in any case, what is required is accountability and measurement,
not a performance obligation.
The procedure thus constructed is therefore able to associate flexibility – a self-certification
mechanism that leaves the entrepreneur to illustrate the social impact generated – andsolvency – the authorities can count on a documentary basis to verify the existence of therequirement. Companies are strongly encouraged to publish the document produced on theirofficial websites.
Describing the social impact of an organisation means assigning wider and long-term effects
in relation to the activities undertaken, effects meaning the potential benefits or changes thatthe intervention generates in the community in terms of knowledge, attitudes, status, lifestyle conditions and values. At the same time, these results must be provided in measurable
terms.19
The impact is the last step of what is called the impact value chain, and that is a methodology
to analyse the activity of an organisation by identifying the resources used (input), theproducts or services provided (output) the results (outcome) and, finally, the impact, that is,the broader and long-term change. By breaking the work down into its individualcomponents, it is easier to clarify the fundamental distinction between the immediate resultsof an intervention (such as the number of participants in a vocational training event) and its
ability to trigger lasting change, the impact (increased level of "employability" of thebeneficiaries).
The operator called upon to draft the Social Impact Description Document should always be
guided by the ultimate purpose of this statement, or give an account of the activities
conducted by the company and their impact on the various stakeholders, which legitimates its
SIAV status.
In view of the foregoing, the information provided by the guide for drafting the social impact
description document, drafted in collaboration with the Ministry of Education and the main
19 A definition adapted from the work carried out by EVPA, GECES Sub-group on Impact Measurement andothers.
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60Annual Report on Innovative Startups and SMEs – 2015

Italian social entrepreneurship players, is intended to be illustrative and not prescriptive,
because mandatory imposition of the use of a single procedure would not lead to an effective
outcome.

STATISTICAL DATAThe new procedure for recognising SIAVS has so far been held back by the delayed adjustmentof procedures for data transmission from the Chamber of Commerce system peripheral to thespecial section of the register at central level, so that at 30 June 2015 there were only 5 SIAVS.
The decree of the General Director for the market, competition, the consumer, monitoring and
the Technical Regulations of the Ministry of Economic Development of 22 June 2015,"Technical specifications for the implementation of procedures for the register of companies(REA)", will overcome this problem allowing a rapid increase in the number of companies
with an approved social goal.
At the end of June 2015, there were 482 startups that develop and market innovative
products or services exclusively of a high technological value in the energy industry (11.5% of
total): almost 60% are located in the North, equally distributed between the west and east,
21% in central Italy and 21% in the South. Almost 90% are involved in private services, therest are instead involved in industry.

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2.1.5 Analysis of the main economic indicators
INTRODUCTION
Development of the information system for startups identified a comprehensive list of all theundertakings, outlining the structural characteristics such as location, type of company andbusiness sector. These attributes were presented for all innovative startups.
The next step, presented in this section, is to enhance knowledge about startups considering
their employment rates and their economic performance. This type of analysis must, however,take into account both the period of formation of startups – for example, many were only
established in 2014 – and the frequency for updating economic information (see the section
on the information system's data sources in the appendix).
Generally, it was possible to obtain information related mainly in regard to the period 20122013 for a subset of heterogeneous companies. An attempt was therefore made to present theresults in a standardised format, compared, for example, to all joint-stock companies, in orderto make the analysis interpretable from an economic point of view. In accordance with thetime required to obtain data from the sources, for 2014 it was possible to present a study on
the dynamics of the number of employees and of the number of shareholders.
The results shown below indicate that the average size of business startups, in terms of
employees, recorded an increase between 2013 and 2014.
Startups also involve a significant number of shareholders on average, mostly natural persons
but also legal persons (among the 1,369 where, with reference to the year 2014, it waspossible to identify the presence of shareholders, there were more than 5,500 shareholders
who were natural persons and about 1,100 who were legal persons).
Compared to the economic data, there are some macro-sectors (R&D, consultancy,
management consultancy, architecture and engineering) where the startups maintain acertain level of competitiveness compared to companies already on the market, also in termsof turnover. Also, as expected, the average levels of profitability of startups are lower thanthose of companies already on the market, but at the same time the levels of solvency andliquidity are quite competitive.
However, in relation to the latter, the dynamics (2013 compared to 2012) of startups showsthat about half of the solvent and liquid companies tend to suffer a contraction (settlingdown) of solvency levels compared with the previous year, which is a less significant
phenomenon for companies already on the market.
EMPLOYMENT AND THE NUMBER OF SHAREHOLDERS
For 2013, it was possible to reconstruct employment information regarding 1,443 out of
1,486 companies registered at 31 December, for 2,630 employees in total (staff employed inany capacity, including self-employed workers). The breakdown by economic sector shows
the importance of service activities and in particular software and research and development
activities.

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Table 2.5 Number of employees and innovative startups by sector of economic activity– 2013
number ofcompanies

Business sectors

number of
staff% of thecompanies%
staff

B +C +D +E +F-Other Industry andConstruction
C-Machinery;

214

433.6

14.8

16.5

58

92.3

4.0

3.5

G +H +I-Trade, transport, accommodation,
catering
OTHER SERVICES

97

148.6

6.7

5.7

133

204.2

9.2

7.8

J-Software

425

941.7

29.5

35.8

J-Data Processing

90

170.5

6.2

6.5

M-Management consultancy

43

76.3

3.0

2.9

M-Architects and engineers

52

81.2

3.6

3.1

M-Research and development

224

322.9

15.5

12.3

M-Specialised design

18

20.0

1.2

0.8

M-Other consultancy activities

55

79.2

3.8

3.0

N -Other business support services

34

59.4

2.4

2.3

1,443

2,629.8

100.0

100.0

Total
Source: Istat

Of these companies, 634 included employees among its collaborators (1,554). In 2014, thenumber of companies with employees significantly increased: 2,725 staff were employed in
1,010 of the 3,179 registered companies.
The increase in the number of companies with employees was accompanied by an increase in
the average number of employees from 3.2 to 3.4.
Table 2.6 Average staff of innovative startups by geographical area – 2013-2014
Breakdown

2013

2014

North-West

3.3

3.8

North-East

2.7

2.9

Centre

2.7

3.2

South

4.1

3.6

Total

3.2

3.4

Source: Istat

The increase in the average size is nearly uniform throughout Italy and in relation toeconomic sector. The exception is the South, where the number of startup companies doubled
over the period while growth in other areas was approximately 50%. The substantial increase
recorded in the South was probably attributable to new companies that, in the initial stage,
had a small number of employees.
An increase in average size occurred in most business sectors. The reduction in the design
sector was due to the small number of companies involved.
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Table 2.7 Average size by sector
Business sectors

2013

2014

B +C +D +E +F-Other Industry and Construction

3.2

3.7

C-Machinery;

2.6

3.4

G +H +I-Trade, transport, accommodation, catering

2.7

3.5

OTHER SERVICES

2.9

3.1

J-Software

3.7

3.9

J-Data Processing

3.2

2.8

M-Management consultancy

3.8

4.0

M-Architects and engineers

2.8

2.7

M-Research and development

2.6

2.7

M-Specialised design

2.4

1.4

M-Other consultancy activities

2.1

3.1

N -Other business support services

2.8

3.3

Total

3.2

3.4

Source: Istat

The increase in average size is even more significant when viewed in relation to companies
that had employees in both 2013 and2014. Of over 600 companies monitored, the average
size increased from 3.2 to 4.5 employees.
The composition of the number of shareholders, natural persons and legal persons wasanalysed for 2014. The startup companies (1,369 units) for which it was possible toreconstruct the number of partners had just over 6,600 shareholders, including 5,500 naturaland 1,100 legal persons. In particular, startup companies are mainly composed of more than 4
shareholders. In addition, more than 25% of the shareholders, whether they are natural or
legal persons, are in companies with more than 10 shareholders.

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Chart 2.19 Distribution of the number of shareholders per category – 2014
30

25

20

15

10

5

0
1

1-2

2-3
Persone fisiche

4-6

7-10

oltre 10

Persone giuridiche

Source: Istat

PRODUCTIVITY ANALYSIS


Added value and production

Of the indicators considered to be strategic, added value is the one that best summarises thedata regarding company productivity levels. Obtained by deducting the negative items on theincome statement from the positive ones, it expresses the company's ability to remunerate thefactors of production.20 In 2013, the situation regarding innovative startups for which it waspossible to obtain accounting data shows that:the average value added per enterprise was about €35,000, compared to about €280,000 for
all joint-stock companies;21
considering the value added per employee, in other words productivity, the differences areless, even if they remain in favour of joint-stock companies (€19,000 compared to €53,000);
in regard to innovative startups, the sector with the highest level of productivity isarchitecture and engineering (€35,000 per employee), followed by the consultancy sector,
with approximately €31,000 per employee;
negative performance was recorded for the data processing sector, where overall, the added
value of innovative startups was less than zero.
Overall, startups have lower productivity levels than enterprises that have already been
established for years. Indeed, in one case (the data processing sector) added value was below
zero.
20 The value added at factor cost, including contributions, net of tax, is taken into account in this case.
21 Joint-stock companies with up to 100 employees were considered in order to ensure a consistent comparison

with innovative startups, made up of small businesses.
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Encouraging data emerges from analysing productivity developments. By using the value of
production22 for the years 2012 and 2013, the production value per employee ratio was
calculated, both for startups and for joint-stock companies.
Table 2.8 Dynamics of production per employee, in regard to startups and joint-stockcompanies overall – 2012 and 2013

Business sectors

Joint-stock companies overall

2013
comparedwith 2012

Innovative
startups
comparedInnovative startups
with jointstockcompanies
overall
2013
2013
2012
2013
compared comparedwith 2012 with 2012

2012

2013

Other industries andconstruction

244,226

252,4361.034

85,013

127,349

1.498

1.449

Machinery

208,722

208,7211.000

68,856

139,119

2.020

2.020

Trading, transport,
accommodation, catering

329,093

320,963

0.975

103,847

121,642

1.171

1.201

Software141,075

144,456

1.024

56,91079,665

1.400

1.367

Data processing

91,58790,0090.983

32,60654,941

1.685

1.715

Management consultancy

179,470

193,237

1.077

42,68468,549

1.606

1.492

Architectural and engineering
firms

240,544

220,576

0.917

62,800120,835

1.924

2.098

Research and development

185,977

149,901

0.806

71,314

101,011

1.416

1.757

Specialised design

142,431130,1100.913

54,06363,325

1.171

1.282

Other consultancy activities

166,415

156,9880.943

71,12893,648

1.317

1.396

Other services

238,847

185,767

0.778

61,316

93,853

1.531

1.968

Source: Istat

The change in the value of production per employee (last column) is always greater than 1,
indicating a higher value in startups compared with joint-stock companies. In particular, insome sectors, such as architecture and engineering, industry, and other services, the growthin the period 2012-2013 was double that of companies in the same sectors, if joint-stockcompanies are considered in overall terms.

22 The value of production is used as a proxy for value added, since the latter has negative values in some cases

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

Economic and financial analysis of profitability, liquidity and solvency

In order to highlight the level of competitiveness of innovative startups in relation to jointstock companies overall, economic performance for the years 2012 and 2013 were analysedusing the key financial indicators.
Particular emphasis was given to the study of three specific areas of performance, relative tothe level of profitability, solvency and liquidity, for which a selected number of indicators
were summarised:
1. two indicators were summarised in regard to liquidity (which expresses the ability tocover short-term liabilities with current assets – inventories, receivables and cash):the liquidity ratio23 = (cash + receivables) / current liabilitiesthe current ratio24 = (cash + inventory + receivables) / current liabilities

a summary liquidity indicator was then calculated using the following equation:liquidity summary = 0.5 * liquidity ratio + 0.5 * current ratio
which it is considered satisfactory if greater than 1 (indicating full coverage ofshort-term liabilities).

2. in regard to solvency (which expresses the quality of the company's sources offinancing and the level of debt, indicating the ability to stay in business over time, evenin adverse market situations), it was summarised by two indicators:leverage25 = debt capital/equity

coverage of fixed assets with lasting sources26 = (own capital + non-current
liabilities)/assets

a summary solvency indicator was then calculated in accordance with thefollowing equation:
solvency summary = 0.5 * (1/leverage) + 0.5 * coverage of fixed assets with lastingsourceswhich it is considered satisfactory if greater than 1 (indicating full coverage ofshort-term liabilities).

3. In regard to profitability, both ROE and ROI were calculated. ROE summarises thefinancial results of a company’s transactions and is given by either of the following
equations:ROE = net profit / equity



ROE = [overall ROI * LEVERAGE (ROI – i)] * extraordinary items and taxes ratio
ROI instead expresses the operating profit (revenue minus operating costs) over
the overall capital invested:

23 A value equal to or greater than 0.8 is considered a normal value.
24 A value equal to or greater than 1.2 is considered a normal average value.
25 A value of less than 2 is considered a normal value; beyond this threshold, the level of exposure towards third

parties is high.

26 A value greater than 1 is considered a normal value, excluding the use of short-term borrowings to financefixed assets.
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Annual Report on Innovative Startups and SMEs – 2015



ROI = operating revenue / capital employed

As a first analysis, the ratio between turnover and overall investment (sales turnover) was
calculated for both startups and joint-stock companies, in order to identify access problems
for companies that are getting involved in the market for the first time.
In certain macro sectors (other consultancy activities, specialised design, research anddevelopment, management consultancy, architects and engineering firms and other services)
the gap between newly established companies and those already on the market seems rather
small, while in others (trading, transport, accommodation, catering, data processing, otherindustry and construction, machinery and software) it is more evident.
This indicates that in return for an initial investment, the innovative startups of the first
segment (other consultancy activities, specialised design, research and development,
management consultancy, architects and engineering firms and other services) achieve a
return in terms of sales in line with competitors already on the market, while in other areas
the competitive advantage of companies already on the market is higher.
Chart 2.20 Turnover of innovative startups and of joint stock companies overall (2012and 2013)

Source: Istat

In terms of performance, it is noted that the profitability of innovative startups is less thanthat of companies already on the market, although some macro-sectors such as otherconsultancy activities, research and development, management consultancy and architects
and engineering firms, have positive profitability levels. In terms of solvency and liquidity,
however, startups generally have good levels of performance, on average higher than those ofexisting companies do. It can be assumed that startups start from a rather low level of debt
and fully able to deal with short-term liabilities, compared with a level of activity that is not
fully operational.

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Table 2.9 Performance in terms of profitability, liquidity and solvency in innovative
startups (average values, 2012 and 2013)
2012
Business sectors

2013

Other industries and construction-5.34

Summary
Solvency
0.80

Machinery

-1.26

0.80

0.99 -7.34

0.93

1.11

17.9
9

0.97

1.22

ROI

Summary
ROI
Liquidity
1.10 -2.34

Summary
Solvency
0.80

Summary
Liquidity
0.91

Trading, transport, accommodation,
catering-14.92

1.17

1.29

Software

-2.66

1.05

1.29 -4.86

1.26

1.47

Data processing-18.64

3.32

3.79

18.7
1

2.06

2.31

Management consultancy

9.75

0.75

1.03

4.54

1.38

1.22

Architectural and engineering firms

4.20

0.87

1.14

3.76

0.80

1.12

Research and development

2.56

1.01

1.35

3.13

1.25

1.59

-17.350.96

1.22 -4.70

0.74

1.09

5.15

0.86

1.08 -1.38

1.17

1.36

Other services-12.16

1.19

1.41 -8.15

1.18

1.42

Total

-3.96

1.01

1.29 -4.61

1.05

1.28

Specialised design
Other consultancy activities

Source: Istat

Table 2.10 Performance in terms of profitability, solvency and liquidity of joint stockcompanies (average values, 2012 and 2013)
2012
Business sectors

ROI

Summary
Solvency

2013
Summary
Liquidity

ROI

Summary
Solvency

Summary
Liquidity

Other industries and construction

11.10

0.94

1.07

3.31

0.97

1.10

Machinery
Trading, transport, accommodation,
catering

4.91

1.02

1.06

5.40

1.03

1.07

2.35

0.46

-0.01

3.22

0.82

1.00

Software

8.20

0.97

1.18

7.57

0.93

1.16

Data processing

7.22

0.98

1.28

6.58

1.00

1.30

Management consultancy

8.45

0.76

0.94

8.14

0.91

0.90

Architectural and engineering firms

7.19

1.10

1.12

6.06

1.05

1.09

Research and development

2.58

0.96

1.19

2.48

0.97

1.18

Specialised design

8.42

1.19

1.39

8.72

1.05

1.29

Other consultancy activities

7.40

0.97

1.27

7.28

1.02

1.33

Other services

3.49

0.99

1.05

-0.57

1.01

1.07

Total

5.83

0.76

0.77

2.50

0.91

1.07

Source: Istat

Italian Ministry of Economic Development

69Annual Report on Innovative Startups and SMEs – 2015

If the analysis of the average level of profitability shows a substantial gap between startups
and companies already on the market, the analysis of the distribution of individual companies
within the sample showed the presence of macro-sectors in which startups manage to be
more competitive.
The following table shows the distribution of the companies with positive profitability (ROE)(i.e. companies making a profit) that showed an improvement or deterioration in
performance in 2013 compared to 2012. The same distribution is indicated for companies
making a loss.
Table 2.11 Distribution of companies in terms of profitability (2012 and 2013)
Startups (%) with:
Business sectors

positive profit

Joint-stock companies (%) with:negative profit

positive profit

negative profit

growth decrease growth decrease growth decrease growth Reduction
Other consultancy activities

26.1

30.4

13.0

30.5

35.1

35.3

5.9

23.7

Specialised design

40.0

20.0

0.0

40.0

35.8

35.4

5.6

23.2

Research and development

37.1

30.5

9.5

22.9

36.1

31.9

7.3

24.7

Other services

27.9

27.9

11.8

32.4

34.3

29.8

10.2

25.7

Trading, transport, accommodation,
catering

26.3

23.7

13.2

36.8

35.1

34.5

7.7

22.7

Management consultancy

34.8

34.8

8.7

21.7

35.6

35.9

5.9

22.6

Data processing

25.0

9.4

12.5

53.1

34.2

41.7

4.7

19.4

Other industries and construction

28.1

22.5

13.5

35.9

34.7

34.3

7.5

23.5

Machinery

33.3

19.0

0.0

47.7

38.0

39.1

5.1

17.8

Software

26.4

28.7

11.5

33.4

34.4

39.5

4.9

21.2

Architectural and engineering firms

45.5

18.2

6.1

30.2

32.7

37.4

5.4

24.5

Total

30.4

26.0

10.7

32.9

34.8

33.4

8.1

23.7

Source: Istat

The analysis shows that in some sectors like specialist design, research and development,
management consultancy and architecture and engineering firms, the percentage ofcompanies making a profit in 2013 increased compared to 2012. This percentage was higher
in the startups than in the joint-stock companies already on the market (these sectors thus
confirm a good level of competitiveness, already highlighted in the turnover analysis).

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70Annual Report on Innovative Startups and SMEs – 2015

Table 2.12 Distribution of companies in terms of solvency (2012 and 2013)
Startups (%)with:
Business sectors

Joint-stock companies (%) with:positive solvency

negative solvency

positive solvency

negative solvency

growthdecrease

growthdecrease

growthdecrease

growthOther consultancy
activities

decrease

26.1

56.5

8.7

8.7

50.3

25.7

10.0

14.0

Specialised design

40.0

40.0

20.0

0.0

48.8

27.5

9.5

14.2

Research and development

43.8

25.7

8.6

21.9

47.5

26.0

9.9

16.6

Other services

35.3

32.4

8.8

23.5

42.5

22.9

16.0

18.6

Trading, transport,
accommodation, catering

26.3

28.9

7.9

36.9

44.3

22.6

14.5

18.6

Management consultancy

39.1

21.7

13.0

26.2

49.6

26.0

9.6

14.8

Data processing

34.4

31.3

6.3

28.0

52.2

24.1

9.6

14.1

Other industries andconstruction

18.0

32.6

15.7

33.7

44.4

23.4

13.8

18.4

Machinery

28.6

19.0

14.3

38.1

46.3

25.4

11.9

16.4

Software

43.1

35.1

6.3

15.5

46.2

26.4

10.6

16.8

Architectural andengineering firms

39.4

15.2

15.2

30.2

52.2

27.9

7.3

12.6

Total

35.7

31.0

9.7

23.6

44.3

23.3

14.3

18.1

Source: Istat

Table 2.13 Distribution of companies in terms of liquidity (2012 and 2013)
Startups (%) with:
Macrosectors

positive liquidity

Joint-stock companies (%) with:negative liquidity

positive liquidity

negative liquidity

growth decrease growth decrease growth decrease growth decrease
Other consultancy activities

39.1

43.5

4.3

13.1

43.9

33.9

8.5

13.7

Specialised design

20.0

40.0

30.0

10.0

42.5

33.7

9.3

14.5

Research and development

42.9

28.6

2.9

25.6

40.8

32.7

8.9

17.6

Other services

38.2

27.9

8.8

25.1

35.4

25.4

17.2

22.0

23.7

34.2

5.3

36.8

32.6

21.3

20.4

25.7

39.1

26.1

8.7

26.1

44.3

32.7

8.8

14.2

Data processing

37.5

34.4

0.0

28.1

43.2

36.3

8.6

11.9

Other industries and construction

20.2

29.2

18.0

32.6

35.1

24.6

16.8

23.5

Machinery

19.0

19.0

33.3

28.7

34.5

23.3

17.7

24.5

Software

42.0

38.5

5.7

13.8

41.2

33.6

10.2

15.0

Architectural and engineering firms

24.2

36.4

9.1

30.3

44.3

35.0

7.8

12.9

Total

34.9

32.8

8.6

23.7

35.1

24.6

17.3

23.0

Trading, transport, accommodation,
catering
Management consultancy

Source: Istat

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71Annual Report on Innovative Startups and SMEs – 2015

Undertaking the same analysis for solvency and liquidity, it is evident that the overall ratio ofstartup companies with positive performance is in line with that of companies already on themarket. The percentage of solvent companies is 67%, for both categories, while in regard toliquidity, the percentage of companies with liquidity is 67% in startups and 60% in companies
already on the market. Moreover, in 2013 about half of the solvent and liquid startups show adecrease compared to their performance in 2012, indicating a reduction in performance thatwas much lower in existing companies.
Ultimately, for the year 2013, the companies in the two categories were divided into threegroups:

The "healthy" companies with a positive level of performance, both in terms of
profitability (a positive ROE) and solidarity (a solvency summary ratio of more than0.75), as well as liquidity (a liquidity summary ratio of more than 1);companies with positive profitability but solvency or liquidity problems;

companies with negative profitability and solvency or liquidity problems.

The results show that in some areas like research and development, other consultancy
activities, architectural and engineering firms, management consulting, the percentage of"healthy" companies, in other words those making a profit, is quite similar for both startups
and joint-stock companies already on the market. On the contrary, in some sectors such as
construction and other industries, trading, transport, accommodation, catering, equipment,
specialised design, software and data processing, the percentage of "healthy" companies wasmuch lower in startups than joint-stock companies already present on the market. In these
sectors, in particular, the percentage of loss-making companies with solvency and liquidity
problems was quite high for startups.

Italian Ministry of Economic Development

72Annual Report on Innovative Startups and SMEs – 2015

Chart 2.21 Distribution of healthy companies and companies with problems in terms of
profitability, solvency and liquidity per macro-sector (2013)

Source: Istat

Italian Ministry of Economic Development

73Annual Report on Innovative Startups and SMEs – 2015

2.2 Certified incubators
A second pillar of this policy is focused on promoting the development of certified incubators.
These are companies that host, support and accompany the development of entrepreneurial
startups from conception to early development by providing training, operational andmanagement support, providing tools and work locations and favouring contacts between
investors and business ideas believed to have a high financial return potential, but which are
not yet attractive enough for the capital market. By providing entrepreneurs with theirexperience and preparation, managers of certified incubators help innovative companies
launch their own business on the market efficiently and, above all, quickly.
The purposes of incubators may be manifold: economic development of a disadvantaged area,
job creation, the establishment of startups in innovative sectors, the diffusion ofentrepreneurship and the marketing of technology. The range of services provided may varyconsiderably: support for new companies is often carried out through the provision ofassistance and support in the formulation of business and commercial development plans, thedevelopment of the entrepreneurial team, the search for sources of financing and access to
specialised professional services. It is often accompanied by the provision of physicalinfrastructure (space, research laboratories, etc.) and other facilities. The idea that businessinitiatives are supported for a limited period of time, after which startups must become selfsufficient or fail, is common to most organisations.27
At the end of the consultation process, which involved about a hundred public and private
entities present throughout the country, the requirements for the authorisation of these
entities were defined in detail.28 These requirements consist of the provision of adequate
accommodation, equipment and a technical-managerial organisational structure of arecognised experience level, as well as the existence of regular working relationships with
universities, research centres, public institutions and financial partners. The regulations also
require incubators to have an adequate level of experience in supporting innovative startups.
The aim of this certification is to support the gradual growth in size of the incubators,
enhancing structures of excellence in the country that are capable of assisting the strong
development of the production system.
Some of the facilitating measures provided for startups are also extended to certified
incubators, which are required to register in the special section of the Register of Companies
and provide periodic updates.
In 2014, the Ministry of Economic Development initiated activities to verify compliance withcertified incubator requirements. Note that possession of the requirements is self-certified by
the incubators, with a declaration signed by the legal representative, when they are registeredin the special section of the Register of Companies. All companies that have just beenregistered in the special section of the Register as certified incubators are subject toverification from January 2015. A total of eight companies were selected for self-certification
verification.
At the end of June 2015, of the 30 certified incubators (Business Innovation Centres – BICs,
university incubators, private independent incubators and private incubators dependent onlarge companies), almost 3/4 were located in the north, about 25% in the centre and only one
27 For more information: Auricchio et al. (2014).
28 Decree of the Minister of Economic Development of 22 February 2013 – Requirements for innovative startup

incubators.
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74

Annual Report on Innovative Startups and SMEs – 2015

in the South (in Sardinia). They employed a total of 322 employees, corresponding to an
average of 11 employees per company, with a maximum of 71 employees.
Last year's production value (the 2013 or 2014 figures, depending on the case) shows that thecertified incubators had an average turnover of €1.6 million, with a maximum of nearly €7million. The share capital of these companies was €1.9 million on average, with a maximum
capitalization of nearly €10 million.
Precise information on certified incubators can be found in the aforementioned website of the
Chambers of Commerce, updated weekly by Infocamere and available free and in an open
format.
On average (the median values are shown) the 30 incubators certified by the Ministry had anarea dedicated to the startup of 1,000 square metres, used by a technical consultancy(employees and professionals working with continuity) composed of 4 equivalent full-time
units, with just under 40 years’ overall experience in enterprise and innovation. On average,
incubators assist 12 innovative startups, which in turn employ 50 employees on average. Last
year, 3 innovative startups completed their accompaniment phase in each incubator. An
average of 3 patents and patent applications was generated by incubated startups.
As also evidenced by the aforementioned survey of the Bank of Italy, the nature of incubators
in Italy is quite varied, with very different organisational structures, business models andabilities in regard to attracting innovative ideas. The selection of innovative startups to be
incubated mainly takes place by means of a continuous "open assistance" process managed inmost cases by the incubator. Incubators are primarily involved in the preliminary stages ofthe definition of business ideas, while their involvement is very low in capital raising andbusiness development support.
Table 2.14 Certified incubators by region at 30 June 2015
RegionLombardy
Friuli Venezia Giulia
Lazio
Piedmont
VenetoEmilia-Romagna
MarcheTuscany
Sardinia
Trentino-Alto Adige
North-WestNorth-East
CentreSouth
Italycertified incubators
9
4
3
3
3
2
2
2
1
1
12
10
7
1
30

Source: based on Infocamere data

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Annual Report on Innovative Startups and SMEs – 2015

Table 2.15 List of incubators certified by the Ministry at 30 June 2015
Enterprise nameMunicipality

ALMACUBEBOLOGNA

Initials of theProvinceBO

WebsiteBIC FRIULI VENEZIA GIULIA INCUBATORSTRIESTETS

www.incubatori.fvg.it

BIC LAZIO

ROME

RM

www.biclazio.it

BOOX

MILAN

MI

www.boox.it

COMO NEXT

COMO

CO

www.comonext.it

DIGITAL MAGICS

MILAN

MI

D-NAMICBSENLABSSAN ZENO
NAVIGLIO
ROME

http://www.digitalmagics.com
www.d-namic.it

RM

www.luissenlabs.com

FILARETE SERVICES

MILAN

MI

FRIULI INNOVAZIONE

UDINE

UD

www.fondazionefilarete.comwww.friulinnovazione.it

H-FARM ITALIA.

RONCADETV

www.h-farmventures.com

I3P- TURIN POLYTECHNIC INCUBATOR

TURIN

TO

www.i3p.it

INCUBATOR OF THE NOVARA INNOVATION CENTRENOVARANO

www.enne3.it

UNIVERSITY OF TURIN INCUBATOR

TURIN

TO

www.2i3t.it

INNOVA

ROME

RM

www.innova-eu.net

INNOVATION FACTORYTRIESTETS

www.innovationfactory.it

JCUBE

JESI

AN

www.jcube.org

M31 ITALIA

PADUA

PD

www.m31.com

NANA BIANCA

FLORENCE

FI

www.nanabianca.it

POLIHUB SERVIZI

MILAN

MI

www.polihub.it

POLO NAVACCHIO (NAVACCHIO CENTRE)CASCINA

PI

www.incubatoreimpresa.it

POLO TECNOLOGICO DI PORDENONE (PORDENONE CENTRE OFTECHNOLOGY)REGGIO EMILIA INNOVAZIONEPORDENONE

PN

www.polo.pn.it

REGGIO EMILIA

RE

www.reinnova.it

TALENT GARDEN MILANO

MILAN

MI

milano.talentgarden.org

THE HIVE

ANCONAAN

www.the-hive.it

THE HUBMILAN

MImilan.impacthub.net

THE NET VALUECAGLIARICA

www.thenetvalue.com

TIS-TECHNO INNOVATION SOUTH TYROLBOLZANO

BZ

www.tis.bz.it

VEGA-PARCO SCIENTIFICO-TECNOLOGICO DI VENEZIA (SCIENTIFICTECHNOLOGY AREA OF VENICE)
WORKING CAPITAL-TELECOM ITALIAVENICEVE

www.vegapark.ve.it

MILAN

MI

www.workingcapital.teleco
mitalia.it

www.almacube.com

Source: Infocamere

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Annual Report on Innovative Startups and SMEs – 2015

2.3 Innovative SMEs
At 31 August 2015, and therefore five months after the conversion into law of the Investment
Compact (24 March) and two and a half months after the creation of the dedicated online
portal (15 June, pminnovative.registroimprese.it), there were 31 small and medium
companies registered in the special section of the Chambers of Commerce register.
This is a small group concentrated in 12 regions, more than 60% in the North (19 companies,
including 6 in Lombardy and 6 in Friuli Venezia-Giulia) with the rest equally divided between
the centre (6 companies) and South (of the 6 companies located in this geographical area,
Apulia stands out with 4).
The most common type of company is that of limited liability companies (Srl) (21 companies),
followed by public limited companies (SpA) (9). There was also one cooperative.
19 innovative SMEs are involved in services (including 11 in the production of software,consultancy, etc.) and 12 in industry (including 4 in the manufacturing of machinery andequipment).
11 companies have a capital of at least €500,000, and 4 have at least 50 employees.
Finally, with regard to the age of innovative SMEs, 9 of them were established in 1996, 2 in
1999, 1 in 2000, 2 in 2002, 1 in 2005, 2 in 2006, 3 in 2007, 1 in 2008, 4 in 2009, 1 in 2010, 1 in2011, 2 in 2012 and 2 in 2014.
Table 2.16 Innovative SMEs by region – information updated at 31 August 2015
Regions

NumberLombardy
6
Friuli Venezia Giulia
6
Apulia4
Emilia-Romagna
3
Tuscany
3
Liguria2
Marche2
Abruzzo1
Lazio
1
Piedmont
1
Sardinia
1
Valle d’Aosta
1
North-West
10
North-East
9
Centre
6
South
6
Italy
31
Source: based on Infocamere data

%
19.4%
19.4%
12.9%
9.7%
9.7%
6.4%
6.4%
3.2%
3.2%
3.2%
3.2%
3.2%
32.2%
29.0%
19.3%
19.3%
100.0%

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77Annual Report on Innovative Startups and SMEs – 2015

References
M. Auricchio, M. Cantamessa, A. Colombelli, R. Cullino, A. Orame, E. Paolucci, Enterpriseincubators in Italy, Bank of Italy QEF no. 216, April 2014.
M.G. Colombo, L. Grilli. Founders' Human Capital and the Growth of New Technology-based
Firms: a Competence-based View, Research Policy, 34, pp. 795-816, 2005.
L. Grilli, High-tech Entrepreneurship in Europe: a Heuristic Firm Growth Model and Three "(Un-)
Easy Pieces" for Policy Making, Industry and Innovation, 21, pp. 267-284, 2014.
M. Muffatto and M. Sheriff, New innovative companies. Italy 2014, University of Padua, June
2015.
Office for Harmonisation in the Internal Market, Intellectual property rights and firm
performance in Europe: an economic analysis, June 2015.
D. Sesana, Innovative startups in Italy: an evaluation of the intervention policy in reference tothe human capital of the founding partners and startup size, Thesis at Milan Polytechnic in
2015.

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Annual Report on Innovative Startups and SMEs – 2015

3. The main facilitating measures in favour of innovative startups
Not all the measures introduced by Decree-Law 179/2012 in favour of innovative startups
allow, considering the current available sources and data collection methods, a quantitative
measure of performance. In particular, the analysis below does not include the following
measures:







exemption from the regulations on shell companies;
subsidies for the settlement of losses;
increasing the VAT credit threshold from €15,000 to €50,000, beyond which it istriggered an obligation to affix the compliance visa in order to obtain horizontal
compensation;
recruitment flexibility using temporary employment contracts;
ability to remunerate employees and contractors with equity incentive plans, subject
only to capital gains tax;
removal from the bankruptcy rules and subjection to the legislation governing themanagement of difficulties due to over-indebtedness – applicable to persons given
immunity from bankruptcy (fail-fast).

3.1 Reduction in costs related to starting business activities
The first type of benefit provided for innovative startups and certified incubators regard
launching companies. Once they are registered in the special section of the register ofcompanies, innovative startups and certified incubators "... are exempted from the payment ofstamp duty and the administrative fees in accordance with obligations concerning registrationin the register of companies, and as well as from payment of the annual fee due to the Chambersof Commerce"(Article 26, section 8 of Decree-Law 179/2012, converted by Law 221/2012).
With reference to the exemption from the payment of Unioncamere administration fees, on
the basis of an express request from the Ministry of Economic Development (Note of 18 April2014), it was clarified that the exemption must be interpreted "in the broadest possible
manner". In keeping with this guideline, the Italian Revenue Agency, in its aforementioned
Circular 16/E of 11 June 2014, made it clear that the exemption from payment of stamp duty
is to be interpreted as a general exemption in relation to all acts carried out by innovative
startups and certified incubators, even after registration in the register of companies, such as
subsidised increases in capital.
These regulations specify that this exemption is “dependent on the maintenance of therequirements provided by law for the acquisition of innovative startup or certified incubator
status, and lasts until the fifth year of registration at the most".
The loss of the requirements for innovative startup or certified incubator status involves
deletion from the special section of the register of companies and, therefore, the obligation to
pay the amount due for the purposes of stamp duty and administration fees “to stay registeredin the ordinary section of the Register of Companies".
The above benefits translate into significant savings, especially for smaller companies.
Limiting the analysis to the 888 innovative startups, companies already in existence at 18
December 2012, i.e. before the entry into force of the law converting Decree-Law 179/2012, it
is estimated that, if they could have benefitted from these such since they were established,
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79Annual Report on Innovative Startups and SMEs – 2015

they would have achieved savings of €525 each, on average, in the first year of registration in
the Register of Companies, and €435 in the following four years.29

29 The annual fee for each company was estimated based on the class of the value of production; three Chamberof Commerce procedures performed each year were considered (the procedure of first registration, an
amendment procedure, the procedure of filing financial statements). Half-yearly and annual self-certification ofrequirements procedures were not considered, since they are obligations relating solely to innovative startups,
as defined by law.
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80Annual Report on Innovative Startups and SMEs – 2015

3.2 Access to tax credits for hiring highly qualified staff
The Ministerial Decree of 3 October 2013 from the Minister of Economic Development, issued
jointly with the Ministry of Economy and Finances, came into force on 22 January 2014 andlaid down implementation rules regarding tax credits for hiring highly qualified staff("CIPAQ"), introduced by Article 24 of Decree-Law 83/2012 "Urgent measures for the growthof the country", converted with amendments by Law 134/2012.
The subsidy consists in a tax credit equal to 35% of the company cost incurred for a maximum
period of one year and an annual maximum limit of €200,000 for the recruitment of highly
qualified staff. The business costs are the actual costs of salaries, including gross pay (pretax), compulsory contributions, childcare and family contributions.
All parties receiving income from a company are entitled to it, and it applies to indefinite term
contracts, even in the event of conversion of temporary contracts into indefinite term
contracts, for staff with qualifications such as a PhD or University degree in a technical orscientific subject. In the latter case, the staff must be employed in basic research, industrial
research or experimental development.
Two specific reserves are added to the general financial measures. The first, in the amount of€2 million, dedicated to innovative startups and certified incubators, the second dedicated tocompanies with headquarters or local units in the areas affected by the earthquake in Emilia
on 20 and 29 May 2012.
Subsidies are granted to innovative startups and certified incubators under a de minimis
system.30 Innovative startups and certified incubators may also benefit from the generalmeasures without asserting their prerogatives.
In fact, the costs related to indefinite term contracts on an apprenticeship basis are also
applicable for these two types of company. Moreover, application for access to the incentive iswritten in a simplified form compared with other companies.
The only constraint for companies is that the jobs must be maintained for at least two years.
Applications may be submitted through the specific CIPAQ platform, following the procedures
and by completing the relevant application form, which is subject to the specificcommunications from the Ministry of Economic Development.
The inclusion in the system of applications for new staff hired from 26 June to 31 December
2012 was possible from 15 September until 31 December 2014. As of 12 January 2015, thesystem is accepting applications in respect of the recruitment of qualified staff that occurred
between 1 January 2013 and 31 December 2013. From January 2016, it will be possible forapplications regarding the recruitment of qualified staff that occurred between 1 January
2014 and 31 December 2014 to be accepted. This tax credit applies to staff hired before 31
December 2014.31
30 With reference to applying the limits prescribed by the guidelines on aid, the so-called "de minimis" aid, itshould be noted that since 1 January 2014, the new Regulation (EU) No. 1407/2013 of the Commission of 18
December 2013 has been in force, which replaced the previous Regulation (EC) No. 1998/2006 of 15 December
2006, in force until 31 December 2013. According to this, the maximum amount in aid that a company canreceive over three years is €200,000.
31 Through the Stability Law 2015 (Law no. 190 of 23 December 2014) the Government introduced an exemption

from payment of the total pension contributions by employers, with the exception of premiums andcontributions due to INAIL, for a maximum period of thirty-six months with a limit of €8,060, on an annual basis,
regarding all newly hired staff with indefinite duration employment contracts, with the exception of
apprenticeship contracts and contracts for domestic work, beginning on 1 January 2015 and signed by 31
December 2015.
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81Annual Report on Innovative Startups and SMEs – 2015

In regard to staff hired between 26 June and 31 December 2012, after an initial investigationthat excluded one company, the Ministry of Economic Development has granted the provisionof credits, sending this information to the Italian Revenue Agency, on behalf of 12 innovative
startups (8 in the North, three in the Centre, 1 in the South). 9 of these applied for access to
the reserve dedicated to this type of company. 10 were operating in the services sector(almost all in the production of software) and 2 in the manufacturing of computers andelectronic products. No certified incubator has so far submitted an application.
In the relevant period, these companies hired 17 highly qualified employees on indefinite
term contracts, requiring loans of €160,000 overall (about €13,300 per company).
The average annual cost per employee amounted to almost €27,000. The average age was 34
years, with a minimum of 28 and a maximum of 45. The new employees included 15 males
and only 2 females, holding a PhD. The 15 males all held a science degree, 9 in electricalengineering or computer science, 4 in computer science and two in mathematics.

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3.3 Free and direct access to the Guarantee Fund for SMEs
The credit crunch that has been felt since 2008 in the economies of European countries
continues to have a negative effect on Italy's growth. The high number of SMEs, theundercapitalization of Italian companies, together with the low number of borrowing
methods and coverage of investment as an alternative to bank loans, help spread thedepressive effects associated with a reduction in the number of loans from the banking
system.
The Guarantee Fund for SMEs for small and medium-sized companies referred to in Article 2,
Section (100) a) of Law 662/96 was greatly strengthened in the last five years and morestrongly in the last two years, in order to counter these effects.
The Fund grants guarantees directly to the lending banks (direct guarantee) and counterguarantees consortia and other guarantee funds, First Instance guarantors of the lendingbanks (counter-guarantee).
Simplified criteria and procedures have been defined to allow innovative startups andcertified incubators to obtain the intervention of the Guarantee Fund for SMEs. The aim of thismeasure was to encourage these companies to find the financial resources necessary for theirdevelopment.32
The procedure allowing the guarantee fund to aid innovative startups and certified incubators
has been significantly simplified. The only requirement is that the funder must not acquire
any guarantees, whether real, insurance or banking in relation to the transaction. The
guarantee is granted free of charge; furthermore, applications relative to these types ofcompanies are given priority in the phase involving preparation and submission to theManagement Committee. The guarantee is granted without an evaluation of financial
statements, for all types of transactions, even in the absence of an investment programme.
Nor is it a requirement for the grantee to provide a minimum amount of the sums in question.
The measure fixed the overall maximum guarantee amount at €2.5 million, to be used if
necessary in a number of transactions up to the established limit, since there is no maximum
limit for the number of transactions. The Fund covers up to 80% of the loan, in the event of adirect guarantee, or 80% of the amount guaranteed by Confidi or other guarantee fund in
relation to counter-guarantees.
The analysis showed a significant volume of business, with a strong growth of operations, inparticular with reference to last year.
660 applications for support from the Fund in favour of innovative startups were submitted
from 26 July 201333 to 30 June 2015. 14 of these were rejected, while 646 were successful.34
The Fund has thus granted almost €156 million in guarantees, which in turn have enabled
about €198 million in credit for innovative startups. 461 innovative startups have used the32 The implementation procedures were defined by the Ministerial Decree of 26 April 2013of the Minister of

Economic Development, in consultation with the Minister of Economy and Finance, which entered into force on
26 June 2013.
33 Date on which the management of the Fondo Banca del Mezzogiorno – Medio Credito Centrale issued CircularNo. 652, which fixed simplified criteria and access procedures in favour of innovative startups and certified
incubators
34 The calculation included applications with a positive outcome (conditional and unconditional) and the partial

resolutions of the Management Committee.
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83Annual Report on Innovative Startups and SMEs – 2015

Fund, of which 110 (24% of the total) have used it several times while they have been inbusiness.
The average share of funding granted to innovative startups totalled €306,000 pertransaction, a value much higher than that recorded in 2014 for all the SMEs put together(€134,000). In the first half of 2015, the average funding had a negative trend, falling to€227,000.
The most representative size category for the entire period under review is that for loans witha monetary value of between €100,000 and €300,000 (32.2% of the total). Loans exceeding€500,000 were 13% of the overall loans guaranteed by the Fund, and 7% are for more than
€1 million.
Chart 3.1 Distribution by category of funded value of the Fund's interventions in favourof innovative startups that have just started trading – data updated on 30th June 2015
100%

80%

60%

3,3%
3,7%
5,9%
7,6%

32,2%

2 MLN <X<= 4 MLN
1 MLN <X<= 2 MLN
500.000<X<= 1 MLN
300.000<X<=500.000

40%

21,8%

100.000<X<=300.000
50.000<X<=100.000
X<=50.000

20%
25,5%

0%

Source: Based on Banca del Mezzogiorno and Medio Credito Centrale data

With regard to the types of intervention by the Fund, the direct guarantee was used in 84% ofcases, with counter-guarantee interventions for the remaining 16%, mostly concentrated in
Tuscany, Lombardy and Emilia-Romagna. Recent years have seen a reorganisation of theprocedure away from counter-guarantees in favour of direct guarantees, due to many factorsof a various kinds. In the first place, the high level of activity of consortia in the years of theeconomic recession has exposed them, more than others, to enforcement orders and areduction in their worth, gradually reducing their ability to act. Second, the need to counterthe credit crunch for companies has necessitated an intervention by policy makers (the "Salva
Italia” Decree in terms of coverage, maximum amount guaranteed and transaction costs) that,while it has facilitated access to credit for SMEs has, on the other hand, made it more
appropriate to operate the concession procedure through direct guarantees.
The prevailing financing transactions are medium to long term ones (over 18 months), which
are 74% of the transactions and have an average level of funding significantly higher than thatof short-term interventions (€380,000 versus €94,000). The average duration of bank loans
granted to innovative startups is 56 months.
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Another aspect that is useful to describe in more detail is the pattern of secured loans andguarantees provided by the Fund. This is shown by the distribution with respect to macroeconomic sectors, identified according to Ateco 2007 classification criteria.
The services sector is the one with the highest proportion of accepted applications (400transactions, which is 62% of the total), followed by industry (233 transactions, 36.1% of thetotal), construction (7 transactions), trade (5) and agriculture with just one transaction.
The sectoral distribution is similar both in terms of the total amount of funding and publicguarantees granted.
Chart 3.2 Sectoral distribution of the Fund's interventions in favour of innovative
startups that have just started trading – data updated on 30th June 2015
0%

OPERAZIONI

20%

40%

61,9%

60%

80%

36,1%

100%

2,0%

SERVIZIFINANZIAMENTI

65,1%

30,9%

3,9%

INDUSTRIA
ALTRI SETTORIGARANZIE PUBBLICHE

65,2%

30,8%

3,9%

Source: Based on Banca del Mezzogiorno and Medio Credito Centrale data

Most of the applications accepted relate to startups located in the North (449 transactions,which is approximately 70% of the total, almost equally distributed between the North-Westand the North-East). 97 transactions were completed in the Centre of Italy, 15% of the total;
100 applications were submitted from Southern Italy (15.5%).
Startups located in the North had 73.6% of the total funding, with 11.3% in the Centre of Italy
and 15.2% in the South.
The average financing awarded to innovative startups now stands at €440,000 fortransactions in the North-West, a value much higher than the national average (€306,000).
The value is below average in other areas of the country.
Regionally, startups in Lombardy used the fund 164 times, a quarter of the total, requestingfunding for almost €87 million, 43.9% of the national total. This was followed by a muchsmaller number by companies in Emilia-Romagna (74 transactions, for €17.4 million, 8.8% of
the total) and those in the Veneto (72 transactions for €12.8 million, 6.5% of the total).
Basilicata was the only region where the Fund was not used by innovative startups.

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Annual Report on Innovative Startups and SMEs – 2015

The average value is higher than the national average in five regions: Umbria, Abruzzo,
Lombardy, Apulia and Liguria.
Table 3.1 Geographical distribution of Fund interventions in favour of innovative
startups that have started trading – data updated on 30th June 2015
Regions

Transactions

Lombardy
Emilia-Romagna
VenetoLazio
Abruzzo
Friuli Venezia Giulia
Piedmont
Trentino-Alto Adige
Campania
SicilyApuliaTuscany
UmbriaLiguria
MarcheCalabria
Sardinia
MoliseValle D'Aosta
NORTH-WEST
NORTH-EAST
CENTRE
SOUTH
ITALY

164
74
72
42
14
43
50
34
31
23
11
29
5
9
21
12
5
4
3
226
223
97
100
646

Funding
86,830,534
17,440,438
12,808,851
10,439,783
9,160,000
8,929,640
8,713,048
7,033,000
6,895,052
5,470,180
5,175,000
4,811,180
4,210,500
3,595,000
2,861,125
1,625,590
1,145,000
510,000
200,000
99,338,582
46,211,929
22,322,588
29,980,822
197,853,921

%
43.9%
8.8%
6.5%
5.3%
4.6%
4.5%
4.4%
3.6%
3.5%
2.8%
2.6%
2.4%
2.1%
1.8%
1.4%
0.8%
0.6%
0.3%
0.1%
50.2%
23.4%
11.3%
15.2%
100.0%

Publicguarantee
68,939,303
13,695,550
10,231,081
8,322,226
7,206,400
7,094,112
6,838,327
5,566,400
5,516,042
4,346,144
4,140,000
2,502,104
3,368,400
2,876,000
2,249,700
1,300,472
906,400
408,000
160,000
78,813,630
36,587,143
16,442,430
23,823,458
155,666,661

Averagefunding529,454
235,682
177,901
248,566
654,286
207,666
174,261
206,853
222,421237,834
470,455
165,903
842,100
399,444
136,244
135,466
229,000
127,500
66,667439,551
207,228
230,130
299,808306,275

Source: Based on Banca del Mezzogiorno and Medio Credito Centrale data

In the reporting period, the Fund also intervened in support of three certified incubators, with6 medium and long term direct guarantee transactions for a total of €5.3 million, which inturn enabled €7 million in bank credit.
It was mainly the banks of the largest five national groups that supported the projects of thesecompanies (innovative startups and certified incubators). A significant contribution also camefrom smaller banks, especially the local BCCs (Co-operative credit banks).

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86Annual Report on Innovative Startups and SMEs – 2015

Table 3.2 Distribution by size of bank in respect of the Fund's interventions in favour ofinnovative startups and certified incubators since they began trading – data updated on
30th June 2015
Types of bank
Top 5 groups
Other large or owned by large Groups
Small
Minor
Total

Transactions
457
46
18
131
652

Funding
112,267,967
13,608,563
2,170,000
76,807,391
204,853,921

Public guarantee
88,121,814
10,484,850
1,668,000
60,641,997
160,916,661

Note: the classification of banks into groups of a certain size is sourced from the Bank of Italy.

Source: Based on Banca del Mezzogiorno and Medio Credito Centrale data

In the first half of 2015, there was a strong acceleration in the Fund's operations. The numberof funding transactions for innovative startups rose from 98 to 342 in the first six months of2014 (up 249%); the total amount of guaranteed loans increased by 41.5%, in line with thetrend of the guarantees granted (39.6%).
The rise mainly concerned counter-guarantee transactions and those for loans of up to 18
months.
The funding of companies in the industry sector increased more than the average comparedwith other sectors. The most significant increases were in the Centre-South and North-East.
Table 3.3 Trends in the Fund's interventions in favour of innovative startups in the firsthalf of 2015 (% change compared to the first half of 2014)
Transactions

Funding

Public guarantee

Direct guarantee

209%

35.1%

35.6%

Counter guarantee

771%

745.0%

646.0%

Short-term loans

444%

291.7%

265.1%

Medium and long term loans

205%

32.5%

31.7%

Industry211%

105.1%

105.4%

Services

269%

25.6%

23.5%

North-East

162%

90.5%

88.3%

North-West

311%

29.4%

29.9%

Centre436%

151.1%

142.3%

South

175%

120,0%

120.4%

Total

249%

41.5%

39.6%

Source: Based on Banca del Mezzogiorno and Medio Credito Centrale data

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87Annual Report on Innovative Startups and SMEs – 2015

3.4 Tax incentives for investments in equity
Historically, Italian SMEs have had to face structural problems such as under-capitalizationand their small size. These factors limit investment opportunities and, ultimately, produce anegative impact on the innovative potential of the business system.
Private equity and venture capital are the main alternative to bank loans in order to growcompanies. The venture capital investment market is a form of financing frequently used inmany countries, involving transactions regarding the temporary acquisition of shares incompanies in order to sell them over the medium/long term, thereby creating a capital gain.
In Italy, this pattern is less pronounced. In 2014, the total amount of investments in private
equity remained significantly below the levels recorded in countries such as France, Germany,
Spain and the United Kingdom. Italy's contribution to the European total is 1.7%, down from
3.1% last year, compared to 35% in the UK, 21.5% in France, 13.8 % in Germany and 2.3% inSpain.35
In particular, the weakest link in Italian capital investments is venture capital – which
concerns risk capital for companies in the startup phase or consolidation capital in sectors
with high growth potential. Italy's contribution to the European total in this particular market
segment in the last year was 0.9%, down from 1.3% in 2013.
In 2014, there were only a few dozen companies involved in venture capital investments in
Italy, compared with 866 German, 461 French, 388 British and 86 Spanish companies.
Considering the overall amount of investment in relation to GDP, the Italian market is five totwenty times lower than that of our main competitors.
According to data provided by AIFI36 (Italian association of private equity and venture
capital), early stage funding (seed and startup) showed a slowdown both in terms of thenumber of transactions, which reduced from 158 in 2013 to 106 in 2014 (a decrease of 33%)
and in the amount invested, which decreased by 48% (€43 million in 2014 against €81
million in the previous year). The average investment fell by 21% to €406,000, compared to€513,000 in 2013.
An important role in the venture capital market is covered by ‘angel investing’, which is thefirst link in the chain of financing venture capital. Angel investors are individuals who directly
invest part of their assets in the early stages of starting a business project, also assuming
management responsibility alongside the project's protagonist. Compared to early stage andventure capital operators, business angels invest smaller amounts, but more quickly,intervening at the earliest stages of business.
The Italian market is lagging way behind France and Spain, the European countries that are
more similar to Italy in terms of culture and experience in industry. The number of startups
involved in investment transactions is from 6 to 9 times lower and the number of authorisedbusiness angels is from 3 to 6 times lower.37
According to data provided by IBAN (Italian Business Angel Network)38, after a few years with
virtually no change, 2014 saw strong growth in investment by business angels in Italianstartups, up 45% compared to 2013 for a total of €46 million, with 135 transactions. The total
35 EVCA, 2014 European Private Equity Activity, May 2015.
36 AIFI Il mercato italiano del Private Equity e Venture Capital nel 2014, March 2015.
37 EBAN, Statistics Compendium 2014.
38 IBAN, Summary Survey 2014, June 2015.

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88Annual Report on Innovative Startups and SMEs – 2015

number of transactions was reduced – 135 in 2014 against 324 in 2013 – but the average
investment increased by more than three times – €351,000 compared to €98,000 last year:
following a trend that is more and more widespread; investors tend to group together toincrease the amount of funding and reduce the risk.
The Venture Capital Monitor Report 2014 shows more encouraging signs39, produced by the
Venture Capital Monitor – VeMTM, which operates at LIUC – Cattaneo University and at the
AIFI, which outlines an improved scenario in the regard to investments in new companies.
According to the figures in the report, in 2014 there was a new peak for investment activity inthe early stage segment in this country.
Policies to encourage the growth of the venture capital market have been introduced in Italy
in recent years, both in terms of the players operating in this field and as regards available
capital and employees.
In particular, in order to strengthen the propensity for investment activities in the seedcapital segment and increase the ability of startups to attract private capital, in 2012 theauthorities opted for the use of leverage by introducing tax incentives of a temporary nature,
for the three-year period 2013-2015.40
Article 29 of Decree-Law 179/2012 provides that natural persons who invest, with cash
contributions, in innovative startups, are allowed a deduction from gross income tax equal to19% of the amount invested, up to a maximum amount of €500,000. Companies, on the other
hand, are allowed a deduction from taxable income of 20% of the amount invested in sharecapital, subject to a maximum amount of €1.8 million.
The deduction rate for natural persons increases to 25% and the rate for companies isincreased to 27% for investments in innovative startups with social goals, or which
exclusively develop and market innovative high technology products or services for theenergy industry.
These tax incentives are valid for both direct investments in startups, and indirect
investments, through Collective Investment Entities (UCI) or other companies that invest
primarily in this type of business.
A limit has been set on investment eligible for the tax concession for each individual target
company. The total amount of contributions made in each relevant tax year must not exceed€2.5 million per individual innovative startup. Should a startup, in a subsidised tax period,
have received cash investments for a total amount exceeding the threshold, none of theshareholders who have made the relevant investments and are thus potentially eligible for thetax concession is entitled to deduct any amount for tax purposes.
The benefits are not granted to innovative startups and certified incubators or mutual funds
or other companies that invest primarily in innovative startups to avoid encouraging fictitious
duplications of investments, as well as ensuring the introduction of new capital in innovative
startups. The exclusion from access to the tax concessions in respect of persons who exercise

39 LIUC AIFI Venture Capital Monitor – Italy Report 2014. The aim of the report is to collect and analyse astructured set of detailed information relating to venture capital transactions carried out in Italy. To this end, thefollowing were taken into account: "initial" investments made by institutional investors in private risk capitaland other categories of operators active in the market (angel investors, angel investing operators, seed capitalfunds) classified as early stage transactions (seed capital and startups).
40 Decree-Law no. 76/2013, converted with amendments by Law No. 99/2013 (the so-called Work Decree)extended the tax benefits originally planned for the period 2013 to 2015 to 2016. This extension is subject tospecific notification of the European Commission.
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Annual Report on Innovative Startups and SMEs – 2015

a significant influence on innovative startups either directly or indirectly throughsubsidiaries, or jointly with family members, is also provided for.
On 6 December 2013, following notification by the Ministry of Economic Development, thisState aid measure was authorised by the European Commission, because it is compatible with
the internal market under Article 107(3) c) of the TFEU.
The decree that establishes the procedures for implementing the tax concession was signed
on 30 January 2014 by the Minister of Economy and Finance, together with the Minister of
Economic Development, and published in the Official Gazette, General Series No. 66 of 20
March 2014.41 The Italian Revenue Agency Circular No. 16/E dated 11th of June 2014provided all taxpayers with a detailed clarification summary concerning the correct use of this
instrument.
Revenue Agency data in tax returns for the 2013 tax period, acquired via the 2014 tax returns,
show that 338 innovative startups directly or indirectly received investments in venture
capital from natural persons. 32 intermediaries were also funded, namely mutual funds orother investment companies specialised in startup investments.
Investments directly or indirectly related to startups amounted to a total of €13.6 million, on
average just over €40,000 per startup. The minimum investment in a registered company was€99, with the highest amount being almost a million.
Indirect investments aimed at mutual funds or other specialised investment companies
reached just over €900,000. On average, €28,200 was granted to each intermediary.
Overall, in 2013, the first year of application of the tax benefit, taxpayers who are natural
persons directly or indirectly invested a total figure of €14.5 million in innovative startups.
Direct investments represented a share of 94.2% of total contributions. With regard to theinnovative startups that received investments, there were 2 investors per startup on average,
ranging from a minimum of 1 to a maximum of 17.
13.1% of investments involved 40 innovative startups with social goals or that exclusively
develop and market innovative products or services with high technological value in theenergy industry.
47.1% of the overall amount of the investment benefitting from this tax concession involved
startups in the North-West (35.5% in Lombardy), followed at a distance by startups in the
North-East, with 25.9% (9% in Piedmont companies, 8.6% in Friuli Venezia Giulia), the Centreof Italy followed with 20.4% (12.5% of startups in Lazio). Innovative startups in the South
managed only 6.6% of the contributions (3.1% in Campania). The average investment per
target company was higher than the average in the North-West (€47,000) and in the NorthEast (€43,500). The most significant incentivised investments at regional level were realised
in Friuli Venezia Giulia (€129,000). 78.7% of the target companies operated in the services
sector and 70.5% of the contributions involved this type of company, while 27.5% went toindustrial companies, which represented 16.3% of the 338 companies, but which received anaverage of €68,000 of subsidised investment against €36,000 in service companies.
The 717 people who invested in startups invested a minimum of €99 to a maximum of€500,000, an average of about €20,200 each. Of these, 69 also or exclusively made indirect
41 A draft decree was notified to the European Commission on 25 August 2015. It substituted the existing decree,which extends the duration of the incentives to the tax year 2016 and introduces some changes to theimplementation methods, implementing the new Community guidelines on state aid to promote investment inrisk financing (2014/C 19/04, published in the Official Journal of the European Union C 19 of 22 January 2014).
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investments, with an average of €16,100 each, while there were above average investments(about €20,500) by the 652 people who made direct investments. Only 3 taxpayers made both
direct and indirect investments.
In total almost €2.9 million, on average of €4,000 per taxpayer, was granted in deductions
from taxable income.
Table 3.4 Incentivised direct investments by natural persons in 2013 by region inwhich target innovative startups were located42
Regions
Lombardy
Lazio
Piedmont
VenetoFriuli Venezia Giulia
Emilia-Romagna
TuscanyCampania
Trentino-Alto Adige
Liguria
Sardinia
MarcheSicilyApuliaUmbriaValle D'Aosta
AbruzzoCalabria
Basilicata
MoliseNorth-WestNorth-East
CentreSouth
Italy

Startups
93
37
33
33
9
27
22
15
12
9
8
13
11
7
1
1
3
2
1
1
136
81
73
48
338

Investments
4,831,977
1,699,701
1,351,110
1,229,478
1,165,410
875,453
853,892
423,591
255,578
176,541
169,150
142,074
138,694120.00383,70038,00024,75014,7501,413
1,300
6,397,628
3,525,919
2,779,367
893,651
13,596,565

%
35.5%
12 5%
9.9%
9.0%
8.6%
6.4%
6.3%
3.1%
1.9%
1.3%
1.2%
1.0%
1.0%
0.9%
0.6%
0.3%
0.2%
0.1%
0.0%
0.0%
47.1%
25.9%
20.4%
6.6%
100.0%

Average investment
51,95745,93840,94337,257
129,490
32,42438,813
28,23921,298
19,61621,144
10,92912,60917,14383,70038,000
8,250
7,375
1,413
1,300
47,04143,53038,074
18,61840,227

Source: Based on Italian Revenue Agency data

42 The table does not include indirect investments when the target investment is not an innovative startup.

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91Annual Report on Innovative Startups and SMEs – 2015

Chart 3.3 Incentivised investments by natural persons in 2013, by the businesssegment of the target innovative startup43
100%

80%

70,5%
60%

78,7%
SERVIZICOMMERCIO
INDUSTRIA

40%
2,0%
20%

5,0%
27,5%
16,3%

0%
StartupInvestimenti

Source: Based on Italian Revenue Agency dataTax returns data for the 2013 tax period acquired from the tax returns of limited companies
presented in 2014 show that there were 126 innovative startups that have received direct orindirect investments in venture capital from companies. 15 intermediaries were also funded,these were mutual funds or other investment companies specialised in startup investments.
Incentivised investment reached the sum of €12.2 million, an average of €97,000 per startup(although the median value was €20,600): the minimum investment in a registered company
was €141, while the highest was €1.8 million.
Indirect investments focused on mutual funds or other investment specialised companies
amounted to almost €1.5 million. Each intermediary received €99,200 on average.
In 2013, the first year of application of the tax benefit, joint-stock companies invested €13.7
million in innovative startups overall.
The number of investors for startups ranged from a minimum of 1 to a maximum of 3.
Indirect investments had a 63.7% share of the total (divided into 43.1% invested throughother companies that mainly invest in innovative startups and 20.6% by UCIs). Direct
investments were in the minority (36.3%).
24.4% of investments went to 22 innovative startups with a social goal or that exclusively
develop and market innovative products or services with high technological value in theenergy industry.
47.3% of the total amount of subsidised investment aided involved startups in the North-East(38.4% in Emilia-Romagna), followed by startups in the North-West with 30.2% (25.9% incompanies in Lombardy), a lot more than in the Centre with 18.3% (almost all in startups in
the Lazio region). Innovative startups in the South received just 3.8% of the contributions(1.2% in Apulia).
43 The table does not include indirect investments since the target investment is not an innovative startup.

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The average investment per target company was considerably higher in the North-East,
where it exceeded €175,000. The most significant incentivised investments at regional level
involved the Emilia-Romagna region (averaging €361,000). Startups in Abruzzo, Basilicata
and Valle d'Aosta did not receive any subsidised investments from joint-stock companies.
Despite the fact that 76.2% of the target companies were service sector companies, only
42.8% of the contributions went to this type of company, while 54.4% went to industrial
companies, with an average subsidised investment of €333,000 versus €55,000 for service
sector companies.
The 127 joint-stock companies invested a minimum of €100 to a maximum of €2 million,
about 108,000each on average, even though the median was just over €17,000.
Of these, 65 completed indirect investment transactions, on average of approximately€138,000 each, while for the remaining 62 companies that made direct investments, theaverage was lower (€77,100). There were no investors who carried out both direct andindirect investment transactions.
21 companies invested in startups with a social goal or operating in sectors with hightechnological value in the energy industry, with a value per investor of €142,000, higher thanthe overall average.
Altogether, almost €3 million of deductions from taxable income were granted, on average€23,300 per investor.

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Table 3.5 Incentivised investments by joint-stock companies in 2013 by region wheretarget innovative startups are located44
Regions
Emilia-Romagna
Lombardy
Lazio
VenetoPiedmont
Tuscany
Trentino-Alto Adige
Friuli Venezia Giulia
ApuliaCampania
MoliseSicilySardinia
Liguria
MarcheUmbriaCalabria
North-WestNorth-East
CentreSouth
Italy

Startups

Investments

%

13
37
16
14
9
11
3
3
2
5
1
2
5
1
2
1
1
47
33
30
16
126

4,699,166
3,173,620
1,780,671
505,460
499,477
476,417295,614
295,003
146,500
123,225
90,00072,23535,97428,38817,2504,000
2,500
3,701,485
5,795,243
2,278,338
470,434
12.245.500

38.4%
25.9%
14.5%
4.1%
4.1%
3.9%
2.4%
2.4%
1.2%
1.0%
0.7%
0.6%
0.3%
0.2%
0.1%
0.0%
0.0%
30.2%
47.3%
18.6%
3.8%
100.0%

Costs
Medium361,474
85,774111,292
36,10455,49743,311
98,53898,33473,25024,64590,00036,118
7,195
28,388
8,625
4,000
2,500
78,755
175,61375,94529,40297.187

Source: Based on Italian Revenue Agency data

44 The table does not include indirect investments since the target investment is not an innovative startup.

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Graph 3.4 Incentivised direct investments by joint-stock companies in 2013 bybusiness sector of target innovative startups45
100%

80%

60%

42,8%

76,2%

2,8%

SERVIZICOMMERCIO
INDUSTRIA

40%
54,4%
20%

7,9%
15,9%

0%
StartupInvestimenti

Source: Based on Italian Revenue Agency data

To conclude, in 2013 there were a total of 844 investors (natural persons and companies)
who directly or indirectly invested in innovative startups with funds amounting to €28.2
million:

In particular, investments from natural persons amounted to €14.5 million (of which€0.9 million as indirect investments) and involved 338 innovative startups. Deductions
from IRPEF taxable income for almost €2.9 million were granted;

Companies made subsidised investments for the overall amount of €13.7 million (€1.5
million of which as indirect investments) which involved 126 innovative startups.
Deductions from IRES taxable income for almost €3 million were granted;

Furthermore, according to AIFI data, in 2013 early stage segment investments amounted to€81 million; the share of investments subsidised by this measure was almost a third of themarket's total.

45 The table does not include indirect investments when the target investment is not an innovative startup.

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References
AIFI, Il mercato italiano del Private Equity e Venture Capital nel 2014, March 2015.
EBAN, Statistics Compendium 2014
EVCA, 2014 European Private Equity Activity, May 2015.
IBAN, Sintesi Survey 2014, June 2015.
LIUC, AIFI, Venture Capital Monitor – Italy Report 2014.

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3.5 Equity crowdfunding
2014 was the first year of implementation for the legislation on equity crowdfunding,introduced by Decree-Law 179/2012 and governed by the Consob in accordance withdelegated Regulation No. 18592 of 26 June 2013.
Italy was the first country in the world to regulate equity crowdfunding. While this followed
the US legislation introduced with the Jumpstart Our Business Startups Act (JOBS Act), theSEC has, however, not yet, followed up on this with secondary legislation under its
responsibility. This was to leave room for individual state laws with regard to offers made in
their respective territories.
After Italy, other EU countries have adopted national legislation on crowdfunding, concerning
both crowdfunding investment (equity or bonds) and loan based crowdfunding (peer to peer
lending). In particular, this subject is regulated by specific provisions in the UK, France,
Germany and, most recently, in Austria, while other countries like Spain and Finland areconsidering the introduction of specific rules46.
However, crowdfunding as an alternative means of funding for companies or individual
productive initiatives is taking place in almost all EU countries, even in the absence of specificlegislation.
The statistics about this show an average annual growth of equity-based crowdfunding inEurope (excluding the UK) of 116% (€18.4 million in 2012; €47.5 million in 2013; €82.6
million in 2014) while in the UK alone the estimated equity capital raised in 2014 amounted
to approximately €111 million with an average growth of almost 200% per year, starting in
2012.47
The following table shows the equity capital raised (in million Euro) for the year 2014 in theEuropean countries that are the most active countries in the field:
ITALY

SCANDINAVIA

SPAIN

NETHERLANDSFRANCEGERMANYGREATBRITAIN

1.3

3.7

10.5

11.2

18.9

29.8

111

However, it seems clear that the coexistence of non-harmonised national rules or a lack ofregulations may be an obstacle to the development of initiatives that can make a decisive
contribution to the financing of the economy, thus limiting the potential of the Internet for
raising capital even beyond national borders.
With the intention of analysing the existing regulatory framework applicable to crowdfundingtransactions and with the aim of achieving greater regulatory and supervisory convergence inthe European Union, the ESMA (European Securities and Markets Authority) published an
46 For a full review of the current regulation regarding crowdfunding in Europe, North America and Israel, see

ECN Review of Crowdfunding Regulation 2014.
47 For a full dimensional analysis regarding the development of alternative finance in the UK and in othercontinental European countries, please see the study "Moving mainstream – the European Alternative Finance
Benchmarking Report", University of Cambridge and EY, from which the data in question was drawn. Specificdata on alternative finance in the UK is also available in "Understanding Alternative Finance – The UK alternative
Finance Industry Report, 2014", NESTA and University of Cambridge.
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Opinion by the competent National Authorities and Advice to the European institutions inrelation to investment-based crowdfunding (acquisition of equity or debt), which identified
crowdfunding as one of the potential areas for financial market regulation in the coming
years.
The potential and risks of the phenomenon were also considered by the European
Commission in its Communication "Realising the potential of crowdfunding",48 which was
followed by the establishment of study groups among operators and experts in the field andthe publication of a "Guide for SMEs. What is Crowdfunding?". Most recently, the Green Paperon the Capital Market Union also drew attention to crowdfunding as a tool for the possible
development of the real economy in Europe.

ANALYSIS OF THE EMPIRICAL EVIDENCE
Since the entry into force of the Regulations, many operators of online portals have shown
interest in the phenomenon requiring commercial registration of portals maintained by theConsob, to support innovative startups that, through the portals, can directly collect venture
capital, thus increasing the financing channels at their disposal. However, the impact of thetool is still limited in terms of capital raised and the companies involved.
For the purposes of this report, the data is presented in two ways. On the one hand, in orderto preserve the relevance of the information, the latest available data is shown, updated to
31 August 2015 by Milan Polytechnic’s Crowdfunding Observatory. On the other hand, inorder to investigate the phenomenon in depth, ample space is given to the analysis
performed by Consob on information dating back to 31 March 2015, the acquisition date of
the annual reports on the activities carried out by operators of portals during the previous
year.
DATA ANALYSIS AS OF 31 AUGUST 2015

As of 31 August 2015, there were 17 portals entered in the Register, including 16 authorised
by Consob and registered in the "ordinary section" and 1 operating under its entitlement
pursuant to current legislation and recorded in the "special section of the Register" (which
can be accessed, in accordance with the law, by banks and investment firms authorised toprovide investment services) following the prescribed notification to Consob. Of the 18
registered portals, 8 of them have notified their start of operations and published offers on
their portals.
A total of 25 offers were displayed on the operating portals. On average, the capital requested
amounted to approximately €342,000 per project, with a minimum of €80,000 and amaximum of €750,000. The average share of venture capital on offer was 23.74%.
Of the 25 available services, 8 ended up operating successfully (36.4%), while, of the other 17,
14 had closed without success and 3 were still in progress. The total funds requested bystartups that have published their offers through the portals amounted to €8,545,976, while
the figure for those actually finalised, which is a first estimate of the potential for capitalraising through online portals, amounts to little more than €2.3 million, equal to 33.3% of theoverall capital raised by the completed offers.

48 COM (2014) 172 final of 27 March 2014.

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Below is a brief description of 8 startups that successfully closed their equity crowdfunding
campaign:
Diaman Tech (Marcon, Venice) was founded as a spin-off of Diaman Holding Group's
technological activities and software. It has become one of the leading suppliers of financial
software. It developed “Ex-ante” and “Bond Selector”, two software programs incorporating
new generation statistical indicators. In three months, it raised €157,780 from 50
shareholders for 20.31% of its capital through the Unicaseed platform (campaign concluded
in March 2014).
Cantiere Savona (Savona Shipyard) (Gonnosfanadiga, Medio Campidano): studies innovative
solar energy technologies applied to boating. In particular, it designs and markets a newconcept of eco-friendly yachts. The starting point is to rationalise consumption and emissions,while reducing costs for the owner and for future generations. It raised €380,000 through theStartUp platform from 44 investors for 20.02% of the capital (July 2014).
Paulownia Social Project (Rome): its activities concern tree plantations with rapid growth: theraw material it gets is intended to be included in the Italian and international wood supply
chain. The company raised €520,000 in 56 days from 12 investors for 86.67% of the capitalthrough Assiteca Crowd (August 2014).
Nova Somor (Rimini): its mission is the realisation of a specific product: a low temperaturesolar thermal power engine for the recovery of water. Electricity can be replaced withsunlight in many areas through the careful and innovative application of thermodynamics at
low temperature. Moreover, in other situations, the heat that is lost, and hence wasted, can beused to increase the efficiency and ecology of existing systems without making changes thatare too demanding. The company is developing a range of products to offer to the market. It
raised €250,000 for 16.67% of the share capital through the StartUp platform (December2014).
ShinSoftware (Lesa, Novara) developed a computing platform, SHOWin3D, which allows theconversion of CAD files (essential for the production of any object) into interactive 3D
renderings, which anyone can visualise in a truly intuitive manner and without any
knowledge or computer skills, using the main browsers on a computer, tablet or smartphone.
It raised €402,000 in five months through Assiteca Crowd, involving 19 investors who
invested €21,000 each on average for a total of 34% of the share capital (in March 2015).
BIOerg (Jesi, Ancona): this company produces dextran, a versatile natural synthetic polymer
that is currently only used in the pharmaceutical industry due to its high sales price. The
company has isolated a microbe that is hyper-productive of dextran and has optimised its
growth medium, considerably reducing production costs and therefore its market price. In
this way, it has opened the way to new applications such as cosmetics, the food industry,healthcare sector and the recovery of wastewater. It raised €452,000 for 44% of the sharecapital from 56 members in 65 days via the Next Equity platform (April 2015).
Cynny Spa (Florence): this company creates interactive videos that adapt to those who arewatching them. The footage generated by the app changes at the moment it is seen, adapting
to the tastes and characteristics of the audience. The contents are defined by the
manufacturers, but they are directed by those who watch them. It raised €54,288 for 0.17% of
the share capital in a month and a half through the StartUp platform (June 2015).
OpenTail Srl (Milan) developed TocTocBox, a collaborative platform which connects those
who need to ship goods and all kinds of products with carriers travelling over any distance. It
raised €96,294 for 47% of the share capital from 32 investors in 170 days through the
Crowdfundme platform (August 2015).
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99Annual Report on Innovative Startups and SMEs – 2015

DATA ANALYSIS AS OF 31 MARCH 2015
The following is a preliminary analysis on the operation of equity crowdfunding portals on
the Consob register since its establishment, based on the information available on 31March
2015, the date on which Consob acquired the annual reports on the activities bymanagement portals during the previous year.
As of 31 March 2015, there were 6 operating portals, of which 5 were authorised by theConsob and registered in the "ordinary section" of the register, and one operating portal
operating as of right. Overall, there were 15 authorised portals at that date.
The relationship between licensed operators and operators entitled as of right is muchhigher than could be expected (14) and of the 14 licensed operators only 5 (35%) wereoperational at the time of the survey, while only 3 (21%) had published successful offers.
Of the 3,883 innovative startups registered at 4 May 2015 in the specific section of theCompanies Register, only 18 (0.46%) opted for funding through online portals. The numberof companies is not particularly large, although it is growing, and it seems, at present, little
interested in opening its capital through equity crowdfunding. This assessment, however,remains partial and temporary, since the number of companies with access to equity
crowdfunding is being enlarged by the legislative changes introduced by the Investment
Compact, which also includes innovative SMEs as parties who may offer their securities
through online portals.
MAPPING OFFERS
The range of offers available on online portals is still quite limited. Up to 31 March 2015, as
just pointed out, a total of 18 offers have been displayed on the portals. On average, the capitalrequested amounted to approximately €342,000 per project, with a minimum of €80,000 anda maximum of €750,000.
Of the 18 offers on display, 4 ended successfully (in one of the three cases, the amount raised
was even slightly higher than the amount requested); while of the remaining 14, 7 were
unsuccessful while 7 were still in progress.49 The total funds required by startups that havepublished their offers through the portals amounted to €8,545,976, while the figure for thoseactually finalised, which is a first estimate of the potential for capital raising through online
portals, amounts to little more than €2.3 million, equal to 33.3% of the overall target capital to
be raised by the concluded offers.
With reference to the offer period, the data shows that the range varies between 2 and 6
months (three months on average).
In order to understand the real extent of the phenomenon as a tool for raising venture capitalfrom innovative startups, an evaluation of economic data relating to those that have so far
been concluded can be performed.
The issuing companies are rather varied in regard to the capital already subscribed at thetime of the offers. Of the 11 companies that had offers completed by 31 March, 6 had a sharecapital of between €10,000 and €25,000, whilst the remaining 3 were at around a 10 times
49 At 30 June 2015, there were 25 published offers in all, of which 7 were concluded successfully, with total

sales of €2.3 million (Source: Milan Polytechnic University - Observatory on Crowdfunding).
Italian Ministry of Economic Development

100Annual Report on Innovative Startups and SMEs – 2015higher level (€80,000, €90.000 and €112,000). The average capital (about €40,500) is
therefore not very representative.
As for capital requested online, it does not appear to be directly related to the amount of preoffer capital. The relationship between the two amounts indicates the impact that offers haveon the ownership structure, and the intensity with which the founder has invested in the
project before turning to the market. The amount of capital raised was €238,763 on average.
Smaller companies (€10,000 – €25,000 of share capital), as one might expect, are the ones
that set lower targets for capital raising (between €99,000 and €250,000) compared to theother three which were significantly more capitalised, and requested €520,000, €250,000 and€380,000. However, it can be argued that the less well-capitalised issuers have been the most"ambitious", considering the magnitude of the demand compared with the share capital. They
"asked" for crowdfunding of €10, €15 and even €20 per share, while the ratio for the otherthree drops to €7 for the company with €80,000 in capital, and€3 for the two more
capitalised businesses.

INVESTOR CHARACTERISTICS
An analysis of subscribers is essential to check that their characteristics adhere to thoseenvisaged when the new regulations were introduced. In theory, equity crowdfunding isbased on direct investment, in very small amounts, by a wide range of investors, based above
all on emotional components that lead to "belief" in the promoter of the project being financed
as well as in its potential, and where the operator of the portal plays the role of facilitating themeeting between funding demand and supply. The widespread nature of the funding also
avoids the risk of a change of control after the offers.
When the number of investors is reduced, or when the average amount of subscriptions isincreased, the structure of the investment becomes similar to a ‘club deal’. This is a mode ofcorporate acquisition by a group of angel investors and private equity firms, who join forces
to share the high risk involved in the development phase of a startup. A club deal is usuallycharacterised by elements of opacity (needed to make certain investment opportunities) that
renders it not entirely comparable to the dynamics of crowdfunding.
However, in a constantly changing financial system, to describe the model that emerges fromthe initial data collected, it is useful to use the image of "private equity online" or "club deal
online", a small number of shareholders making offers of substantial amounts. This still allows
the issuer to exploit the potential benefits offered by the internet, by submitting offers on
specialised portals to expand the opportunities for raising capital.
The available data involves a restricted set of cases, and therefore, general conclusions cannot
be based on them; instead, they provide evidence of the introductory phase of equity
crowdfunding in Italy, which will certainly be re-evaluated in a broader sense and with a more
complete base database. However, for the moment it is possible to highlight the small numberof subscribers who made successful offers: 134 parties50 of which 16 were legal entities, withan average of 33 investors (approximately) per offer, with a minimum of 3 and a maximum of
75 subscribers.
The range of subscriptions helps us to understand better the medium to large size of thesubscriptions for shares. The smallest investment of the 134 considered amounted to €400,
whilst the highest was €150,000. The average value of a single subscription, obtained by
50 Two of which subsequently withdrew their subscriptions.

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dividing the total amount raised (€1,307,780) by the number of investors (132, taking
withdrawals into account), was close to €10,000 (€9,907.42).
One last matter of importance concerns the contribution of funds from small investors. To
identify these investors, the distribution of investors compared to the threshold of €500(€5,000 for legal entities) was taken into account, as identified in the Regulations on equity
crowdfunding (Article 17, Section (4)) for application of the assessments required by MiFID
by intermediaries responsible for executing orders. In the light of the available data, it ispossible to highlight how sub-threshold investments involved a number of parties (67 out of134) with a "weighting" of less than 4% in terms of the amounts subscribed.51
A final element in the assessment concerns the role of institutional investors. Based on datacollected, they represent 4.4% of total subscribers (6 out of 134 parties, including one
incubator52). In terms of value, on average 12.42% of the target capital to be raised was
subscribed, reaching a value almost three times higher than the requirement imposed by theRegulations on equity crowdfunding (5%).

THE ENVIRONMENT
Finally, available data made it possible to undertake initial assessments on indicators ofcorrectness of the activities carried out by crowdfunding operators. In this regard, it is notedthat as of 31 March 2015:

no interim measures had been adopted or sanctions brought against the operators;

no complaints had been lodged with Consob in connection with crowdfunding;the value of subscriptions for which the cancellation option was exercised was equal to€10,499, corresponding to less than 1% of the capital raised;

no complaints had been received by operators about the unlawful exercise of theiractivities;

there was no evidence of fraud to the detriment of investors through equity
crowdfunding.

These factors, which must certainly be assessed on the basis of more complete data, are, atpresent, an initial encouraging sign regarding the conduct of portal operators and the creationof a reliable environment for investors.

CONCLUDING CONSIDERATIONS
The analysis of operations for the first year of implementation of the legislation on equity
crowdfunding shows that the market has not yet found a way to ensure meaningful
development.
The Investment Compact has increased the services provided to the equity crowdfunding
51 In particular, with regard to natural persons, there were 57 subscriptions of less than €500, for a total

subscribed amount of €27,022, compared with 59 "above-threshold" subscriptions amounting, in terms of value,to €758,570. However, if we consider legal persons alone, there were 10 "sub-threshold" subscriptions totalling€23,169 and 5 "above-threshold" subscriptions totalling €249,019.
52 In addition, a bank foundation subscribed to an offer that did not have a positive outcome.

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market as well as admitting innovative SMEs, UCIs and companies that invest mainly instartups and innovative SMEs, the latter being an extension that enables investment
portfolios.
An intervention appears to be necessary in respect of the regulation of equity crowdfunding
to implement these changes, as well as an intervention in respect of the framework, which,about two years after its launch, appears restrictive in operating terms.
To this end, on 19 June 2015, Consob published a "Consultation Document" on its website,with a questionnaire attached, which was designed to acquire assessment elements,
supported by evidence, from all of the stakeholders in this phenomenon (portal operators,
issuers, investors, incubators, scholars, etc.) regarding the charges and effectiveness of theregulations, which will be evaluated in the forthcoming review.

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References
European Crowdfunding Network, ECN Review of Crowdfunding Regulation 2014, December
2014.
NESTA and the University of Cambridge, Understanding Alternative Finance – The UK
Alternative Finance Industry Report, 2014, November 2014.
University of Cambridge and EY, Moving mainstream – the European Alternative Finance
Benchmarking Report, February 2015.

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3.6 Internationalisation services of the ITA and ItaliaRestartsUp
The Italian Trade Agency (ITA)53 – the agency for the promotion abroad andinternationalisation of Italian companies – supports startups as part of its institutional
mission, as specified by Article 30, Sections (7) and (8) of Decree-Law 179/2012. In regard ofthis legislation, reference is made to Resolution 84 of 2013 from the ITA Board of Directors,
which provides for a 30% reduction in the costs of services rendered to innovative startups
included in the registers kept by the Chambers of Commerce. Whilst implementing the law,
ITA offers selected startups the opportunity to take part in certain promotional events free ofcharge, depending on the availability of human resources and funds. The main activities
carried out in 2014 are explained below, with brief details on those still pending or carriedout in 2015.
2014 EVENTSThe Office for supporting strategic planning, studies and the international network, in linewith the provisions of the new organisation and operating regulations approved by the interministerial decree of 28 December 2012, managed certain informational, support andpromotional activities for the benefit of Italian innovative "startups" that were deemedworthy of special incentives for development and promotional activities in foreign markets.
To this end, an innovation and startups unit was formed, composed of four officials who havebeen entrusted, amongst other things, with the activities described below.
Participation with innovative startups in foreign fairs
The participation of Italian innovative startups in numerous international fairs was organised.
They were essentially matchmaking initiatives, aimed at facilitating meetings between
startups and venture capitalists, private equity funds and research and development.
A total of 51 innovative startups were involved:


Mobile World Congress, Barcelona 24-27 February 2014. This is the most important
global event in the mobile phone industry. The Agency presented 6 startups.



CeBIT, Hannover, 10-14 March 2014. This event is one of the most prestigious trade
fairs dedicated to ICT. 8 innovative startups were involved in this event.

Game Connection USA, San Francisco 17-19 March 2014. The biggest international
event for gaming. Three startups were involved in this event.

GEC, Moscow 17-20 March 2014. This is a world-renowned event for promoting public
policy and debate on innovation and entrepreneurship. 6 startups were involved inthis event.



ECCM16, Seville, 22/26 June 2014. The event was defined as a science and technology
workshop dedicated to composite materials. Two innovative startups were involved inthis event.

53

The Italian abbreviation for the ITA is the ICE. Since 2011, its full name is ‘ICE - Agenzia per la promozione all'esteroe l'internazionalizzazione delle imprese italiane’
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

Webit, Istanbul 1-2 October 2014. This is an event for digital technologies with a global
reach. Seven startups were involved in this event.



Pioneers Festival, Vienna, 20-30 October 2014. An important international event fortechnology startups and venture capital investors. Twelve innovative startups wereinvolved in this event.

Game Connection Europe, Paris 29-31 October 2014. This is the European edition ofGame Connection. Four innovative startups were involved in this event.

ItaliaRestartsUp
The "ItaliaRestartsUp" initiative was held in Milan and other cities on 9 and 10 December
2014, and was organised in collaboration with the Ministry of Economic Development.
An independent committee composed of professional investors chose 69 currently expanding
startups from over 200 candidates, with the aim of achieving investment plans for developing
their innovative projects.
The first day involved a conference focused on the characteristics of the national innovation
ecosystems. This was followed by specialist panels aimed at international investors about
investment opportunities in Italy in four strategic areas (digital and media, software andelectronics, life sciences, green technology and renewable energy). There were also B2B
meetings between more than 50 international investors chosen by the ITA offices abroad in
23 countries, plus the Italian startups admitted to the event.
The second day involved guided tours for international investors from 4 regional ecosystems:
Rome, Turin, Milan and Rovereto, one from each of the four thematic areas discussed by thevertical panels.
A new website dedicated to ITA initiatives for the internationalisation of innovative
companies: www.innovationitaly.it was also launched during these two days.
The initiative was a great success according to the participants: responses to a customer
satisfaction survey about the results of the investment, collected 7 months after the event,showed that in some cases, the contacts made during the event had continued, highlighting
the strong interest of the participants in a new edition of ItaliaRestartsUp in 2015. In
particular, only 6 of the 21 foreign investors who responded did not maintain contact withany Italian startups; 10 had developed relationships with a number of startups from 1 to 5, 2
between 6 and 10 and 2 with more than 10 businesses.
Bio International Convention 2014
The Bio International Convention is the largest biotechnology fair in North America. In
collaboration with Federchimica-Assobiotec, ITA organised the participation of 3 Italianinnovative Startups at the edition held in San Diego between 23 and 26 June 2014.
Innovation and high technology exchange – 2014 edition
BIAT – the Innovation and High Technology Lab is a measure funded by the Exports Plan for
the Convergence Regions (Pesrc), in other words Calabria, Campania, Apulia and Sicily, of
which ITA is the management agency on behalf of MiSE. It was developed to support

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companies in enhancing, marketing and exporting the results of innovative research, in
relation to patents or products with a high technological content.
Through this new promotional format, which happens on an annual basis, intangible property,
particularly patents, are considered as codified knowledge that can be exported like otherproducts.
The aim is to develop systematic opportunities for industrial applications, from which both
Italian and foreign entrepreneurs can benefit.
The first edition of BIAT, held in Naples at the end of 2014, made it possible to match businessand technology supply and demand between inventors (startups, micro, small and mediumsized innovative companies, universities, technology centres) and their foreign counterparts(large companies, venture capitalists and others). The focus sectors considered were
aerospace, nano-biotechnology, environment, renewable energy, information andcommunication technologies and mechanical engineering.
174 innovative projects were identified in the four regions in question, relating to arepresentative sample of companies and clusters with more than 15,000 employees, whoachieved a turnover of about €700 million in 2013.
A platform was therefore created to capture foreign demand, which enabled foreign counterparties to view projects and arrange meetings with the companies in which they wereinterested.
For the purposes of intellectual property protection, all of the projects were validated by the
Italian Patents and Trademarks Office, to avoid compromising future patents. An educational
exercise aimed at Italian companies was also undertaken to introduce the use of nondisclosure agreements prior to B2B activities.
The international character of BIAT was also demonstrated by the presence of 102 foreigndelegates, selected from the categories of investors, venture capitalists and large companies,
from the 15 foreign countries that had the highest level of technological development.
Over two days, the Italian and foreign parties held 1,050 meetings, which generated
numerous contracts and agreements.
On the sidelines of the event, sessions were organised to promote innovative projects andselected regional areas of excellence in which there are technological districts.
Mission for Italian ICT startups in California, 19-25 October 2014
The aim of the initiative was twofold. On the one hand, it was to allow a selected number ofinnovative Italian ICT startups to present their products or software solutions (applications,programs etc.) to potential US investors (venture capitalists, investment funds, high-tech
incubators and companies). On the other hand, it was to promote an exchange of technology
and the creation of joint ventures and partnerships with university laboratories or incubators,
science centres and universities from the two countries.
In the vast ICT environment, this initiative focused on information technologies for which
there is a greater potential demand in the United States. These were cyber-security,
innovative medical tools and technologies, life sciences, wireless communications, clean tech,
the internet of things, IT solutions for institutions and companies provided as services,
distributed manufacturing, plug-ins for are market leading web platforms, domestic andindustrial robotics, augmented reality, and biological engineering integration.
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The mission, which was attended by 9 startups from across Italy, was held between 19 and 25
October 2014, in two stages (San Francisco and Los Angeles) which included the following:








a preparatory mission orientation meeting,two investors' arenas with company pitches,bilateral and networking meetings,
visits to several companies that are symbolic of Silicon Valley, like VMware, Yahoo and
Google, with company pitches,
visits to startup incubators,
meetings with successful Italian startups in California
meetings with two specialist legal firms.

Italian startups had the opportunity to participate in 8 rounds to present their pitches and toestablish contacts with the highest possible profiles, obtaining privileged access to theecosystem of Silicon Valley and Silicon Beach, the two areas of California with the highest levelof concentration in the ICT sector.

INITIATIVES UNDERTAKEN IN THE FIRST HALF OF 2015
Two promotional initiatives were undertaken in the first half of 2015, namely theparticipation of innovative startups at the Game Developers conference in San Francisco
between 4 and 6 March 2015, and at the Mobile World Congress in Barcelona between 2 and 5
March 2015. There was also the preparation of meeting spaces for startups and investors withancillary services at the Global Entrepreneurship Congress held in Milan between 16 and 19
March.
The three innovation help desks set up at the ITA offices in Hong Kong (China), Mumbai(India) and Los Angeles (United States) have been a long-standing feature. The help desks,
which made their debut in 2014, consist of staff hired locally with the experience and skills
needed to assist innovative companies and research centres in relation to the Agency's
promotional activities, or to provide services upon request.
Two of the three help desk activities were confirmed in June 2015 and the creation of twoother help desks in London (UK) and Singapore (Singapore) were initiated. It was not deemed
appropriate to refinance the help desk in Hong Kong. This initiative has a three-year lifespan,with the possibility of extension if the results are positive, and the activity is monitored on amonthly basis. A special section on the website www.innovationitaly.it is currently being
realised, to collect and highlight the material produced by the help desks and to enable local
and Italian companies to get in touch more easily.
Finally, the innovation and startups unit took part in some stages of the internationalisation
roadshow organised by the ITA at the initiative of the Ministry of Economic Development, in
collaboration with a large group of national and local partners. This provided detailed
information about regulations and business opportunities in foreign markets, and assists therelevant startups, as appropriate, to get in touch with the Agency's offices in the countries
they are most interested in.
Investor reception at the BioinItaly Investment Forum, Milan 21-22 April 2015

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As part of the technology partnerships in innovative sectors promotion, the Office ofindustrial partnerships and relations with international organisations, with the support of ITA
offices in Los Angeles, Seoul and Tel Aviv, organised the reception of an internationaldelegation to the eighth edition of the BioinItaly Investment Forum & Startup Initiative 2015,
an event organised by Assobiotec and Intesa Sanpaolo to benefit the biotechnology sector.
The aim of the reception was the participation of selected and qualified foreign investors fromstrategic and priority markets for the internationalisation of Italian companies in this sector.
The foreign delegations were composed of investors and representatives of industry andresearch in biotechnology from the aforementioned markets (United States, South Korea andIsrael).
The format for the event was the presentation of innovative projects and products by 10
startups involved in biotechnology and six from the biomedical sector, selected by acommittee of industry experts.

Newsletter and Start Up Value New YorkAt the request of the New York office, the training services for the internationalisation Officeused promotional funds to set up a newsletter that aims to provide information and training
to Italian startups, and is distributed to over 3,140 users every two months.
In April 2015, the New York Office launched a temporary office service for innovative Italianstartups. The service involves providing free workstations in a common area at the Office's
headquarters, which are located in Manhattan's Upper East Side. Each workstation consists ofa desk with electric hook-ups and fast internet connectivity via Wi-Fi. The service is part of
the Start Up Value initiative, organised by the Agency offices in the USA to facilitate theapproach to the market for Italian innovative startups.
Each workstation is assigned for a maximum period of 15 calendar days after booking
depending on availability, and can be renewed only once. A meeting room with seating for 25
people is also available. Full rules for the service and a booking form are available online.

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4. Further actions to benefit the innovative startups ecosystem
4.1 The Smart&Start programme
FROM SMART&START TO SMART&START ITALIAThe Decree of the Minister of Economic Development of 6 March 2013 launched a new type of
incentive programme for businesses to strengthen the competitiveness of their manufacturingsystems, develop the digital economy and promote technology transfer in the regions ofSouthern Italy.
This incentive programme, called Smart&Start, is run by Invitalia, the National Agency forpromoting inward investment and business development. It supports the creation anddevelopment of businesses, including high-tech companies in the regions of Basilicata,
Calabria, Campania, Apulia, Sardinia and Sicily by pursuing the following main objectives:

supporting technology transfer;

exploiting the results of public and private research systems;

stimulating the return of "brains" from abroad.

The Ministerial Decree of 6 March 2013 and subsequent measures assigned an overall budgetof €203 million for this tool, broken down by financial source as follows:
Resources provided PON 2000-2006 SIL (Smart)€100 million

PON R&C 2007-2013 (Start)
FCS Cratere L'AQUILA (L'AQUILA earthquakezone)€90 million

Total€203 million€13 million

Pursuant to Article 13, Section (2) of the Decree of the Minister of Economic Development of
24 September 2014, the online help desk for the first edition of Smart&Start was closed on 14
November 2014. Under the provisions of the said Ministerial Decree of 24 September 2014
and the related explanatory circular No. 68032 of 10 December 2014 on 16 February 2015, it
was possible to open the Smart&Start Italia help desk, a new edition of the subsidy measure,which has the following main features:







it covers the entire national territory;
it is solely aimed at innovative startups entered in the special section of the
Chambers of Commerce register of companies (Article 25 of Decree-Law
179/2012);
the procedure for accessing the incentive is entirely paperless;processing times are not longer than 60 days;
it finances business projects that provide for expenditure, investment andmanagement of between €100,000 and €1.5 million;
it grants financial support in the form of interest-free loans for up to 70% of the
project cost.

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In addition, great attention was paid to issues relating to access to credit for startuppers: inorder to facilitate startup investment, on 28 April 2015 the Ministry of Economic
Development, Invitalia and the Italian Banking Association signed an agreement allowing
recipient companies to request disbursements too, based on non-receipted invoices.
The subsequent Directorial Decree of 20 July 2015 of the Directorate General for Incentives tocompanies of the Ministry of Economic Development regulated the provision of facilities
related to the investment programme, concerning the mode of operation of the escrowaccount created to handle such invoices.
In addition to financial tools, Invitalia manages a set of tools and services to strengthen thecompetitive position of innovative firms and support the skills of the project teams:
pre-startup phase: services to assist teams in design activities in the phase
preceding presentation of the business initiative, also in online mode (webinar);startups: support for businesses in the startup phase via a programme of
personalised tutoring, based on the needs of each company. The services are also
provided online – via webinars – and in some cases involve informationexchanges with best international experiences. Topics range from the use of
subsidies, financial planning, and access to the capital market, from marketing toorganisation and human resources, innovation management, recording ofexpenses, and so on.

THE RESULTS OF SMART&START – EDITION 2013-2014
Almost 55% of total applications were received (1,252 total) within the first three months ofthe help desk opening. The flow of applications remained high throughout the period in which
the help desk was open, with a physiological peak of applications submitted in the last twomonths it was open.
Over 40% of applications came from Campania, reflecting a consolidated knowledge of theCampania entrepreneurs and academics about these incentives.
Chart 4.1 Applications submitted by region

Source: Invitalia

Only 136 applications were received from innovative startups (10.9% of total applications).
This figure, definitely below expectations, can be explained by the limited number ofinnovative startups located in Southern Italy.
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Even in the case of startups, most of the applications came from Campania (almost 40%);
followed by Sicily (25.7%) and Apulia (19.1%).
Table 4.1 Applications submitted by innovative startups by region
RegionNumber%Abruzzo7

5.2%

Basilicata

1

0.7%

Calabria

11

8.1%

Campania

54

39.7%

Apulia26

19.1%

Sardinia2

1.5%

Sicily

35

25.7%

Total

136

100.0%

Source: Invitalia

The opportunity given to businesses that had not yet been incorporated to apply, with anundertaking to incorporate within one month from the possible granting of the subsidies, wasparticularly successful (81% of applications were received from companies that had not yet
been established).
This, amongst other things, strengthens the incentive effect that Smart&Start has had on
starting new businesses. Over 34% of the applications received belonged to the cloudcomputing and e-commerce sectors, a sign of how dynamic and attractive this industry is,especially for new entrepreneurs.
Conversely, trailing behind are the two sectors with the most intensive scientific and technicalknow-how and investment requirements, like nanotechnology and aerospace, which together
do not reach even 1% of the applications submitted. The primacy of cloud computing is also
confirmed in connection with innovative startups (30 applications out of the 136 total
number of applications).

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Chart 4.2 Number of applications by sector
Cloud computing

232

30

E-commerce

195

17

Turismo e beni culturali

129

9

Ambiente e energia

125

22

Social network

90

11

Infrastruttura e sicurezza

6

ICT

9

Smart cities

4

Life sciences

3

Bioagroalimentare

4Internet of things

4

Materiali innovativi

3

E-government

4

Automazione industriale

4

Trasporti

1

Nanotech4
1
0

Aerospazio

84
71
68
51

Totale47

Startup

41
35
31
30
14
8

0

50

100

150

200

250

Source: Invitalia

Aerospace and innovative materials are the areas in which there is, on average, a greater
demand for subsidies. Sectors that require a lower level of investment, like those associatedwith the Internet, register the lowest average in terms of requested subsidies.
The mean values for innovative startups are generally much higher; this trend applies to all
sectors apart from the nanotech and smart city sectors.
Chart 4.3 Average subsidies requested by sector (in 1,000 Euro)
265

Aerospazio

251

Materiali innovativi

349

240

Automazione industriale
Nanotech

309

234

195

Ambiente e energia

216

ICT

214

293
357

198

Trasporti

E-government

198

Cloud computing

195

Life sciences

192

Infrastruttura e sicurezza

185

E-commerce

181

Internet of things

176

Bioagroalimentare

173

Turismo e beni culturali

165

Social network

163

Smart cities

121
100

293
294
Totale248

Startup

268
288
231
218
210
209
336

150
150

200

250

300

350

400

Source: Invitalia

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To summarise, these are the results in relation to the applicants:
Application status

New companies

Innovative startups

Total

Applications accepted

409

33

442

Applications rejected

631

90

721

Waiver

76

13

89

Total

1,116

136

1,252

Source: Invitalia

Despite maintaining primacy for eligible applications, Campania also had approval ratings
that were slightly below average.
Innovative startups had lower approval rates, a clear sign that innovation is associated with agreater business risk and, therefore, require more attention to the company presentation todemonstrate credibility in terms of market, technological and financial sustainability.
As is reasonable to expect, the better-established companies showed an approval rating(37%) that was higher when compared to those that were not established (35%).
A sectoral analysis of approval ratings demonstrates the success of applications in the life
sciences and nanotechnology sectors. The success of applications in the cloud computing andsocial networking sectors is also interesting.

Chart 4.4 Rate of application approvals by sector

76,7%

40%

20,0%

Ammesse
23,4%

25,8%

27,9%

30,4%

28,6%

32,4%

33,9%

35,3%

34,3%

36,6%

Non ammesse
39,6%

43,3%

42,7%

47,1%

Rinuncia
50,0%

20%

100,0%

68,1%

71,0%

65,1%

71,4%

64,8%

64,8%

56,4%

52,9%

51,4%

63,4%

54,8%

54,4%

60%

46,1%

51,0%

80%

50,0%

100%

0%

Source: Invitalia

The 442 businesses financed generated investments in the following three areas: digital economy: €53.7 million
 exploitation of research: €21 million
 product/service innovation: €11.5 million

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The average investment per company was approximately €195,000, for a total of granted
subsidies that amounted to €75.4 million.
The 33 financed innovative startups generated the following investments:
 digital economy: €4.3 million
 exploitation of research: €3.8 million
 product/service innovation: €0.03 million
The average investment per company was about €246,000, for a total of granted subsidies
amounting to €8.2 million.
Most entrepreneurs were under 36 years of age (47%; 50% for innovative startups). Also
noteworthy is the percentage of people in their forties to fifties who were funded by the
programme (41%; 35% for startups).
The percentage of women who were proprietors of their own companies was 22% (17% forstartups). This percentage rises to 26% for women who are under 36 years of age. Women
therefore continue to have difficulties when starting up companies. This gap is slowly
narrowing as the new generation of entrepreneurs enters the labour market.
In terms of employment, it should be noted first that more than a third of entrepreneurial
team members come from paid employment: that, on the one hand, demonstrates a strong
motivational component, and on the other hand shows added value in terms of selfemployment created by Smart&Start.
75% of shareholders hold a University degree; 8% hold a PhD. The higher educational
background of startuppers is, however, consistent with the type of activities funded.
Graph 4.5 Previous employment status of shareholders
Altro
7,1%
Lavoratore
dipendente
37,5%Studente
8,5%

Disoccupato
10,8%Lavoratore
autonomo
36,2%

Source: Invitalia

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Chart 4.6 Shareholders' qualifications
Master I livello
5,1%

Master II livello
5,3%Dottorato
8,0%Laurea56,3%

Diploma
25,3%

Source: Invitalia

SMART&START FIRST EDITION SUCCESS STORIES (MINISTERIAL DECREE OF 6 MARCH 2013)
Italrobot The project from this company, based in Marcianise, Caserta, was to standardise
and automate the assembly of certain types of electrical panels using robots. The aim was toreduce assembly times, reduce the inefficiencies typical of traditional processes and improve
the product’s quality standards. This project was the result of research financed by the
Ministry of Economic Development with the Fund for Technological Innovation. The company
generated an investment of about €1 million.
Robotics Life A startup from Catania which is developing experimental therapy for treating
autism in children between 2 and 6 years of age, using a humanoid robot. RoboMate is an
educational platform based on customisable software designed in accordance with theedutainment behavioural paradigm. The company was founded by two brothers, Marco andDaniel Lombardo, respectively 37 and 41 years of age, who are both computer experts. Their
mission was to bring practical robotics into the world of medicine and neuropsychiatry. The
investment was about €44,000.
Sophia High Tech An innovative startup founded in July 2013 to design, produce and market
instruments and laboratory equipment for testing innovative materials ("stress tests") in the
aeronautics, aerospace, automotive, rail and shipbuilding industries. The company set up an
investment of €113,000. The shareholders are five University professors at the University of
Naples Federico II, who also hold PhD degrees.
Youbiquo The products are called Talens, a name combining the words talent and lenses.
They are smart glasses made by this Italian company, based in Cava de' Tirreni (SA), whichdevelops software for "wearable computers". Youbiquo is the brainchild of two computerengineers with experience in the ICT sector and two experienced marketing professionals.
The company set up an investment of €186,000.
Genomix4Life A spin-off of the molecular medicine and genomics laboratory at the Universityof Salerno, this company was founded and is now run by young experienced researchers ingenomics and bioinformatics, with the aim of developing innovative diagnostic tools in the
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field of cancer. The company offers services in genomics and bioinformatics, targeting all
research and industrial sectors that use these technologies, in particular the biomedical,
livestock and agri-food sectors. The company set up an investment of around €133,000.
Drone Design A company that has designed an advanced autonomous navigation system fordrones, which allows data and information to be collected on reduced timescales at a very low
cost. The drone will be equipped with an algorithm that allows the customer to carry out adetection service completely autonomously, without using specialised technical personnel.
Drone Design was founded in December 2013 based on an idea from two aerospace engineers
and an astronautical engineer with experience in analysing and optimising launch trajectories
as part of space missions. The company, based in Ginosa (Taranto), set up an investment of€198,000.

THE FIRST RESULTS OF SMART&START ITALIA 2015 EDITION
From 16 February 2015 to 29 July 2015, 856 requests for subsidies were received. Campaniaand Lombardy were the most active regions with 15.5% and 14.5% of the applications
submitted respectively.
Chart 4.7 Applications submitted by region
CAMPANIALOMBARDIALAZIOVENETO
SICILIA
ABRUZZOEMILIA-ROMAGNAPIEMONTEMARCHEPUGLIATOSCANACALABRIA
SARDEGNA
FRIULI-VENEZIA GIULIA
BASILICATA
LIGURIA
UMBRIA
TRENTINO-ALTO ADIGEMOLISE
VALLE D'AOSTA

133
124
90
77

58
50
46
44
39
38
29
28
26
23
14
12
11
8
6
0
0

20

40

60

80

100

120

140

Source: Invitalia

52% of applications involved supporting the development of existing innovative startups(businesses already in existence when the applications were submitted).
More than €460 million of subsidies were requested, and distributed as follows bygeographical area:North-Central: €292.1 million
South: €15.9 million
L'Aquila earthquake zone: €16.9 million

The applications submitted involved 2,575 people, of whom 21% were female, and covered
the following areas of investment:
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


Development in the digital economy: 522
Enhancing public and private research: 78
New/experimental technology: 256

Chart 4.8 Applications submitted by type of investment
Tecnologia
nuova/sperimentale
29,9%

Sviluppo nel campodell'economia
digitale61,0%Valorizzazione ricerca
pubblica e privata
9,1%

Source: Invitalia

Almost 37% of the initiatives involved parts of the e-commerce and green economy (bio-food,environment and energy) sectors.
Chart 4.9 Applications submitted by sector
E-commerce163

Ambiente e energia

107Social network

83

Internet of things

77

Cloud computing

64

Materiali innovativi

50

Turismo e beni culturali

49

Bioagroalimentare

45

Automazione industriale

44

Smart cities

44

Life sciences

41

ICT

27

Trasporti

27

Infrastruttura e sicurezza

17

Aerospazio

9

Nanotech5

E-government

4
0

20

40

60

80

100

120

140

160

180

Source: Invitalia

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To date, 625 applications have already been assessed, of which 131 were eligible forsubsidies. The 131 applications generated investments of more than €63.2 million andcommitted subsidies amounting to €65.8 million broken down as follows by geographicalarea: Centre-North: €49.1 million; South: €16.2 million; L'Aquila earthquake zone€0.5
million.

NEW EDITION SMART&START SUCCESS STORIES (MINISTERIAL DECREE OF 24 SEPTEMBER 2014)
Geofood: this startup, based in Pisa, was founded in September 2014. It comprises a team of
two people under forty years of age, an agronomist and an engineer. The application was
submitted at the Italian Pavilion of Expo2015. It allows consumers to know the origin of foodproducts by scanning labels using a smartphone or tablet. Data is entered directly by the foodcompanies and consumers through a multisided platform. By using this application, they canobtain information about the origin of ingredients, the location of suppliers, the company’s
production facilities and outlets for typical food products, as well as the quality and technicalcharacteristics of the latter.
MyMantra: the brainchild of a father and daughter. The company is located in the Lazio
region. The aim is to replace animal skin by using and reinventing an ancient material: wood.
The love of animals, the need to reduce the environmental impact of factory farming and thetanning industry, as well as an innate passion for fashion and design, led Marcello and Marta
to create this new material: soft wood. The material, which has been patented, has been
subject to laboratory tests aimed at verifying the level of wearability, water resistance, heat
resistance, etc.
Digital Lighting: this company was founded in August 2014 and has been entered in theregister of innovative startups in Bolzano. The group currently has employees as well as adirector; however, two new employees are expected by the end of 2015. The company
provides services and products to promote smart cities. They have designed a multi-sensory
device, with new high performance "enabler" technology, allowing: smart lighting control,
video surveillance and traffic analysis, WiFi HotSpot internet coverage, variable message
signs, charging of electric cars and bicycles, free parking control, waste management, trackingof objects and people, and management of bike-sharing services. Everything happens via theuse of a simple object, elegantly designed to be applied primarily to street lighting.
Nice Filler: a spin-off from the University of Salerno, established by three female lecturers in
the faculty of engineering. This won the Polymer Challenge 2009 organised by the Nanotech
and IMAST Technology Clusters in the Veneto region. Nice Filler has invented and patented aplastic wrap that preserves and enhances the duration of freshness. The product is part of the"active" and "intelligent" packaging category. In fact, by using polymeric materials for active
food packaging, it can be used to protect and improve the quality of food products and to
reduce preservation treatments. This technology is based on an organic-inorganic compoundthat can be dispersed into any type of plastic packaging (including biodegradable packaging).
TissueGraft: this Piedmontese team, consisting of four people, including three women and
two PhD holders, won the Award for Innovation in 2014. It manages to recreate biologicaltissue substitutes useful in the field of cardiovascular medicine, in a laboratory. In practicalterms, a new method for functionalising decellularised biological tissue with an active

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ingredient was invented and patented. The firm produces two main types of products: TPATC, a pericardium restraining surgical product and T-VESSEL, a vascular substitute.
Brain2Market: a company located in Lombardy, it launched onto the Italian market anapplication of neurotechnologies for corporate strategies, which aims to the optimisation ofdecision-making. Integration of neurotechnology allows analysis of the reaction andinteraction of target subjects (consumers, users, viewers) in relation to perceptual stimuli(products, advertising, web interfaces, etc.), via the measurement of attention and emotion ata biological, instinctive and unconscious level. Using specific equipment (goggles and helmet)that allow you to record eye movements and the cognitive/emotional reactions burdens
associated with perception, it is possible to trace the pattern of experience of theperson/user/consumer when they are subjected to a given stimulus.
BClever: located in Veneto, this firm has designed Spider, a printer that can reproduce any
digital image on any surface, simply by using a normal printer. This technology is protected byan international patent. Spider can even print onto the surfaces of walls. Prior treatment of
the surface allows different effects to be created (photo effect, fresco effect, etc.) The targets
are professionals who decorate large surfaces. Spider is currently under development, and is
expected to be completed during 2015.

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4.2 The performance of innovative startups with regard to the Horizon
2020 SME Instrument
HOW THE H2020 SME INSTRUMENT WORKS
Horizon 2020, one of the EU strategies for development and growth planned for the period
2014-2020, includes the SME Instrument, designed to support innovation and theinternationalisation of innovative companies through grants and loans. The Instrument
provides a budget of about €3 billion to support European SMEs in the process of introducing
highly innovative products and services to the market, and it is divided into three phases:Phase 1 "Idea to concept" (feasibility study, 6 months)
This initial phase includes a non-repayable grant worth €50,000 (an amount definedfor everyone as a lump sum), as a single solution, to assess the technical feasibility andpotential of innovative business models.

Phase 2 "Concept to Market-Maturity" (market access and R&D, 1-2 years).
At this stage, the Commission may grant co-funding loans on a non-refundable basis of
70% of the investment required for companies to develop and test their proposed
innovations. The value of the loan ranges between €500,000 and €2.5 million.
Activities included in this phase can be the creation of prototypes and scale models,design development, performance audits, testing, demonstrations and the validation ofmodels for market replication. The results that companies should achieve at this stage
are the development of a new product, process or service that is competitive in the
global market.

Phase 3 "Prepare for Market Launch" (marketing)Companies receive support to facilitate the marketing of innovative products andservices through networking initiatives, training, coaching and mentoring, as well as
access to private capital.

Startups and innovative SMEs are advised to apply for Phase 1. However, access can be
granted in the later stages if the proposals or business models are already at an advanced
stage.
THE PERFORMANCE OF ITALIAN INNOVATIVE STARTUPS
The lack of information regarding the third phase should be noted, as this has not yet been
started at a European level.
In June 2015, a total of 189 Italian innovative businesses had benefited from the SME
Instrument. Of these, 107 were selected for Phase 1 of the loans granted in 2014, whilst 12
obtained access to Phase 2 in the same year. In 2015, 60 companies successfully participatedin Phase 1, and 10 in Phase 2.
Among the winners there were 32 Italian innovative startups listed in the special section of
the Register of Companies (31 for Phase 1, 1 for Phase 2).
If we examine the geographical distribution, 17 startups were located in the North (12 in
Lombardy, 2 in Emilia Romagna, 1 in Liguria, 1 in Piedmont and 1 in Valle D'Aosta (1), 10 inCentral Italy (4 in Lazio, 4 in Tuscany, 2 in the Marche) and 5 in the South (2 in Calabria, 2 inSicily and 1 in Campania).
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With regard to macro-sectoral distribution, the services (22) and manufacturing sectors (10)stood out.
If we consider the value of the output of successful innovative startups that have alreadysubmitted a budget, 16 produced up to €100,000, 7 between €100,000 and €500,000, 2 from€500,000 to €1 million, and two companies between €2 and €5 million.
Information about employment (relative to the open INPS positions) is only available for 12
startups, as follows: 9 innovative startups from 0 to 4 employees, 1 company from 5 to 9
employees, 1 from 10 to 19 employees and 1 from 20 to 49 employees.
Of the 32 successful innovative startups, none was established in 2015, 11 in 2014, 8 in 2013,
7 in 2012, 4 in 2011 and 2 in 2010.

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4.3 Italia Startup Visa and Italia Startup Hub
THE IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED OVERSEAS NATIONS AND THE EU INITIATIVESIn his manifesto for the European elections, the President of the Commission, Jean-Claude
Juncker compiled a list of 10 priorities54. In eighth place was the "Towards a new migration
policy" priority, which highlights the need to promote a new European approach to legal
immigration, aimed at "filling specific gaps in the labour market and demographic challengesof the European Union". Juncker's stated purpose was "to make Europe at least as attractive as
the migration destinations currently prevailing globally, such as Australia, Canada and theUnited States".
Immigration plays an important role in the entrepreneurial class of developed countries. One
only needs to reflect on the fact that 40% of the 500 largest US companies surveyed by
Fortune magazine in 2010 were founded by first- or second-generation immigrants.55
Immigrants set up 28% of US companies in 2011.56
Other statistics give a measure of the relevance of the phenomenon. In 7 EU countries57, therate of entrepreneurial activity amongst immigrants is higher than amongst the native
population58. In most OECD countries, immigrants participate in more business startups thanlocals do. In the same area, between 2007 and 2008, 12.6% of the immigrants wereentrepreneurs, compared to 12.0% for local people.59
Looking at the figures for Europe, in the decade 1998-2008, the percentage of foreign-born
entrepreneurs increased by 3% in the Netherlands, 2% in Austria and 1.3% in Germany. The
number of new immigrant entrepreneurs in Germany has almost doubled from 49,000 per
year in 1998-2000 to more than 100,000 per year in 2007-2008. Similar dynamics haveaffected the United Kingdom (45–90,000), Spain (77,000), Italy (46,000) and France (35,000).
In the UK, one out of every 7 companies were founded by immigrant entrepreneurs. Here,immigrants account for 14% of the establishment of SMEs,60 even though they form only 12%of the population.61
As regards the source of immigration, it varies from country to country, but a prevailing trend
in the OECD area is the prevalence of Asian citizens.62 In the general absence of regional
approaches by member states of the European Union as part of their attraction policies,
Belgium, which is focusing exclusively on China, United States and Brazil, stands out.63
54 J.C. Juncker, A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change. Political

Guidelines for the next European Commission, 2014.
55 Partnership for a New American Economy, The "New American" Fortune 500, June 2011.
56 R.W. Fairlie –Open for business: how immigrants are driving small business creation in the United States, August

2012.
57 Belgium, Czech Republic, Denmark, France, Germany, the UK and Hungary.
58 OECD and the European Commission (2014).
59 M.V. Desiderio (2014).
60 L. Johnson, D. Kimmelman (2014).
61 C. Rienzo and C. Vargas-Silva (2014).
62 OECD, International Migration Outlook, 2011.
63 European Migration Network (2015).

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In OECD countries, immigrant entrepreneurs are often better qualified than their local
counterparts (between 30% and 40% are graduates) and in all OECD countries (except
Germany) the proportion of highly educated immigrant entrepreneurs is higher than that oflocals.64 Between 2006 and 2012, 24.3% of the engineering and technology companies in the
United States had at least one foreign-born founder. In the same period, the ratio equalled
43.9% in Silicon Valley.65 In addition, 60% of the top 25 technology companies in the UnitedStates was founded by immigrants, employing 1.2 million workers in 2012.66 Of thetechnology startups in Tech City (London), up to 25% were founded by immigrants.67
Compared to other developed regions, the EU has a structural gap in terms of the ability to
attract highly skilled immigrants and offer the same the opportunity of establishing a genuine
business.68 The difference in performance compared to the other OECD countries can betraced to differences in policies and approach towards global talent attraction. EU migration
policies are largely motivated by humanitarian reasons or for family reunification, rather thanby the demand for labour and the wish to bridge skill gaps in the labour market.69
Table 4.2 Achievement of higher levels of education amongst entrepreneurs born
abroad and over 15 years of age, by country of destination70

CanadaForeign-born and highly skilled(%)
47

Australia

35

New Zealand

33

United States

30

EU28

22

Source: OECD

To bridge this gap, the Commission is studying a set of policies for attracting highly qualified
non-EU citizens who intend to start a high-tech company in Europe.71
The initiative is part of the European Agenda on Migration, adopted by the European
Commission on 13 May 2015. This is accompanied by a number of other interventions,
including:a proposal for a directive by the Parliament and the EU Council on the conditions ofentry and residence of non-EU citizens for the purpose of research, study and student

64 OECD, International Migration Outlook, 2011.
65 V. Wadhwa et al. (2012).
66 M. Meeker, L. Wu (2013).
67 The Tech London Advocates Blog (2013).
68R. Gropas (2013).
69M. Luthria, P. Dale (2013).
70A. Damas de Matos (2014).
71 This initiative by the Research Directorate General, conducted in collaboration with Directorate General for

Home Affairs, was launched with the consultation of experts from various EU countries in Brussels on 20 May
2015. The Technical Secretariat of the Minister of Economic Development participated, illustrating theexperience of the Italia Startup Visa and Hub programs.
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

exchange, training, charity and au pair work, which aims to integrate and strengthen
the two existing directives72;
the Startup Manifesto (developed under the European Digital Agenda and, inparticular, the Startup Europe initiative), which is aimed at a pan-European startups;
the “Erasmus for Young Entrepreneurs” scheme, involving young entrepreneurs fromsome non-EU countries73 andthe Review of the Blue Card Directive to facilitate the use of highly skilled nationals
from other countries.

THE ITALIAN POLICY FOR ATTRACTION AND RETENTION OF INNOVATIVE ENTREPRENEURS FROM OUTSIDEEUROPE
Anticipating the above-mentioned European initiatives, some member countries have alreadycreated national programmes ascribed to the startup visa category. Requirements, procedures
and development times vary from country to country, but the common purpose is to facilitate
the attraction of non-EU citizens interested in starting new companies.
Launched by the Minister of Economic Development on 24 June 2014 in accordance with the
Destination Italy plan, the Italian programme, called "Italia Startup Visa", revolutionised thestandard procedure for granting entry visas for self-employment, by introducing aconsiderable simplification for the benefit of non-EU citizens who intend to set up an
innovative startup in our country (official website: italiastartupvisa.mise.gov.it).
The aim of the programme, which is being implemented in collaboration with the Ministry ofForeign Affairs, the Ministry of the Interior and the Ministry of Labour and Social Policies, is topromote the opening, renewal and strengthening of the national innovative entrepreneurshipecosystem by facilitating the attraction of human and financial capital from around the world,in the belief that the ability to attract the global flows of talent is an important indicator of thelevel of development of a modern economic fabric.
The standard procedure for providing visas for self-employment, still in force outside thescope of innovative startups, states that non-EU citizens should:

apply to the competent local Chamber of Commerce or entity for clearance inrelation to carrying out the business activity;
submit to the financial parameters, which vary from sector to sector;
obtain the necessary authorisations, according to the type of activity, inadvance; andrequest clearance from the Police by appearing before them in person or via an
attorney. All without having to open a channel of communication in the Italian
language.

However, in the case of the Italia Startup Visa, the procedure is completely centralised, via theinternet and greatly accelerated, so that it ensures a visa is issued within 30 days. Specifically:

the requirements and obligations are explained in English on the programme's
website, which is central to the entire front end of the process;

there is only one financial parameter, €50,000, which is valid for all candidates

72 For further information: European Parliament, Third-country nationals: conditions of entry and residence forthe purposes of research, studies, pupil exchange, training, voluntary service and au pairing. Recast.
73Liechtenstein, Norway, Macedonia, Iceland, Montenegro, Turkey, Albania, Serbia and Israel.

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regardless of the designated economic sector;


assessment of the business plan is performed by the Italia Startup Visa Committee,
chaired by the Director General for Industrial Policy, Competitiveness and SMEs andcomposed of the Presidents of five key innovative entrepreneurship ecosystemassociations: IBAN representing business angels, AIFI representing private equity andventure capital, PNICube representing university incubators, APSTI representing
science and technology centres and Netval representing technology transfer centres.
The Committee works remotely and is centrally coordinated by the Ministry of
Economic Development;at the back end, this Ministry acts as a proxy for the candidate for the purpose of
security checks carried out by the Police;

communications to and from the candidate are always carried out online and, within
30 days, non-EU citizens get a clear answer, be it positive or negative, about thepossibility of receiving a visa;

if the answer is positive, that is, if the Committee considers the application ispracticable in business terms and if the Police do not prohibit entry for security
reasons, once the green light is received- and this often takes less than30 days – anapplicant must only perform one physical requirement: going to the relevant consulate
or embassy to pick up the visa.

In accordance with the European guidelines, which place a particular emphasis on the conceptof retention ("retaining talent"), as well as the attraction, on 23 December 2014, the Italia
Startup Hub programme was launched, based on the Italia Startup Visa model. This
programme includes use of the fast-track procedure, which is extended to non-EU citizens
already in Italy who have a valid residence permit (for example, one obtained for study
purposes) who intend to remain even after the deadline to set up an innovative startup. The
Italia Startup Hub programme therefore allows such people to convert a residence permit(which is held by citizens from outside of Europe) which is about to expire into a "permit for
self-employment startup" without having to leave Italy, which is subject to the same
simplified procedures as those for granting startup visas.
The two programmes are also opportunities for Italian entrepreneurs wishing to attract talentfrom outside of the EU to their innovative startups that are being established or have alreadybeen established, as shareholders for a reduced fee (this does not apply to employees if they
are not shareholders).
Finally, it is important to emphasise that if the candidate proves to have obtained "willingness
to accommodate" status from an incubator, the process is even faster for his/her own future
innovative startups because this assesses the merits of the business plan. It is believed, in fact,that approval from a certified incubator is in itself a guarantee of the quality of a proposal.
ANALYSIS OF THE RESULTS:
37 applications were received as of 31 August 2015, and break down as follows:

18 were received in 2014, 19 in 2015.



28 applicants were males, 9 females.

Average age: 34 years.
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

There were 5 teams (1 Japanese with 4 people, 2 Ukrainian with 2 people each, 2
Russian, of which one with 4 people and one with 2 people) – all applications received
from these teams had a positive outcome.



18 of the applicants had entrepreneurial experience; 16 of the applicants had aprofessional background; one applicant had no professional background (thisapplicant was in a team); one applicant claimed to be a student and another claimed to
be a professional artist. Information technology and marketing dominated theprofessional sectors.



11 applicants held a three-year degree; 11 held a master's degree; 8 held a high school
diploma; 4 held a doctorate; 3 held post graduate qualifications; information
technology, marketing, design and engineering were the main subjects.



There were 15 countries of origin (the denominator is the total number of nominations
per country, the numerator the number of positive outcomes):
1. Armenia: 1/1
2. Australia: 1/1
3. Brazil: 2/2
4. China: 0/2
5. South Korea: 0/1
6. Egypt: 1/1
7. Japan: 3/3
8. Israel: 1/1
9. Lebanon: 0/1
10. Nigeria 0/1
11. Pakistan: 0/4
12. Russia: 8/10
13. United States: 2/3
14. Ukraine: 5/5
15. Uzbekistan: 0/1



31 applications involved the establishment of new companies. In 5 cases, a team wasinvolved in innovative startups already established by Italians. In one case, theentrepreneur had already established an innovative startup when applying for a visa,
but it was found that the company did not meet the requirements, so it was removed
from the special section of the Register.

Out of 37 applications, 24 were successful (65%) whilst 8 were rejected due to theweakness of the business plan or lack of innovativeness, and 5 were considered
inadmissible because they manifestly lacked the minimum financial or innovation
requirements.



Two applications were submitted via a certified incubator.

Of the 24 clearances granted, 20 resulted in the issuance of visas.

So far, five innovative startups have been created from scratch (Genuine Education
Network S.r.l.; Routes Software S.r.l.; LabQuattrocento Srl; SCdB S.r.l.; Spacialist Ltd.);
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there were 3 existing innovative startups that were joined by a partner outside of the
EU (Artemest S.r.l.; Lookcast S.r.l.; Connexun S.r.l.). Other cases are evolving and thedevelopments are being monitored continuously.
As for the Italia Startup Hub programme, three applications have been received so far. One ofthese, a joint application from 2 Korean citizens (one male and one female, 35 and 34 years ofage) who were already legitimately in our country for study purpose (both hold a degree).
They want to establish an innovative startup in the tech-fashion sector. Another application
was made by an Iranian citizen (male, 34 year of age, who holds a degree). He wants to launch
an innovative startup for monitoring the underground power grids via an incubator.
After reaching a year and six months of operations respectively, both programmes haveshown that despite their strongly innovative character, on a procedural level they are working
and ensuring full efficiency and compliance with the defined deadlines,
From a bureaucratic perspective, the processes in question are a challenge: the front office ismaintained by the Ministry of Economic Development, but three other ministries (foreign
affairs, interior and labour) are involved behind the scenes, as well as embassies andconsulates, police stations and the five ecosystem associations called on to assess theapplications.
After one year, it is clear that the procedure works smoothly and the recipients of the visas,
once in Italy, create innovative startups (e.g. Routes Software S.r.l. and LabQuattrocento S.r.l.),thus developing our ecosystem.
This first year has allowed us to test and fine-tune the process. The Netherlands, which
recently launched a similar programme, also showed similar results. Next, we need to grow interms of quantity and improve the reception of foreign citizens.
When interviewed about the difficulties encountered in accessing the programme, non-EU
citizens who had received visas explained that the procedure is simple and clear; the main
problems arise after arrival in our country and mainly concern language - spoken English is
not very widespread, even among professionals and consultants. Even the media, including
the parts specialising in online publications, is almost entirely in Italian. This is a sign that weshould take as a warning. To what extent does our innovation ecosystem wish to open itself
up to the world? It is an important question, because the main global startup centres – SanFrancisco, Tel Aviv and London – are first of all crossroads for international talent flows.
Better communication by the authorities involved can help supply the empirical evidence forthe programmes, but it is also important to reflect on the contribution made by individuals,
whose international ambitions so far appear to have been very modest. The following is an
example supporting this view. The Italia Startup Visa procedure provides for further
acceleration when a non-EU citizen receives a declaration of hospitality from a certified
incubator. In this case, the Committee refrains from assessing the business plan because of thewill to accept the foreign entrepreneur manifested by a structure whose competence isconsidered sufficient evidence to prove the application’s credibility. There are 30 certified
incubators in Italy - how many have used this mechanism to attract global talent? Only one. A
sign that should make us think. Measures such as the Growth Decree 2.0 and the Investment
Compact have created a regulatory environment that puts us at the very least on a par withother advanced systems in Europe that are involved in promoting innovative
entrepreneurship. However, are we confident that compared with these substantial
innovative policies, there is a corresponding demand for innovative policies that is as well
supported?
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References

A. Damas de Matos, Immigrant skills, their measurement, use and return: A literature review In
Matching Economic Migration with Labour Market Needs, OECD, 2014.
M.V. Desiderio, Policies to support immigrant entrepreneurship, August 2014.
European Migration Network, Admitting third-country nationals for business purposes, 2015.
R.W. Fairlie, Open for business: how immigrants are driving small business creation in the UnitedStates, August 2012.
R. Gropas, Migration and Innovation: why Europe is failing to attract the best and brightest?
March 2013.
L. Johnson, D. Kimmelman, Migrant entrepreneurs: building our companies, creating our jobs,
Centre for Entrepreneurs & DueDil, March 2014.
J.C. Juncker, A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic
Change. Political Guidelines for the next European Commission, 2014.
M. Luthria, P. Dale, Liberalising the global market for labour: from paralysis to policy
innovation, in The Global Talent Competitiveness Index, INSEAD, November 2013.
M. Meeker, L. Wu, Immigration to America & the growing shortage of high-skilled workers, May
2013.
OECD, European Commission, The missing entrepreneurs 2014.Policies for inclusive
entrepreneurship in Europe, December 2014.
OECD, International Migration Outlook, 2011.
Partnership for a New American Economy, The "New American" Fortune 500, June 2011.
C. Rienzo, C. Vargas-Silva, Migrants in the UK: An Overview, The Migration Observatory at the
University of Oxford, December 2014.
The Tech London Advocates Blog, Blanket migration laws threaten the thriving Tech City
startup scene, June 2013.
V. Wadhwa, A. Saxenian and F.D. Siciliano, Then and Now: America's New Immigrant
Entrepreneurs, October 2012.

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4.3 The Fondo Italiano d’Investimento and the Fondo Italia Venture I
FONDO ITALIANO D’INVESTIMENTOThe Fondo Italiano d’Investimento (Italian Investment Fund) SGR SpA (FII) was establishedwith the aim of creating, over the medium term, a wider range of medium-sized businesses,
and encouraging aggregation processes between SMEs to make them more competitive oninternational markets.
The draft constitution of the SGR and fund promotion was developed by a steering committeethat was set up in December 2009, which includes representatives from the Ministry of
Economy and Finance, "sponsoring banks" (UniCredit Group SpA Intesa Sanpaolo Spa, Banca
Monte dei Paschi di Siena SpA and Cassa Depositi e Prestiti SpA), Confindustria and the Italian
Banking Association.
FII now manages three closed-end investment funds:

FII UNO – dedicated to investments in closed-end funds or holding companies aimed
at:o investments in new business initiatives with a high technological content(venture capital funds) and investment in venture capital for small andmedium size companies (private equity funds);
o direct investments in venture capital for small and medium-sizedenterprises operating in the fields of industry, trade and services, toaccompany them along their path of growth.



FoF VC – fund of funds dedicated to the venture capital market.



FoF PD – fund of funds dedicated to the private debt market.

The Italian venture capital market, although still underdeveloped, offers significant growthprospects, but needs the stable presence of venture capitalists with proven professionals
capable of attracting new resources for startups. The experience of indirect investment by FII
UNO in 2012-2014 has shown the ability to support the creation and development of new
funds, and it therefore serves as a reference point for practical development of the venture
capital market as well.
The FII strategy for investments in venture capital funds is based on three main elements:

selecting investment teams with sector-specific experience and a relevant andmeasurable track record;

professionalising the venture capital market in Italy by investing in funds that are
adequate in size and characterised by a governance based on best international
practices;

proactively providing assistance from the earliest stages in which funds are
established, when they are being managed by new teams (the so-called first-timeteams/first-time funds) as a cornerstone/investor anchor.

With regard to the investment activities of FII UNO, FII focused primarily on fund investments
dealing with round A transactions (investments from €500,000 to €2 million for startups)
because this stage of investment provides the capital needed to transform an idea developedby a startup into a business, and requires significant strengthening in relation to the country's
system in terms of both available capital and investment skills.
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FoF VC is taking this approach, but at the same time, will also invest in funds that focus on
investment stages before and after round A transactions, such as seed and late stage/growth
capital investments.
On 1 September 2014, FII completed its first closing for €50 million. On 28 April 2015, ICBPand Intesa Sanpaolo signed for €5 million each at the second closing, adding new resources tothe €50 million already provided by the Cassa Depositi e Prestiti (Deposits and Loans Fund)for the first closing. The target amount for FoF VC was €150 million. In particular, FoF VC
carefully considers funds with investment strategies in stages in the venture capital value
chain:
pre-seeds and seeds, through the selection of funds that finance startups in the earlystages, namely to facilitate the evolutionary leap from an idea to a business enterprise.
FoF VC investments will allow investments in seed capital more relevant in monetary
terms for each opportunity that is more structured and useful to create future businesssuccess. In this context, cooperation with the European Investment Fund ("EIF") will
be central to the creation of a degree of matching for business angels (called"Caravella");round A, which will remain a central issue in investment strategy. Also thanks to theinvestments made so far by FII UNO, the Italian situation has significantly improved
with the creation of funds and teams of specialised operators in this segment; however,the capital available in the market is still limited and there is a great opportunity fordevelopment;round B and late stage/growth, the segment in which to date there are no specialised
Italian operators. These operators (who can invest sums in excess of €5 million foreach company in their portfolios) are a key element for the strengthening anddevelopment of companies that require a significant contribution of resources to beable to grow and compete on an international scale. In general, these funds are now
mainly represented on the Italian market by foreign operators.

It is also appropriate, in order to strengthen the international network of the operating teams
and attract other international operators who can invest in Italian startups:


to consider, on a selective basis, pan-European funds that make significant investments
in Italy. This may apply in particular to the biotech segment; andto include in the investment strategies of the target funds, even if they are focused on
Italian startups, the ability to invest selectively a limited part of the commitment inopportunities based outside Italy (possibly with expansion plans in regard to the
Italian market).

In order to maintain the role of reference point and cornerstone/investor anchor in theventure capital market in Italy, FII must:

be disciplined in the selection of funds, ensuring the implementation of appropriate
governance, thereby creating conditions to facilitate investment by other national
institutions (such as foundations, family offices, social security bodies) andInternational institutions (in particular the European Investment Fund (EIF)), as they
already did in 2012/2014 with the activities of FII UNO;

to be able to invest (particularly in situations where VC FOF will be acting as acornerstone investor) a substantial amount, of at least 15 million, in individual funds.
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o FoF VC is the main investor in the Italian market, not only in terms of skills but
also in terms of available capital;o it remains essential to invest in funds that have sufficient capital resources tosupport the development of portfolio companies that could not otherwise
express their growth potential without significant risk of dilution;o the role of cornerstone investor assumed by FII is considered an importantsignal to other institutions that could invest in these funds.
It is therefore necessary to push the expansion of the investment amount of FoF VC, in orderto achieve the target amount of €150 million as soon as possible. This would allow continued
support from Italian venture capitalists with adequate financial resources: (i) the creation offunds of a sufficient size and professional management, and (ii) necessary for thedevelopment of the companies that have received investments.
An increase in the funds collected should be aimed at involving: (i) selectively, some social
security and pension funds, (ii) an increase in the commitment of the Cassa Depositi e Prestiti(deposits and loans fund), and above all, (iii) Italian companies (in any case limited in terms of
the amount for each of them).

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Table 4.3 Funds held and currently being finalised (July 2015)

Source: Italian Investment Fund

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FONDO ITALIA VENTURE I (ITALIAN VENTURE FUND I)
Through the Decree of the Minister of Economic Development of 29 January 2015, theGovernment funded Invitalia Spa to support investments in venture capital firms with highgrowth potential. The aim was to set up a venture capital fund, called "Fondo Italia Venture I(Italian Venture Fund I)", managed by Invitalia Ventures SGR, with resources of €50 million
from the "Fund for sustainable growth".
The fund will provide risk capital to firms together and simultaneously with private andindependent national and international investors. Invitalia Ventures intends to create a
network of co-qualified investors, providing its partners with streamlined and transparent
governance and a fast and efficient workflow.
Investment in equity is planned for transactions of between €500,000 and €1.5 million up to a
maximum of 70% of the overall individual co-investment. The investments are aimed at atarget of around 60% innovative startups and 40% innovative SMEs with less than 250
employees and a turnover of less than €50 million, operating in the domestic market (80%)
and the international market (20%), in areas such as ICT, logistics and mechatronics, biotech& health, fintech, clean energy, food, social impact and PA. The Fund will ensure continuous
monitoring of the performance of companies in which it invests, by verifying the achievementof the objectives set for the duration of direct investments that will, in general, be higher thanthe market average and, therefore, approximately equal to 5 years.

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4.4 Leonardo Startup Award 2014
The Leonardo Italian Quality Committee, in consultation with the Ministry of Economic
Development and the Italian Trade Agency, decided in 2012 to sponsor a Special Startup
Award, in addition to the already coveted awards conferred each year by the Leonardo
Committee74: The Leonardo Award, the Leonardo Italy Quality Awards, the Leonardo
International Award and the Lifetime Achievement Award.
The award goes to an Italian innovative startup that particularly distinguishes itself in:innovation, meaningful progress with regard to knowledge;
success, qualified in terms of speed of business growth and the positive effect on therest of the production system;
internationalisation, meaning the ability to extend the sale of its products or services toforeign markets;
employment, especially for the young, and in terms of social impact, meaning its
contribution to the resolution of problems that concern citizens.

The final choice, by the Leonardo Italian Quality Committee, the Ministry of Economic
Development and the Italian Trade Agency, falls on a startup that has distinguished itself interms of innovation, contribution to building a positive image of Italy abroad, and being an
inspiration and testimony for the younger generation. The award is presented annually by the
President of the Republic on Italian Quality Day.
The President of the Italian Republic Sergio Mattarella conferred the Leonardo Awards 2014,
now in their twentieth edition, on 27 April 2015.
This year the Leonardo Startup award went to Ennova, a recent innovative company that has
successfully developed an innovative remote service model for the telecommunicationsindustry.
Ennova was founded in 2010 in the I3P incubator at Turin Polytechnic with the mission to
design, develop and release new models for companies in the telecommunications, financeand utilities industries that wanted to streamline their business processes and improve theuser experience. In an increasingly digital world, where smartphones and tablets havebecome inseparable part of life for many, and where the smart home and smart city businessis about to take off, simplifying and improving assistance and configuration processes means
adding value to customers and helping the sector's operators to achieve a higher turnover. It
is in this context that Ennova created SOS Digital. This is an innovative remote service modelthrough which customers can get help and advice for all configuration, usage, security needs,
and the protection of their digital devices, since it gives them access to a dedicatedcompetence centre and a specialist who can connect in remote mode and work directly on thecustomer's device. This service is part of a broader assistance model that the company hascertified as the first in Europe for smartphones, tablets or PCs, as well as first in the world thatallows remote assistance for all the customer’s digital equipment, with the same technology
and operating mode. For example, by using SOS Digital, a customer can, transfer all thecontents of his/her old smartphone to a new one completely autonomously.

74 Created in 1993 from an idea shared by

Sen. Sergio Pininfarina and Sen. Gianni Agnelli, of Confindustria(Italian industry association), the ICE and a group of entrepreneurs, with the aim of disseminating andreinforcing Italy's image of excellence throughout the world
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Ennova won the award in succession to NISO Biomed, a Medtech Company that won theaward in 2013 and Silicon Biosystems, a biomedical company that was the 2012 winner.

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4.5 Global Entrepreneurship Congress 2015
The Global Entrepreneurship Congress (GEC) is an event established in 2009 at the instigationof the Kauffman Foundation, a US non-profit foundation that studies and promotes
entrepreneurship and seed financing. The main objective of the event is to promoterecognition of the economic and social function of companies, as a vehicle for employment,
growth and innovation that will have an impact on the welfare of society.
To this end, GEC operates worldwide to:foster the exchange of ideas between policy makers, innovative entrepreneurs andinvestors;strengthen the network of startups and help entrepreneurs understand that working
with communities scattered in various cities around the world can help them realise
their ideas and make them scalable;

The intent is to improve global collaboration and increase awareness of the efforts made atnational level to promote entrepreneurship and the economic development of the various
territories.
At the international application stage, in order to be awarded the organisation of the GEC
2015, the META Group received a formal endorsement from the Ministry of Economic
Development, the Ministry of Foreign Affairs, and the Ministry of Education, University andResearch.
The 2015 edition was thus held in Milan over the weekend of 16 to 19 March 2015, involving
20,000 people from 159 countries, including more than 200 investors. The 103 events held
within the premises of the MiCo (Milano Congressi) can be classified into the following types.
Main Event: Organisation of the main events, with international speakers, held in English, inthe plenary hall of the MiCo: 17 March 2015: the date of the Global Entrepreneurship Congress, with assistance from the
Kauffman Foundation, ITA, and the Ministry of Economic Development; 17 March 2015: Start and Scale Forum, dedicated to visionary entrepreneurs who havehelped the entrepreneurial ecosystem of their own country expand. The companies invited
to present their development history included Italian companies (Illy, Eataly) andinternational companies (Google, PayPal); 18 March 2015: Research and Policy Summit, dedicated to the most advanced public
policies in terms of entrepreneurship and innovation. Ample time was given to the US
Small Business Administration, the Italian Trade Agency, and the Ministry of Economic
Development; 18 March 2015: GEC Cities Challenge, with awards for the cities that achieved the mostinternationally in terms of the development of competitive entrepreneurial ecosystems(Milan, Buenos Aires, Genk, Yerevan and Kansas City); 19 March 2015: Global Angels Summit – an international gathering of investors which
illustrated, through an open discussion with the participants, the investment operating
methods typical of venture capital operators. Investment case studies were presented
during the session.

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Institutional Events with the participation of institutional representatives both at local,
national and international level. There was large-scale participation by the press:


The first "SME Ministerial" meeting was held on 17 March 2015, with the active
contribution of the US Embassy in Italy and the US Small Business Administration.
Ministerial representatives of the United States, Italy, Mexico, South Africa, Cuba,
Croatia and Denmark met to discuss how to work together to promote development
and the creation of new SMEs able to impact on employment and innovation in key
sectors of their respective national economies;

presentation in the Italian Pavilion and final approach stage at EXPO 2015;

presentation of the investment opportunities provided by the new Smart & Starttender notice;presentation of opportunities for young people, students and wannabe entrepreneurs
provided by the Garanzia Giovani (Youth Guarantee) plan.

Business themed workshops: there have been numerous workshops, both in English and
Italian, all linked to issues related to doing business.
More specifically, experts were called to manage seminars and events on the following topics:

crowdfunding as a means of alternative finance;the digital economy and internet of things, new key sectors for the European economy inwhich to invest;financial instruments under the new 2014-2020 programming;

opportunities for young people and new entrepreneurs provided by public and European
development programmes;"how to pitch" seminars for entrepreneurs, with an emphasis on classical themes(introduction, problem, solution, market, IPR, team, investment proposal, etc.) highlighting
the critical points for the evaluation for each section, and on unconventional issues (e.g.
non-verbal communication elements);

entrepreneurship education, from high school to University, with the participation of highschool teachers and several Universities;the role of social innovation for the development of cities and territories, with theparticipation of young Italian entrepreneurs operating in the social field.

Pitching competition and matchmaking event with investors: during the conference, there were
two different pitching competitions for entrepreneurs and startuppers organised by:Ninja Marketing;

ICE Italian Trade Agency (with the support of Get in the Ring).

Investor days and matchmaking events with investors were also held.
Events dedicated to students: to stimulate creativity, curiosity and the study ofentrepreneurship, with different approaches, for all ages:

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Hack School: 600 high school students from all over Italy were involved by the Ministry of
Education, META Group and Scuola Zoo in a giant Hackathon to find innovative solutions
to improve life in schools; Coder Dojo: realisation of workshops for middle school students, to teach the first steps ofcoding, a skill that is essential in today's digital economy;

 Science laboratories: to interactively stimulate elementary school students and encouragethem to study science, promoted by Golinelli Foundation.

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4.6 Contamination Lab (CLab)In the previous report to Parliament of March 2014, the Contamination Lab (CLab)programme was cited as a project that was still in its infancy. It is important to underline that,a year and a half later, the programme is fully under way and has already produced effects
that can be analysed. Before explaining them, it is appropriate to reiterate the genesis,characteristics and purpose of this initiative.
In early 2013, based on the acceptance of a proposal contained in the Restart, Italy! report of
the Task Force on startups, the Ministry of Economic Development and the Ministry of
Education, University and Research (MIUR) developed a policy designed to expose students toa stimulating environment for the development of innovative projects with an entrepreneurial
ambition. This project is based on the need to bring together two worlds that are often
distant, Universities and industry, and in particular to promote the pool of skills necessary forthe creation of new innovative companies. The Government's plan was for this target to beachieved through the creation, in the Italian universities, of "Contamination Labs" ("CLabs"),
physical spaces for "Contamination", aimed at fertilising horizontal skills between students ofdifferent subjects in which they promote the culture of entrepreneurship and innovation, in
an interdisciplinary way, as well as new learning models.
With the fourth ‘line’ of the "Startup Notice" published on 13 March 2013, with Ministerial
Decree 436, funded by the Ministry of Education with national resources previously assigned
to the Research and Competitiveness 2007-2013 PON and then reprogrammed to participate
in the Action Plan for Cohesion, an overall budget of €1 million was made available to build
these facilities, and the value of the projects submitted was not allowed to exceed €200,000.
In light of the identified financial source, the territorial area receiving the intervention wascomposed of the Convergence Regions: Campania, Apulia, Calabria and Sicily.
A committee of experts selected by the Ministry of Education and the MiSE selected, amongthe 17 applications it received, the projects put forwarded by the Università degli Studi
Mediterranea di Reggio Calabria, the Università della Calabria (Cosenza), the Università degliStudi di Catania and the Università degli Studi di Napoli Federico II. The four projects, allcurrently under development, will be completed by the end of the first half of 2016, and theirprogress is monitored by the ministries concerned with the collaboration of a team of external
evaluators.
The notice included four cycles of six-monthly activities during the two-year term of the
programme, in order to allow the participation of a large student audience and to promote a
periodic exchange by the students involved. In practice, it was agreed that these cycles would
be held at the academic semesters. Of the four universities involved, only one, Cosenza,
maintained the teaching schedule it had initially set, starting teaching in the second semesterof the academic year 2013-2014, and thus its CLab currently hosts the third cycle ofparticipating students. At the date of publication of this report, the other CLabs were insteadin the second cycle. This initial slowdown was due to certain bureaucratic and organisationaldifficulties encountered by the Universities, in particular concerning the identification of aphysical space to accommodate the CLabs and their equipment. The possibility of granting an
extension to allow the full performance of the originally planned activities is being discussed
at the Ministry of Education.
On the administrative level, the Universities involved have identified an institutional
University relations representative and, through an internal notice, a manager of the CLab incharge of organising teaching in coordination with the teachers and students involved. The
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latter were selected by public notification, taking several factors into account: not only
academic curriculum and professional skills but also any extracurricular skills, the reasons
explained during interviews and the quality of projects submitted. On a procedural level, atseveral universities, selection was carried out by sending video applications and, at a laterstage, using cognitive interviews. The selections, made at the beginning of each semester,
tried to encourage the participation of different universities, and the representativeness of thevarious faculties, as well as students enrolled in different stages of their academic career(three-year degrees, five-year degrees, graduates, doctoral students) so as to promote a real
fertilization effect within the student population, on a geographic, subject-related, and age
basis. The contamination also involved a number of external partners, with dozens ofinstitutions, companies and associations involved in the initiatives.
Some 445 students were involved in CLabs at 30 June 30, broken down as follows (thenumber of applications received are shown in brackets):
st

nd

rd

1 Cycle2 Cycle3 CycleTotal

CLab Cosenza

74 (106)

84 (113)64 (77)222 (296)

CLab Reggio Calabria

36 (36)39 (39)075 (75)

CLab Naples

35 (37)48 (99)0

83 (136)

CLab Catania

30 (127)

35 (74)065 (201)

Total

175 (306)

206 (325)

64 (77)445 (708)

Source: Based on Ministry of Education data

In describing the learning methods adopted, the nature of the teaching and communications
activities carried out and the type of projects created so far, it was decided to highlight those
aspects common to the four CLabs, transcending the specific features of each one.
Focusing on teaching methods, a common feature of CLabs is that they prepare a "minimum
starting training service" to familiarise the students with the themes and vocabulary ofstartups and with cultural paradigms typical of the knowledge society and economy.
Interactive tools like the business game have been added to classic teaching practice,promoting the construction of new learning processes. At the same time, from the firstmeetings, the students have been directly involved in developing and proposing otheractivities and pathways, in relation to the specific project needs, with a progressive stages
approach to the implementation of a business plan.
To connect the experience of CLabs to teaching institutions, methods for the recognition of
credits were identified, so this experience is an integral part of the academic career of thestudents involved.
A key role was that of meetings with players who were not from the University: first, local
startups, but also 'mature' companies, investors, professional, cultural and business
representation associations, in a two-way exchange relationship with the local and national
production system. Lectures, seminars and testimonies from these external parties covered all
the phases for planning and starting a business. This went from its establishment tomanagement of a business model canvas, to the drafting of a successful business plan, without
neglecting important aspects of entrepreneur’s personal communication with a thoroughreshaping of the curriculum vitae and then concluding with effective communication of thecompany's brand. Particular attention was paid to creating the elevator pitch for participation
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in national and international competitions. In some cases, this fertile relationship withexternal parties resulted in coaching by successful entrepreneurs acting as mentors andstudents getting involved in the implementation of projects. The encounters generated in thisway produced dynamic dialectical observation, evaluation and remodelling of proposedbusiness schemes.
Typically, two types of projects are developed by CLabs: business projects and innovative
projects with a social content. Business projects develop products and services in the fields ofenergy conservation, the development of the local area and cultural heritage, both artistic andarchitectural, e-commerce, digital manufacturing and Welfare 2.0. Some stood out during thestartup competitions organised at local and regional level. On the other hand, the CLabs werealso an opportunity to develop initiatives with social content aimed at improving the qualityof life for the student population (social exchanges with international students, support andservices for students).
The entrepreneurial project teams generated by CLabs are characterised by cross-disciplinaryand specialist skills in different areas (humanities, economics, scientific-technical, social andanthropological), testifying to the cross-fertilising contamination referred to in the name of
the training programme.
The following an initial overview of the business projects created by the CLabs at 30 June
2015:
Number and type of business projects
NA
7

Number of projects initiated

1st cycle
CS RC
7
3

CT
6

NA
N.D.

2nd Cycle
CS RC
CT
8
6 N.D.

Total
37

Number of technology-oriented projects

2

4

1

5

N.D.

6

3

N.D.

20

Number of projects with a social goal

5

3

1

1

N.D.

2

1

N.D.

13

Number of projects expected to result in a company being set
up within 6 months of the end of the CLab cycle

7

2

1

2

N.D.

2

1

N.D.

14

Source: Based on Ministry of Education data

In order to communicate and share the results of the activities of CLabs, the teachers andstudents involved created websites, blogs, social network profiles, audio-visual productions,radio programmes, adverts, events and seminars as well as the participation of local TV
stations.
A questionnaire submitted to the people in charge of CLabs showed the main challenges thatemerged in the implementation of the programme focused on overcoming the rivalry between
universities and teachers, the functional hierarchies within the university staff involved,
distances from companies and classic teaching activities.
It is worth noting that, to an even more pronounced extent than with the other measures
examined in this document, the effects of this programme cannot easily be described inquantitative terms. In fact, as mentioned in the introduction, considering that the underlying
objectives have a purely social and cultural dimension, and in order to capture their effects,
the most appropriate method is believed to be conducting a satisfaction survey.
A description of some of the business projects created by these CLabs is given below:

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

(Cosenza CLab) The EnerJuice team registered a patent for a “Mobile devices system
for the recovery of energy from movement". It is currently working on a crowdfunding
project and will shortly create a social page.

(Cosenza CLab) The Tekove Association collects experiences created in the CLab(Calabria Town Experience) which are continued in the teaching programme of the
University “Unical Creativa”, also in collaboration with other projects and associations(among them RisorgiMenti.Lab, a social innovation project funded by the Ministry of
Education), to promote the integration and inclusion of cultural diversity within the
University.

(Naples CLab) Atipico Eyewear is a digital artisan workshop that makes customised
3D-printed glasses. It offers an ergonomic and customisable high market product.
Since July 2015, it has been incubated at the CSI-Incubator Naples East of themunicipality of Naples.

(Naples CLab) VasciTour proposes the redevelopment of the Neapolitan "Vasci" (inItalian bassi, ground floor flats with direct access to the road, especially found indowntown Naples) by selling packages for tourists seeking an authentic experience.
Travelers can choose from a range of packages, personalise their experience andgeolocalise the sights with the help of an app. The first beta test was carried out incollaboration with the municipality of Naples in June 2015.

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4.7 CleanStart
The Energy Services Operator (GSE), as part of the Corrente (Current) initiative, in agreementwith the Ministry of Economic Development and by virtue of its technical expertise andsupport provided to the Public Authority, monitors the cleantech sector of innovative startups
whilst offering a range of activities and initiatives aimed at their development andenhancement.
The CleanStart initiative was launched in September 2013 and helps to identify, among recent
Italian companies, which of them operate and are specialised in offering products and services
in the following sectors: renewable energy, energy efficiency, smart grid, water treatment andmanagement, home automation, waste treatment, materials, energy-storage, eco-building andsustainable mobility.
An analysis carried out at the end of May 2015 on the activities and characteristics of some
4,000 innovative startups registered in the specific special section of the Register ofCompanies as per Growth Decree 2.0, shows that there are 361 companies that operate in thecleantech field. At the sectoral level, a wide representation of the different sub-supply chainsof the national green economy emerges. In particular, of the 361 startups being analysed, 32%
operate in the renewables sector, 29% in the eco-building and smartgrid sectors, 18% inenergy efficiency and home automation, 17% in waste management and environmental
services, and 4% in the green mobility supply chain.

Chart 4.10 Innovative startups operating in the cleantech field – information updated
on 31 May 2015

105
29%

114
32%

Fonti rinnovabili
Efficienza energetica
Ambiente e waste management
Green Mobility

14
4%
62
17%

66
18%

Altro - es. Smart Grid,
Ecobuilding

Source: GSE

Startups operating in the cleantech field are present in all Italian regions, with a regional
distribution concentrated in Lombardy (63 startups), Emilia-Romagna (45) Lazio (31),
Piedmont (30) and Veneto (29).

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The Italian province with the largest number of cleantech startups is Rome (28), followed byTurin (22) and Milan (20).
Chart 4.11 Cleantech innovative startups by region – information updated on 31 May
2015
Lombardia
Emilia Romagna
Lazio
Piemonte
VenetoSicilia
Trentino Alto Adige
Toscana
Friuli-Venezia Giulia
MarcheCampania
PugliaAbruzzo
Liguria
Sardegna
Calabria
UmbriaBasilicata
Valle D'Aosta
Molise

63
45
31
30
29
21
19
18
18
17
16
15

11
8
6
6
4
2
1
1

Source: GSE

The Corrente (Current) programme, through the CleanStart initiative, together with the
Ministry of Economic Development and in collaboration with various sectors, offers a range ofactivities and services dedicated to Italian cleantech startups, to assist, enhance and promote
them.
The following training and support is focused on all Italian cleantech startups:
Europlanning courses
GSE, in collaboration with APRE-European Research Promotion Agency and RSEEnergy System Research, have carried out two free Europlanning training initiatives
involving 20 startups. In fact, the European programme Horizon 2020 has made over
€70 billion available for the period 2014-2020 to European companies involved in
product development, research and innovation in the renewable sources and energy
efficiency sectors. The participating startups were given the "EU Research andInnovation Funding Opportunities 2014-2020" manual published by APRE, RSE andCurrent.
Participating startups also benefited from remote assistance via the email
corrente.startup@gse.it, dedicated to meeting specific technical requirements onparticipation in European projects.

Training and presentation to venture capital funds
Current promotes the participation of cleantech startups in major initiatives involving
presentation to venture capital funds, including the Digital Energy Tour organised byLegambiente, GSE, BarCamp and Sviluppumbria, and ItaliaRestartsUp, promoted by the
Ministry of Economic Development and the Italian Trade Agency.

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Following the above training initiatives, two startups were incubated at the Business
Innovation Centre of the Umbria Region, and one of the startups was awarded publicfunding based on a notice published by the Lazio region of €100,000.
Services and activities to enhance visibility
Cleantech startups benefit from a free space in the quarterly journal of the GSE"Elementi" under the heading" The World of Corrente (Current) "in order to illustrate
the activities, products and innovative technologies offered by young Italiancompanies.
In May 2015, five startups had already made use of the special section dedicated toinnovative startups operating in the Italian national green economy.

In addition, through its website corrente.gse.it, Corrente (Current) provides a specific section
for cleantech startups to inform them about the opportunities offered by the Italian green
economy system, in order to help them find technology partners/financial services and toprovide scouting to identify potential foreign markets of interest.

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4.8 Support by the Chambers of Commerce
In early 2014, Unioncamere approved a system-wide initiative, using the equalization fund, tosupport innovative startups. This framework was agreed with the Technical Secretariat of the
Ministry of Economic Development and its Directorate General for Industrial Policy,
Competitiveness and Small and Medium companies. It consisted of a nationwide roadshow,
focused on this type of business. The purpose was to give information about the ample
network of facilities provided by national legislation to those startups that are registered in
the special sections of the Company Registry (Registro delle Imprese). It was aimed atcommunicating this to a wide audience of professionals – primarily notaries and accountants,business associations, centres specialising in business services, aspiring entrepreneurs andinnovative companies.
Unioncamere accepted the proposal from the Technical Secretariat of the Ministry and thecompetent Directorate-General, in the belief that it was necessary to "push" to accelerate theturnover of manufacturing businesses in our country, and to reallocate resources in favour of
new companies with a higher innovation profile, which were a higher risk, but also offered thebest prospects for medium to long term growth.
The Chamber of Commerce of Reggio Emilia opened the stage zero of the roadshow. This
therefore favoured the entire realisation, not only to ensure high public participation
registering for the event on 4 July 2014, but also because the logic behind this seminar was
successfully replicated in subsequent stages, held between mid-November and early
December 2014.
In fact, the element most appreciated by participants during the events was the detailed
explanation of benefits and contributions under the rules in force for this type of business, aswell as the opportunity to explore any doubts and outline possible solutions to problems
encountered by operators in meetings with representatives from the Ministry.
In addition to illustrating a series of significant data on the prevalence and characteristics ofinnovative startups in the areas under consideration, another important aspect of the seminarconsisted of interventions from both public and private operators at regional and local level,
who assist SMEs to introduce and develop innovative projects and activities, in terms of
products, processes and business models.
The presentation of success stories and testimonies of startups also gave participants anopportunity to reflect, not just on the practical details of their potential for growth, but also on
the remaining obstacles limiting the full expression of this potential.
In the months immediately after the pilot event, the institution developed a schedule of events
around the country, selecting, with the Ministry, those areas with a significant existingpresence of startups, or those that appear likely to see an increase. This was followed by theselection of the Chambers of Commerce facilities that would be used for the seminars.
The dates set by the Technical Secretariat of the Minister, the competent Directorate Generaland Unioncamere, in agreement with the Chambers organising of the events, were as follows:Treviso, 14 November 2014 (organised by t2i, a consortium of the Chamber ofCommerce of Treviso and Rovigo);

Turin, 21 November 2014 (organised by Unioncamere Piemonte and the TurinChamber of Commerce);Trento, 24 November 2014 (organised by the Chamber of Commerce of Trento);
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Campobasso, 25 November 2014 (by Unioncamere Molise, Campobasso Chamber ofCommerce);Genoa, 27 November 2014 (organised by the Chamber of Commerce of Genoa);Salerno, 2 December 2014 (organised by the Chamber of Commerce of Salerno andUnioncamere Campania);Bari, 4 December 2014 (organised by the Chamber of Commerce of Bari and Apulia
Unioncamere).

Overall, the roadshow was attended by about eight hundred participants, including
professionals, representatives of business associations, heads of public and private service
centres, entrepreneurs, business angels and startuppers.
The choice of organisations to be involved made it possible to model the events, offering, on acase-by-case basis, the testimonies of the most active and incisive local companies.
Although not a planned objective, it was perhaps not coincidental that the regional Chambersof Commerce and Unioncamere who organised the roadshow stages, and the other service
facilities that took part in it were frequently also nodes in the Italian network of the Europe
Enterprise Network (EEN) along with specialist organisations, who promote the international
technological cooperation of small and medium size Italian companies, as well as facilitating
access to the European funding of most direct interest to them.
Strong interest was also seen at similar meetings organised directly by other Chambers ofCommerce, such as the Chamber of Commerce of Ferrara on 11 December 2014 (once again
with the support and collaboration of the Ministry of Economic Development), which wasattended by over one hundred representatives from various private and public organisations.
In addition to seminars for disseminating basic and specialised information, other system
structures in any case initiated a number of important services for these companies.
The conception and organisation of the Maker Faire by AssetCamera (the special agency of the
Chamber of Commerce of Rome specialising in innovation), which last year held its second
edition, deserves a special mention. The deeper meaning of this international event, which
involved 40,000 people in 2014, has now gone far beyond the original objectives of open
innovation and co-working in the digital artisans (makers) world.
The scope of the Chamber of Commerce initiatives also includes:


projects and activities of the Chamber of Commerce of Milan on innovative startups,
financial investors, crowdfunding and finance for social companies, as well as thecollaboration of Innovhub (the special agency of the Chamber of Commerce forInnovation) with Bocconi University and the municipality of Milan in relation to its
special incubator (Speed Me Up);

the OPENiSME European project of t2i – Transfer Technology and Innovation, for the
dissemination of Open Innovation in SMEs, simplifying their first contact with
universities and research centres. This is now part of the Open Platform for Innovative
SMEs consortium coordinated by University College London;the agreement of the Chamber of Commerce of Trento with the INPS to improveinformation on the constraints and pension obligations of innovative startups, toreduce cancellations;the activities carried out indirectly by various Chambers of Commerce for thesecompanies, through the management of (and support for) some local science and
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technology areas and incubators, whether or not they are certified in accordance withlaw;
the Tech Hub project, promoted by the Chamber of Commerce of Naples, the University
Federico II and the Bank of Naples, with the collaboration of CESVITEC (the special
agency of the Chamber for Innovations) and the Startup Europe Partnership,
coordinated by Mind the Bridge;notices issued by these and other structures of the Chambers’ system regarding
financial contributions (exclusive or mainly reserved contributions) for innovative
startups, as well as more personalised services to facilitate access to venture capital, as
well as for their incubation and acceleration.

The most frequent collaborations of the Chambers of Commerce and specialised nodes of their
network for innovation in SMEs mainly concern company associations (Confindustria, CNA,
Confcommercio, etc.), science centres, particularly in supporting startups, some regions andtheir dedicated development agencies, sometimes the provincial municipalities, other Italianand European Universities, banks, investment funds and international organisations.

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4.9 Online communication and promotional activities
The web is undoubtedly the preferred vehicle for promotion and information in respect of the
Ministry's policy in favour of innovative startups.
All regulatory changes related to innovative startups, as well as a multitude of statistical data
about registered companies can be found online at two sites that have, over time, seen asignificant increase in the number of users.
The section dedicated to innovative startups on the Ministry of Economic Development
website recorded 19,562 visits in the first half of this year. Some 60,528 pages were viewed in
2014. With reference to data for the first half of 2015, the following were recorded for thegeographical locations of visitors to the website: in first position, Rome (with 19.4% of thevisits), Milan (13.6%) and Naples (4.4%), followed by Catania (3.8%), Padua (3.2%), Bologna(2.8%), Palermo (2.7%), Turin (2.3%) and Bari (2.1%).
Analysis of visits to the website of the Chamber of Commerce system dedicated to innovative
startups and certified incubators shows there was a substantial increase in the number ofvisits, from 99,604 (first quarter of 2013) to 98,066 (first quarter of 2014) to 180,573 in the
1st half of 2015. The same dynamic applies to the total number of connected users (83,650 in
the 1st half of 2013, 91,255 in the 1st half of 2014 and 170,948 in the first quarter of 2015). As
for the geographical distribution of visitors, the ranking is led by Rome, Milan and Naples, andthe USA, UK and Germany for foreign countries.
Another initiative worth attention is the Startup Manifesto Policy Tracker, a kind of online
dashboard promoted by the European Commission. Using this, Member States are called on to
give an account of policies undertaken at national level in regard to innovative
entrepreneurship support (promotion of digital education, measures for the attraction of
innovative talent, tools to facilitate the connection between companies and the researchcommunity, and so on). The aim of this project is to allow a comparison and assessment of thepropensity for innovation of the various European regulatory environments. Italy joined thisinitiative, recognising it as an opportunity to promote its recent progress in terms of policies.

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Statistical tables
Table A Indicators measuring the presence of innovative startups at a regional level – data updated on 30
June 2015
Area
Territorial

Innovative
startups%

Joint-stockcompanies
registeredInnovative
startups per
10,000companies

LOMBARDY

916

21.8%

314,242

29.1

EMILIA-ROMAGNA

499

11.9%

108,826

45.9

LAZIO

414

9.8%

253,332

16.3

VENETO

317

7.5%

114,006

27.8

PIEDMONT

297

7.1%

71,586

41.5

TUSCANY253

6.0%

99,72925.4

CAMPANIA

244

5,8%

145,61716.8

SICILY182

4.3%

86,834

21.0

MARCHE179

4.3%

37,528

47.7

APULIA165

3.9%

76,655

21.5

TRENTINO-ALTO ADIGE

143

3.4%

18,12378.9

SARDINIA

122

2.9%

32,83937.2

FRIULI VENEZIA GIULIA

119

2.8%

23,37050.9

CALABRIA

101

2.4%

30,937

32.6

ABRUZZO80

1.9%

31,79925.2

LIGURIA67

1.6%

31,27921.4

UMBRIA54

1.3%

20,345

26.5

BASILICATA

25

0.6%

9,979

25.1

MOLISE

18

0.4%

6,340

28.4

VALLE D'AOSTA

11

0.3%

2,260

48.7

NORTH-WEST

1,291

30.7%

419,367

30.8

NORTH-EAST

1,078

25.6%

264,32540.8

CENTRE900

21.4%

410,934

21.9

SOUTH

937

22.3%

421,000

22.3

ITALY

4,206

100.0%

1,515,626

27.8

Source: Based on Infocamere data

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Table B Indicators measuring the presence of innovative startups at a provincial level – data updated on 30
June 2015
Province

Geographic
al areaInnovative
startups%

Joint-stockcompanies
registeredInnovative
startups per
10,000companies(A)

Indicator
ranking
(A)

1

Milan

North-West

609

14.5%

164,536

37.0

25

2

Rome

Centre362

8.6%

215,012

16.8

73

3

Turin

North-West

226

5.4%

39,66157.0

4

4

Bologna

North-East

135

3.2%

25,91352.1

9

5

Naples

South

125

3.0%

81,649

15.3

80

6

ModenaNorth-East

111

2.6%

21,04852.7

87

Florence

Centre103

2.4%

29,190

35.3

29

8

TrentoNorth-East

102

2.4%

9,472

107.7

1

9

Padua

North-East

88

2.1%

23,396

37.6

24

10

Cagliari

South

85

2.0%

15,494

54.9

7

11

Bari

South

85

2.0%

34,291

24,8

50

12

AnconaCentre77

1.8%

10,413

73.9

3

13

Bergamo

North-West

71

1.7%

28,147

25.2

46

14

Brescia

North-West

71

1.7%

32,198

22.1

56

15

TrevisoNorth-East

68

1.6%

20,802

32.7

34

16

Palermo

South

64

1.5%

18,892

33.9

32

17

Pisa

Centre57

1.4%

11,118

51.3

10

18

VeronaNorth-East

57

1.4%

22,332

25.5

45

19

Reggio Emilia

North-East

56

1.3%

12,673

44.2

16

20

Genoa

North-West

55

1.3%

19,035

28.9

41

21

Catania

South

55

1.3%

21,876

25.1

48

22

Salerno

South

53

1.3%

25,866

20.5

59

23

VeniceNorth-East

50

1.2%

16,688

30.0

40

24

Parma

North-East

49

1.2%

12,189

40.2

20

25

Cosenza

South

47

1.1%

13,148

35.7

27

26

Lecce

South

47

1.1%

13,539

34.7

31

27

TriesteNorth-East

41

1.0%

4,017

102.1

2

28

BolzanoNorth-East

41

1.0%

8,651

47.4

14

29

Perugia

Centre39

0.9%

15,472

25.2

47

30

Vicenza

North-East

39

0.9%

23,533

16.6

74

31

Macerata

Centre

36

0.9%

7,367

48.9

12

32

Ravenna

North-East

34

0.8%

7,772

43.7

17

33

Udine

North-East

34

0.8%

11,029

30.8

38

34

Ascoli Piceno

Centre

33

0.8%

5,828

56.6

5

35

Pordenone

North-East

32

0.8%

5,724

55.9

6

36

Forlì-Cesena

North-East

32

0.8%

8,324

38.4

22

37

FerraraNorth-East

31

0.7%

6,091

50.9

11

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Table B Indicators measuring the presence of innovative startups at a provincial level – data updated on 30
June 2015
Province

Geographic
al areaInnovative
startups

38

Monza-Brianza

North-West

31

39

SassariSouth

40

Caserta

41%

Joint-stockcompanies
registeredInnovative
startups per
10,000companies(A)

Indicator
ranking(A)

0.7%

21,954

14.1

86

30

0.7%

12,598

23.8

52

South

30

0.7%

20,496

14.6

83

Piacenza

North-East

27

0.6%

6,198

43.6

18

42

NovaraNorth-West

27

0.6%

6,494

41.6

19

43

Pavia

North-West

27

0.6%

9,465

28.5

42

44

Pescara

South

26

0.6%

8,385

31.0

37

45

Siena

Centre

25

0.6%

6,604

37.9

23

46

Reggio Calabria

South

25

0.6%

7,084

35.3

28

47

Como

North-West

25

0.6%

12,389

20.2

61

48

Catanzaro

South

24

0.6%

6,112

39.3

21

49

L'Aquila

South

24

0.6%

6,833

35.1

30

50

Cuneo

North-West

24

0.6%

7,532

31.9

36

51

RiminiNorth-East

24

0.6%

8,618

27.8

44

52

VareseNorth-West

24

0.6%

19,669

12.2

90

53

Pesaro and Urbino

Centre

23

0.5%

9,647

23.8

51

54

Benevento

South

22

0.5%

7,851

28.0

43

55

Messina

South

22

0.5%

12,023

18.3

67

56

Potenza

South

21

0.5%

6,546

32.1

35

57

Frosinone

Centre19

0.5%

12,965

14.7

82

58

LatinaCentre19

0.5%

17,004

11.2

92

59

Lucca

Centre17

0.4%

10,328

16.5

75

60

ArezzoCentre

16

0.4%

9,259

17.3

70

61

Terni

Centre

15

0.4%

4,873

30.8

39

62

Lecco

North-West

15

0.4%

6,641

22.6

54

63

MantuaNorth-West

15

0.4%

7,502

20.0

62

64

Chieti

South

15

0.4%

8,123

18.5

65

65

Teramo

South

15

0.4%

8,458

17.7

68

66

Foggia

South

15

0.4%

11,241

13.3

87

67

Lodi

North-West

14

0.3%

3,785

37.0

26

68

Campobasso

South

14

0.3%

4,163

33.6

33

69

Agrigento

South

14

0.3%

5,583

25.1

49

70

Prato

Centre

14

0.3%

9,099

15.4

79

71

Avellino

South

14

0.3%

9,755

14.4

85

72

LivornoCentre

13

0.3%

6,639

19.6

64

73

Gorizia

North-East

12

0.3%

2,600

46.2

15

74

Cremona

North-West

12

0.3%

5,356

22.4

55

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Table B Indicators measuring the presence of innovative startups at a provincial level – data updated on 30
June 2015
Province

Geographic
al areaInnovative
startups%

Joint-stockcompanies
registeredInnovative
startups per
10,000companies(A)

Indicator
ranking(A)

75

Taranto

South

12

0.3%

10,763

11.1

93

76

Aosta

North-West

11

0.3%

2,260

48.7

13

77

Trapani

South

11

0.3%

7,326

15.0

81

78

Fermo

Centre

10

0.2%

4,273

23.4

53

79

RovigoNorth-East

10

0.2%

4,812

20.8

57

80

ViterboCentre

10

0.2%

5,892

17.0

72

81

Caltanissetta

South

7

0.2%

4,485

15.6

77

82

BiellaNorth-West

6

0.1%

2,894

20.7

58

83

SavonaNorth-West

6

0.1%

4,143

14.5

84

84

Brindisi

South

6

0.1%

6,821

8.8

95

85

Alessandria

North-West

6

0.1%

7,851

7.6

97

86

BellunoNorth-East

5

0.1%

2,443

20.5

60

87

La Spezia

North-West

5

0.1%

4,746

10.5

94

88

Pistoia

Centre

5

0.1%

7,221

6.9

99

89

Syracuse

South

5

0.1%

8,295

6.0

100

90

Isernia

South

4

0.1%

2,177

18.4

66

91

Rieti

Centre

4

0.1%

2,459

16.3

76

92

Asti

North-West

4

0.1%

2,567

15.6

78

93

Nuoro

South

4

0.1%

3,226

12.4

89

94

Matera

South

4

0.1%

3,433

11.7

91

95

Oristano

South

3

0.1%

1,521

19.7

63

96

Enna

South

3

0.1%

1,732

17.3

69

97

Vibo Valentia

South

3

0.1%

1,766

17.0

71

98

Vercelli

North-West

3

0.1%

2,313

13.0

88

99

Sondrio

North-West

2

0.0%

2,600

7.7

96

100

Crotone

South

2

0.0%

2,827

7.1

98

101

Massa-Carrara

Centre

2

0.0%

6,111

3.3

102

102

Verbano-Cusio-Ossola

North-West

1

0.0%

2,274

4.4

101

103

Imperia

North-West

1

0.0%

3,355

3.0

103

104

Grosseto

Centre

1

0.0%

4,160

2.4

104

105

Ragusa

South

1

0.0%

6,622

1.5

105

Note: the territorial breakdown does not take into account the following provincial boundaries: Barletta-AndriaTrani, Carbonia-Iglesias, Medio Campidano, Ogliastra, Olbia-Tempio.
Source: based on Infocamere data

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Methodological Appendix
Database sources and information content
The sources of information used to build the innovative startups database are discussed in this chapter. The
chapter is divided into three sections. The first provides an overview of the sources used and the timing of theirdistribution, while the second section provides a brief description of each source. Finally, the last part contains a
description of the main characteristics of the web dedicated to innovative startups in progress.
OVERALL DATABASE FRAMEWORKThe innovative startups database (henceforth DBSUI) is built and supplied by sources of a statistical andadministrative nature.
The DBSUI was developed starting from the list of innovative startups contained in the archives of the Chambersof Commerce. The entire list was obtained by combining data for three moments in time, respectively on 31
December 2013, 31 December 2014 and 30 June 2015. It should be noted that the 3 available situations are not
only incremental in nature: it is possible that a company ceased to be registered as a startup or is present at
different times (registration, termination, new registration). These cases are a minimum subset.
The list of startups was then enhanced by a variety of information available both from Istat data and in thearchives of other parties (INPS, Italian Revenue Agency, Consob, etc.). A significant part of the work involved
listing the data available for assessing the performance of startups, trying to reduce duplication when requestingand processing data. For example, if a source was already available in the Istat data, a further request was notmade, or the supply of data was expected to take into account the future needs of the report to Parliament.
In general, statistical sources managed by Istat include information from:

statistical registers – the ASIA register of companies (statistical inventory of companies that are
trading), the registry of the business groups, and the ASIA-employment register;

information systems, based on the massive use of administrative data, integrated with that of the twomain direct surveys on companies (SMEs: sample of companies with fewer than 100 employees; SCI
census on those with 100+ employees) – FRAME-SBS;statistical surveys – foreign trade in goods;

 administrative sources: such as Chamber of Commerce, taxation and social security data.
The first goal of the summary of information flows used was the processing of the ASIA-companies and ASIAemployment data, to determine the number of companies that were trading during the year and thecorresponding number of employees. It was possible to extract the subset of startups from these files, by using
the list of companies registered in the specific registers of the Chambers of Commerce.

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Graph A Representation of key information provided to supply the database

Once the list of companies and its employees has been defined, is possible to extract, for each company, its
annual economic profile using the FRAME-SBS information system. Here too, the subset of startups was
extracted to supply data to the DBSUI.
Finally, the DBSUI obtains data from the tax files relative to the individual measures in favour of innovative
startups, such as, for example, investments in startups provided by individuals or companies.
UPDATE TIMINGThe timing of the database's updates reflects the timing of the release and processing of the various sources. The
ASIA and FRAME-SBS sources are released 18 months after the end of the relevant year. The annual data for2013 was available in June 2015. The same timing applied to tax information with reference to the year ofincome (in June 2015, income related to 2013).
The most up to date information, in this case, related to 2014, and involves information about employment(employees), shareholders and the first issuance of the financial statements.

CONCISE DESCRIPTION OF INDIVIDUAL INFORMATION FLOWS
A. Istat sources The ASIA statistical Register of trading Enterprises
Since 1996, Istat has developed the ASIA statistical register of trading enterprises to meet the requirements of
EU Council Regulation No. 2186/93 regarding Community co-ordination in the development of company
registers for statistical purposes. The ASIA-Enterprise register is composed of economic units engaged in tradesand professions in industry, trade and services to companies and households, and provides identifying
information (company name and address) and structure (economic activities, employees and independent
workers, type of company, activity start and end date, turnover) about these units.
As well as providing the information base for analysing the evolution of the structure of Italian companies andtheir demographics, the ASIA register is the reference point for surveys on enterprises conducted by Istat. The
register is updated annually by integrating information sources of a various types from both administrative andstatistical sources.
The variables included in the register are classified according to four types:


identifying variables (identity codes, company name, address and other elements for the precise
identification of the unit in the area);

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

stratification variables (economic activity classified according to NACE classification, type of enterprise ,company size, in terms of the average annual number of employees and self-employed staff, as well as
turnover) and

demographic variables (date of incorporation and termination of the enterprise, dates of events such as
spin-offs, mergers or arrangements with creditors, bankruptcies, liquidations, etc.),

 relationship variables, about the relationships between units.
To generate the production of statistical information, companies are classified according to their economic
activities, defined in accordance with a specific level of the Ateco (Italian version of NACE) nomenclature.
Economic activity is the combination of resources, such as equipment, labour, manufacturing techniques,information networks or products, leading to the development of specific goods or services. Companies aregrouped based on their exclusive or main economic activity, according to the prevalence criterion.
 The Asia-Employment register
The statistical register on Employment, called ASIA-Employment, is a database that produces information on anannual basis, using the national and international statistical system's harmonised official definitions on
employment, according to a Linked Employer-Employee Data (LEED) type structure. It contains information
about the characteristics of companies, individual workers of a certain population, and characteristics of theemployment relationships for each individual in the defined time interval. Individuals characteristics are thosethat are demographic and invariant over time, such as gender, age and place of birth; the characteristics ofcompanies are present in the ASIA Enterprise register (and local units) such as economic activity, type ofcompany, turnover class, age of the company, membership of business groups and location. These characteristics
can vary over time and the validity interval for the information is one year, in line with the ASIA updating period.
The characteristics of existing employment relationships for an individual are those, appropriately processed,
contained in the administrative sources used to develop ASIA-employment. The types of workers in the registry
are: self-employed, employees, external workers.
The information content of the Asia-Employment register is based on three levels of information:i) company level, where the information structure is perfectly aligned with the data updated anddisseminated by the Asia-Enterprise registry;ii) individual level, for which demographic variables can be assigned andiii) employment variables most closely related to the employment relationship of the individual in
relation to a given company.
The company-employment report uses two classification levels: the type of workers and thecharacteristics of the employment relationship that vary according to the type of work. 4 types ofworkers were classified: self-employed, employees, external workers who are not VAT registered,temporary workers (formerly called interim workers).
 The anticipated Asia register – the anticipated estimate of companies with employees
To improve the timeliness of the information normally provided by ASIA-companies, since 2013Istathas
disseminated a new product (anticipated Asia) that regards an anticipated estimate of information about the
production structure of the country in relation to the population of enterprises with employees.
The EMENS source, appropriately processed, provides data about dependent employment and the demographic
and social characteristics of workers (gender, age, etc.), as well as the principal nature of the way in which theemployment relationship is realised, information similar to that contained in the annual Asia-employment
register.
Finally, information from the tax authorities’ master file and Chamber of Commerce Register of Companies areused to estimate the date trading will cease and the characteristics of new companies, when none of the othersources are available.
The available and disseminated information is as follows: enterprises that are trading and have employees;
structural variables such as location, economic activity, number of staff (self-employed and employees), type ofcompany; the main social and demographic characteristics of employees (typically, by age group and country oforigin), the type of contract of employees (temporary/open-ended).
 The Register of Groups of Enterprises
The Statistical Register of Groups of Enterprises, developed in compliance with European regulations No.
177/2008 and No. 696/1993, in accordance with the harmonised methodology approved by Eurostat, is realised
by integrating administrative and statistical sources. The population considered for the reconstruction of the
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Groups consists in all corporations belonging to groups and included in the scope of observation of the Asiaenterprises Statistical Register.
A Group of companies is the higher hierarchical statistical unit, which may include several legal units and otherenterprises. The development of a statistical register is part of the strategies promoted by Eurostat for the
implantation of a system of statistics on companies, which includes available information about ownership.
In particular, it establishes that the association link, indicated by Regulation No. 696/1993, must materialise for
operational purposes in actual control, exercised, directly or indirectly, by the head of the Group in respect of allother companies included in it.
The concept of control is defined in European Regulation No. 2223/1996 on the European System of Accounts(ESA 95), which, in section 2.26, states: "Control of a company" means the ability to determine the general policy,
if necessary by choosing the directors. A single institutional unit – another corporation, a family or publicauthority unit – exercises its control over a company by owning more than half of the voting shares or otherwise
controlling more than half of the shareholders' voting power. In addition, a public authority may exercise control
over a company as a result of legislation or regulations that empower it to determine company policy or toappoint the directors".
 FRAME-SBS
The FRAME-SBS information system for economic statistics is a complex system for estimating SBS variables
based on the use of big data from different sources – Financial statements, Sector Studies, income tax returns,
IRAP and Inps returns data – integrated with the Istat survey data on small and medium-sized companies andthe information base consists of Asia, the Statistical Register of companies, if active. Using existing high coverageand quality information sources for statistical purposes, Frame provides more accurate and consistent estimatesin temporal terms, with a reduction in overall costs for acquiring statistics. Frame is configured as an advanced
response to international stimuli pushing towards the progressive modernisation and harmonisation of
economic statistics on companies. The new system provides a significant improvement in the degree of
harmonisation and consistency of the whole system of economic statistics on companies.
For each Italian company, FRAME-SBS contains the main items of the income statements (revenue from sales
and services, expenditures for goods and services, labour costs, production value, intermediate costs, value
added, gross operating profit).
With regard to the administrative sources used by FRAME-SBS, please see the descriptions above. Below we
illustrate the two main direct surveys about companies, SMEs and SCIs.
 Survey of Small and Medium Companies (SMEs)
The survey of SMEs carried out by the ISTAT shows the income statements of companies with up to 99
employees. The survey was conducted by extracting a sample of companies stratified by economic activity (first
4-digit Ateco), region (NUTS 2) and class size from Istat's statistical archives of trading companies (ASIA), The
survey identifies all economic activities, except agriculture-livestock-hunting and fishing, financial activities(except activities auxiliary to financial intermediation and insurance), of public authorities and the businessactivities carried out by groups of companies and conducted by families and related groups. It is worth recallingthat the EU regulation on structural statistics requires estimates by class of economic activity (Ateco 4-digits), by
economic activity group (Ateco 3 digits), class of worker and finally by division of economic activity (Ateco 2
digits) and region. In the various editions of the survey, the sample coverage was about 3% on average and the
response rate was 50%.
 Survey of the System of Accounts of Companies (SCI)
This survey, carried out by the ISTAT, is a kind of census and is aimed at companies with at least 100 employees(about 10,000 units). The data collected refers to both the companies, classified according to the main economic
activity, and functional units, derived by separating the main economic aggregates based on the various
production lines, in order to provide consistent data for industrial economic activity. The Ateco5 digits
classification is used for the economic activities of companies.
Companies with multiple locations (companies that have local units in a number of regions are considered multilocation companies) are also required to provide data at a local level (Administrative Region/NUTS 2) regarding
the number of employees, turnover, personnel costs and investments, so as to allow the territorial breakdown ofrelated aggregates. The survey identifies all the economic activities, except agriculture, livestock-hunting andfishing, financial activities (except the activities auxiliary to financial intermediation and insurance), of public

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authorities and the business activities carried out by groups of companies and conducted by families and relatedgroups.
The following integration methods have been adopted for companies that do not respond to the survey (nonresponse):ointegration from an administrative source: with the financial statements filed by law with the
Chambers of Commerce (the financial statements have been acquired by the Istat since 1998); withdata from the IRAP declarations; with the data from VAT returns;ofor the remaining companies, integration of the required variables giving each company that does not
respond the per capita values (calculated on the number of employees) in companies of the same size,
operating in the same class of economic activity and in the same region.
Coverage, in terms of number of companies, is 55% on average, a value that with integration of theadministrative source reaches about 97-98%.
B. Chamber system sources Financial statements of joint-stock companies
Joint-stock companies are required to file financial statements with the Chambers of Commerce. They are obliged
to make them available for inspection within the Chambers' network (Infocamere). The parties responsible forthe filing of financial statements with the Chambers of Commerce are: limited liability companies (Srl) , public
limited companies (SpA), companies limited by shares, cooperatives with limited liability, cooperatives withunlimited liability, small cooperatives, consortia with external activities, foreign companies with a branch in
Italy, economic interest groups, joint-stock consortia or limited liability consortia. They exclude financial
statements submitted by companies engaged in financial intermediation and those that submit financial
statements in the format prescribed for financial companies.
Once acquired by Istat, the archive is subjected to careful analysis for proper use for statistical purposes. This
involves identifying the conceptual framework for the information being processed, identifying the relevant
population, surveying and analysis of units, characteristics, classification, timing and updating method, and theidentification of rules for converting administrative data into statistical data.
 The list of shareholders
The archive of shareholders list declarations provided by joint-stock companies registered in the Register ofCompanies, administered by the Chambers of Commerce, is based on the third section of Article 2435 of the Civil
Code, which requires publication of the list of shareholders and holders of options on shares or shares ofcompanies resident in Italy not listed on regulated markets. The directors are required to file a list ofshareholders (natural and legal persons, residents and non-resident), with the Chamber of Commerce, referringto the date of approval of the financial statements with an indication of the number of shares held, and thepersons other than shareholders who are holders of rights or entitled to constraints on these shares. “Thedeclaration must be made the first time during the formation of the company and annually within 30 days ofapproval of the financial statements.
The main information used refers to the list of shareholders (participants), identified by their tax code, and totheir subsidiaries, identified by their tax codes and to the number of shares held. In particular, the Chamber ofCommerce supplies an ad hoc extract from its Register on a specific date (in the case of startups, this extraction
took place at the end of June 2015).

C. Social security system sources INPS/EMENSThe INPS is the most important source of information for estimating employee relationships. As of 1 January
2010, all companies with employees had to send the INPS a monthly declaration, called UniEMens, with all theinformation on the pay and contributions for each individual worker, as well as those paid by the company. The
introduction of UniEMens has unified two separate forms and procedures for the acquisition of information:- Individual EMENS declarations, regarding remuneration data for individual workers;- The DM10 company form regarding data business contributions (INPS serial numbers).
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The transmission of information flows using the new electronic declarations form includes employees andworkers who belong to separate management and participating associates. The monthly transmission of the data
must take place by the last day of the month following the month to which the data refers. Since 2010, the INPS
has provided Istat with an extract of remuneration information from the monthly UniEMens declarations,
essentially corresponding to the previous EMENS declarations.
Although it is the main source about employment by companies in the private sector, UniEMens does not yet
provide comprehensive coverage. In order to achieve this, it is necessary to integrate UniEMens data with othersources: the archives of Cassa Integrazione Guadagni (CIG) for direct payment (to workers temporarily not atwork due to company employment need conditions), the ex DMag declarations for farm workers, and the ex
Enpals declarations for show business workers.
THE WEB AREA DEDICATED TO STATISTICS ABOUT INNOVATIVE STARTUPS
A new section of the Istat website dedicated to the information system about innovative startups is currently
under development.
The aim is to provide users with complete availability of data collected in conjunction with the accompanying
metadata, thus ensuring maximum transparency and accessibility free of charge, as expressly stated by thelegislator in Article 32 of Decree-Law 179/2012.
With this initiative, ISTAT seeks to continue satisfying the needs of users, the traditional demand for high quality
statistical information, combining the request with further analysis to understand and interpret economic andsocial phenomena.
News of the publication of the new web area will be communicated promptly on the websites of Istat and theMinistry of Economic Development.
Expert users interested in working on dataset about a business firm can use the ADELE Laboratory (for ananalysis of the basic data) free of charge. This is a "safe" place that is accessible to researchers and scholars tocarry out their own statistical analysis on micro data, in compliance with the rules on the confidentiality of
personal data. The Laboratory is available at Istat headquarters in Rome and at local offices (the Institute has 17
regional offices in Italy and an office for the Lazio region).
The Code of Conduct regarding the processing of statistics performed outside of the Sistan (Annex A.4 ofLegislative Decree 196 of 30 June 2003) is applicable to the Laboratory. Data security and statisticalconfidentiality are guaranteed by monitoring the work methods and the results of the analyses performed byusers.
Access to the ADELE Laboratory is free. For details, please consult the User’s Guide.
Micro data will be available as soon as the web area dedicated to innovative startups is published.

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Towards the Annual Report 2016: methodology for an impact analysis
This chapter aims to describe the proposed methodology for assessing the effectiveness of aid to innovative
startups. First, it is necessary to explain two key concepts in detail: "evaluation" and "effectiveness".
Evaluation means the impact caused by a law on one or a number of observable and measurable indicators,
known as outcome variables or more commonly outcome. In effect, it is the ability of the legislation to achieve
the desired result, precisely measured in terms of outcome.
It goes without saying that the assessment of performance depends crucially on both concepts defined above.
While we will dedicate space later on to explain how to implement the evaluation, Article 32, Section (5) of theabove-mentioned Decree-Law provides a definition of outcome in terms of growth, employment and innovation.
The second of the three outcome measures is sufficiently clear, but conversely, the first and the third remainsubject to interpretation. Usually, when referring to growth in micro economic company terms, micro means thechange in the number of people employed. Since this outcome is separately indicated, reference will be made to
turnover, added value and other measures that can represent the concept of dynamic growth. In regard to theoutcomes in terms of innovation, the issue is even more indefinite since there are no measures of innovation
obtained from administrative data. This aspect will instead be further investigated by a direct survey on
innovative startups that will be conducted in early 2016.
Let us come to the crucial point: the evaluation. The extent of the impact of a rule is the causal effect it produces.
In turn, the causal effect is defined as the difference between what happened due to public intervention,compared to what would have happened in its absence; the latter occurrence is called counterfactual.
The econometric methodology that handles these issues originated in biomedical statistics, and uses its
terminology, which distinguishes subjects that have been "treated" from those that are "untreated”, where‘treatment’ indicates companies that have benefitted from public subsidies.
Thus, according to an initial analysis, the impact assessment, in other words the effectiveness of a measure
would seem to require a comparison of the outcome variables, for example employment, relating to treated anduntreated companies. However, this simple deduction opens up to a serious problem that undermines anddistorts any comparison: the so-called self-selection problem. In particular, the treatment is administered on a
voluntary basis, no company is obliged to exploit the benefits, but these companies self-select themselves basedon characteristics that are not completely observable. A company that was founded as a startup is intrinsicallydifferent from another that was not founded as such, making comparison impractical, and if this comparison is
not informative for each of the companies in question, it is not even the case on an average basis, since theaverage is just one of the possible forms of aggregation for individual data. For example, the reasons that make it
impractical to compare treated and untreated companies can include different entrepreneurial skills that guidebusiness decisions. This ability is likely to have a direct effect on the outcome variables and, therefore, acomparison of the outcomes between treated and untreated companies will reflect the diversity of management
skills, rather than the real effect of public intervention. We may assume that a startup entrepreneur has an ability
to use new technologies that is very different from that of a non-startup entrepreneur in, for example, thecatering industry. This ability will affect the organisation of technological factors and therefore productivity,
making a comparison of the productivity of the two types of company a question of ability, rather than theeffectiveness of the intervention. This phenomenon is so important and well known in econometric literaturethat it goes under a plurality of names, such as selection bias, self-selection, selection distortion, and so on. Seenfrom another perspective, returning to the definition given a moment ago of the causal effect of legislation, it caneasily be seen that the untreated do not constitute a good approximation of what would happen to the treated in
the absence of intervention, they are not a valid "counterfactual".
From a theoretical perspective, there is only one case in which the non-treated may be used per se as a valid
counterfactual. This is where the treatment is randomly assigned, which is to say that companies did not selfselect themselves but were randomly selected and assigned to exploit the benefits. In this case, which is very
difficult, if not impossible, to achieve75 , the characteristics of the company or the entrepreneur do not count, as
the only mechanism for the allocation of treatment is chance, which, by definition, is blind.
Having said that, the heart of the problem remains: how to identify the causal effect, since it is not possible toobserve the counterfactual. Several remedies, called predictors, have been identified in econometric literature.
Under certain conditions, they are able to estimate the causal effect. Such conditions vary depending on anumber of circumstances, such as the design of the policy, availability, quality and quantity of available data. A
75 In education, there are few known cases of complete randomization of the experiment. See, for example, theexperiment called STAR implemented in the education system of Tennessee in the academic year 1985/86, theeffectiveness of which was studied by Finn and Achilles (1990) and Krueger (1999).
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detailed examination of the estimators and their underlying assumptions is beyond the scope of thismethodological note. For a discussion of this subject, please refer to Imbens and Wooldridge (2009). This reportwill only describe the functioning of the estimators proposed for the first round of the evaluation.
These consider the following:a) instrumental variables;b) propensity score matching;a) Estimate strategy using instrumental variables
The instrumental variables estimator can be effectively used in certain circumstances that lend themselves to socalled natural experimentation. It may be here, and this is the case, that legislation introduces randomness
elements. Indeed, the establishment of certain requirements for access to the special startups register is adistinction between cases that is totally exogenous to the companies receiving the benefits. Among theserequirements there is one in particular, that clearly evidences chance, this is the establishment date of not earlier
than forty-eight months, later raised to sixty by Decree 3/2015 converted into Law 33/2015, the date of entry
into force of Growth Decree 2.0. Thus, existing companies can only access the benefits of the Decree-Law if they
were not established before 19/12/2007. This requirement forms a chance dividing line between pre-existing
companies, since a company established on 18/12/2007 will be excluded from the benefits for a reason that is
purely accidental, random. There is no self-selection in the establishment date in relation to the receipt of public
intervention benefits. The instrumental variables estimator uses this chance to restore the possibility ofcomparisons between the treated and untreated categories. Therefore, by using a so-called "tool" that involves
the identification of pre-existing treated companies and the date of entry into force of the public intervention, it
is possible to infer a causal effect of the intervention.76
Note, however, that the causal effect identified in this way is the causal effect relative to a subpopulation oftreated companies, that is to say relative to those which benefitted from the treatment thanks to the fact they
already existed, and not relative to all the treated companies. This effect is known in the literature as the Local
Average Treatment Effect, often referred to by the acronym LATE.77
The positive aspects of this estimator certainly includes the fact that it is a valuable tool that really does stemfrom a chance cause. There is no need for a lot of additional information to estimate correctly the effectiveness of
the intervention, but above all, there is the fact that the estimate can be made without a particular hypotheses or
restrictive assumptions of any kind. The more negative aspects include a subpopulation to which a causal effectcan be attributed. In theory, this limitation can be mitigated under particular circumstances, which unfortunately
do not involve the issue in question.78b) Estimation strategy using propensity score matching
The second estimation strategy is based on the idea that, once conditioned on the probability of treatment,
treated and untreated companies are completely identical except for the treatment they receive. To explain thisin another way, this estimator is based on the assumption that it is possible to develop a similarity ratio oftreated and untreated companies based on the probability of treatment. Therefore, this estimation strategy
consists of two phases. The first is the estimated probability for each company to be subject to the treatment, i.e.,
the registration of startups, in accordance with certain characteristics observed by the companies themselves. In
the second phase, the so-called matching, comparing the treated companies with a given probability value, withother not treated companies with the same probability or a value that is very close. It is possible to say that, on
the basis of equal probability of treatment, a mirror image of a treated company is developed via a company thathas not been treated. There are several combination algorithms relating to treated and untreated companies(radius, nearest neighbour, kernel, and so on) that define when two or more companies can be considered the76 The following is the equation for the model:

𝑌𝑖𝑡 = Xit'β + σDPolicyit+ εit
Where Y is the outcome variable (growth, employment, innovation), X are the control variables, the DPolicy isthe variable of interest (presumably a dummy). Given the endogenous nature of the DPolicy variable, theinstrumental variables approach uses the dummy variable (DNascita_antelegge) (Dregistrations before the law)which captures the possible innovative startup status of companies established before the law came into force, asa tool in order to obtain an unbiased estimate of the coefficient σ..
77 The causal effect known as LATE was first identified and studied by Angrist (1990).
78 In this regard, see Angrist and Pishkie (2008) at p. 117.

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Annual Report on Innovative Startups and SMEs – 2015"reflection" of each other. In empirical analysis it is better to apply them all to see if and how much the final
result is sensitive to the chosen algorithm approach.79 Once the causal effects on subsets of similar companies
have been estimated, these are aggregated on the basis of a weighting mechanism.
This estimator has some advantages compared to the instrumental variables estimator, such as the fact of not
requiring the availability of a tool, and that of estimating the treatment effect in regard to all the treatedcompanies, the so-called Average Treatment Effect on the Treated, ATT, and not only on a subset, as in the caseof LATE. Conversely, the assumption on which it is based is a limit, in other words by taking into account all that
we see, we can reasonably consider treated and untreated to be comparable; this assumption is called a selection
on observables, or unconfoundedness. The first limit can be mitigated by having a highly significant database,like our database; the second can be indirectly tested using recent developments found in the literature. 80
At this point, it is important to note that the strong point of an estimator is the weak point of the other, so thejoint use of both will probably define a range of values within which the causal effect of the policy can be placed.
Construction of the untreated sample
Having defined the econometric tools to be used, what remains is the choice of companies to be included in theuntreated sample. The answer is quite simple, in the sense that because the difficulty of estimating causal effects
arises from the unobserved heterogeneity of companies, the most obvious practice to follow is to minimise theheterogeneity as far as possible, or at least the observable heterogeneity. This could be done by including
companies in the sample that are as similar as possible to the treated companies. They should therefore becompanies that could be called "potential startups", i.e. ones that satisfy the requirements for registration in thespecial section of the register of companies. Although this intuition is quite correct, the reality exposes us tocertain limitations. This is because not all the requirements are verifiable from the available Istat archives. In
particular, the requirement concerning the ownership of patents, research and development costs, and thequalifications of the work force are not verifiable.
Once the control sample is combined with the sample of the treated companies, it is possible to verify theeffectiveness of the most important individual measures, those for which information on treatment will beavailable, such as access to the Guarantee Fund for SMEs and tax incentives.
Timescales of the evaluation
To enable us to identify a cause-effect relationship, it is necessary for the cause to precede the effect, among
other things. This very intuitive condition undermines the possibility of performing an impact analysis (at least)
during 2015 and thus to account for it in this report.
In detail, the database includes information on companies available up to 2013, the year the measure wasintroduced, so at best it will be possible for there to be simultaneity of cause and effect for certain companies.
This simple, but crucial, consideration can be paraphrased in an articulated manner that allows the problem to
be viewed from two perspectives, like two sides of the same coin. From a strictly economic point of view, it isnecessary for a certain amount of time to pass for an impetus to the actual economy to show its effects. From apractical point of view, the current availability of data only allows companies registered in the special register in2013 to be included in the analysis, and for some of these, the items in the financial statements include items thatexisted even before registration. An example of an extreme case is a company already registered in December
2013 that did not achieve any sales until 1 January.
In conclusion, the current situation invites us not to perform an analysis that would inevitably be based onincorrect assumptions.

79 The literature that uses the propensity score matching is very extensive. This methodological note does notpretend to be comprehensive. For more information, please refer to the fundamental contribution of Rosenbaumand Rubin (1983) and the studies that followed in its wake.
80 In this regard, see Ichino et al. (2008).

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References
J.D. Angrist, J.S. Pishke, Mostly Harmless Econometrics: an Empiricist's Companion. Princeton University Press,
Princeton, 2008.
J.D. Angrist, Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative
Records, American Economic Review, 80, pp. 313-335, 1990.
J.D. Finn, C.M. Achilles, Answers and Questions about Class Size: A Statewide Experiment, American Educational
Research Journal, 28, pp. 557-77, 1990.
A. Ichino, F. Mealli, T. Nannicini, Help from temporary jobs to permanent employment; What Can We Learn from
Matching Estimators and their Sensitivity? Journal of Applied Econometrics, 23, pp. 305-327, 2008.
G.W. Imbens, J.M. Wooldridge, Recent Developments in the Econometrics of Program Evaluation, Journal of
Economic Literature, 47 (1), pp. 5-86, 2009.
A.B. Krueger Experimental Estimates of Education Production Functions, Quarterly Journal of Economics, 114, pp.
497-532, 1999.
P.R. Rosenbaum, D.B. Rubin, The Central Role of the Propensity Score in Observational Studies for Causal Effects,
Biometrika 70 (1), pp. 41-55, 1983.

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