The Italian venture capital market, or the lack thereof : an analysis in the European context

Abstract

Italy is widely regarded as one of the most beautiful countries in the world. Food, arts, design and gorgeous landscapes contribute in making it a unique place that I am proud to call home. However, in the last two decades Italy has experienced a tremendous decline in its economic activity. Youth unemployment levels soared while corporate bankruptcies numbered in the hundreds of thousands every year. Innovation, once a pillar of the country's success, gradually faded off, like dimming lights after a theatre play. This work aims to investigate the industry of venture capital in Italy because of its key role in supporting innovation. Through innovation and enhanced productivity, I believe, the country can escape its spiral of decline and provide a future for its "lost generation". The work is divided in three sections, gradually zooming on Italy from a global perspective to a country focus. The first section investigates the venture capital markets in the United States and Europe. The comparison is designed to contrast the two approaches and illustrate the best practices that shaped the success of the American venture capital model in the last four decades. This section includes a performance-based framework that I have designed to explain the gap between European and American VC investment levels. The second section focuses on Europe and presents several comparative analyses between the venture capital markets of each member state, with particular attention to the Italian case. In this section I present the findings from my study investigating the correlation between culture, climate and investing behaviour: the results confirm the presence of positive linear correlation and provide interesting grounds for further research. Finally, the last section is dedicated to the Italian venture capital market with an overview of its current state and an analysis of the main issues hindering its development.