When you think of markets abroad to study from an innovation perspective, you might think of the United Kingdom, China, or Germany. Yet there's a new and somewhat unexpected source of innovation that's worth studying: Italy.
Italy has a long history of innovation, from the technological achievements of the Roman Empire to the development of the radio by one Guglielmo Marconi. Of late, however, Italy has had something of a reputation for being bureaucracy-heavy and risk-averse, both of which are never good from the point of view of an entrepreneur. Yet this is beginning to change, with new initiatives from the Italian government and private parties that have made it easier for startups to, well, start up.
Italy has consistently weathered criticism for the excessive amount of red tape that entrepreneurs are required to navigate. In 2013, the government took much-needed steps to reduce the bureaucracy involved, passing legislation that made it easier to start "innovative businesses" and provided tax exemptions for qualifying startups. In order to qualify, startups must be based in Italy, fewer than five years old, and with revenues of less than €5 million a year.
"Italy is not just food, fashion and design," says Antonio Chiarello, the CEO of iStarter, an accelerator. Instead, the country "is quietly becoming a hotbed for technology innovation, as shown by the array of startups" focusing on everything "from digital health to fintech to gamification."
The Italian startup scene has had a few notable success stories. Talent Garden, a coworking network based in Milan, recently raised €12 million in funding, and now has 17 locations across Europe. In addition, the company runs an "Innovation School", which offers courses on coding, e-commerce, and other useful skills for entrepreneurs. Musement, a travel app that gives visitors the ability to find and book activities, has also completed a successful round of funding, raising €10 million from investors with the goal of expanding the app's global reach.
One of the factors that makes Italy's startup culture different from that of places like Silicon Valley is the fact that there's no one center of innovation. In 2016, the three most popular locations for startups - Milan, Rome, and Turin - were home to less than 30 percent of the total number of startups in the entire country. While this means that the infrastructure to support such ventures is more widely dispersed, it also presents an opportunity for innovators throughout the country, wherever they happen to be located.
The biggest challenge that Italian startups face, in addition to having to navigate bureaucratic red tape, is funding. Because startups are a relatively recent concept, many institutions are reluctant to lend them the money they need. As Chiarello notes, "The challenge startups face in Italy is the availability of capital and local financial resources to support their creativity and innovation," adding that Italy's "startup ecosystem is widespread, early stage and vast, making it ripe to invest in its digital market."
iStarter, the Italian angel-led accelerator and investment company based in London, aims to bridge that gap, using the expertise of its investors as entrepreneurs and managers to mentor local companies and support their growth. Not only that, iStarter is meant to act as a connector between Italian companies and other international markets, including the US, UK, and China. To that end, the accelerator now runs a series of events known as "Made in Italy 188.8.131.52" in London, Beijing, and now New York, where a select group of Italian startups present in front of investors from around the world.
"Italy has no major structural differences compared to France or U.K. and could easily match the same startup industry size if more investment was issued," says Gian Luca Petrelli, founder of BeMyEye, a company that provides real-time data and insights from consumers to retailers. Petrelli also points out that Italy can leverage its culture's inherent creativity and somewhat less expensive developers to create innovative startups that can compete alongside the best.
The fact that major tech players, including Apple, IBM, and Cisco, have begun opening up new tech hubs in Italy is another sign of the potential that the Italian market holds. If these giants are paying attention to Italy, shouldn't you?