While funding for Italian startups is growing, the country still ranks eighth in Europe in VC investment, according to Dealroom.
New creation Italian Founders Fund (IFF) hopes to help make up the difference, both in quantity and quality. With €50 million to invest in 25 companies, it also positions itself as an industry-agnostic, founder-friendly fund that understands the pain points of entrepreneurs.
IFF’s portfolio already includes four companies, with a fifth deal in the works. Two have been revealed so far: Before customer survey platform Glaut in April, IFF led a 2023 funding round HR technology startup Jet HR.
“IFF faces the challenge for early-stage founders in Italy to find a leading investor with high conviction in the pre-seed and seed stages,” IFF founding partner Lorenzo Franzi (third from right in the image above) told TechCrunch.
Some may disagree with the diagnosis. VC firms operating in Italy already include CDP Venture Capital, Exor Ventures, LVenture Group, Milano Investment Partners, Pariter Partners, Primo Venturesand United Ventures.
Franzi, however, believes this still leaves a gap for seed capital. And in any case, the IFF is emerging as a new source of capital for a market whose startups collectively receive far less funding than France, for example, despite the two countries having a similar population size.
IFF is also a supplement to accelerators such as H-FARMand a step up from the angel investing that Franzi and other entrepreneurs-turned-backers had participated in.
A former CEO at startup Laundrapp turned partner at Global Founders Capital until the end of 2022, he said the “unstructured” approach inherent in angel investing can lead to many issues such as limited analysis, complex cap tables and small funding rounds size. IFF can bring the structure of a mutual fund to its investment process, but also be hands-on after the investment.
For example, IFF has been able to assist portfolio companies with key recruitment, commercial expansion and strategic partnerships, Franzi said. Jet HR CEO Marco Ogliengo agreed, noting that IFF’s added value comes from the fact that it is “backed by virtually every successful Italian founder.”
This may be an exaggeration. but according to Franzi, about 100 of the IFF’s supporters are indeed Italian businessmen. He added that they come from a wide range of generations and sectors, but with a common goal: to put Italy on the map of the best places in Europe to open a company.
That’s an ambitious goal, especially given that some of the key points are outside the IFF’s purview: There’s not much a private VC firm can do to offset high taxes and red tape. There have been more recent public efforts to boost the attractiveness of the country and its tech sector. but unlike CDP Capital, which is supported by government agenciesIFF is entirely privately funded.
In the absence of public funding or institutional LPs, the IFF is free to invest where it sees fit. It will use this geographic flexibility to also support Italian founders operating abroad, as well as foreign startups interested in entering the Italian market.
Overseas connections are two-way, with IFF aiming to get foreign VC funds to co-invest in its portfolio, either initially or in subsequent rounds. It will also help that some of its LPs are GPs of foreign funds and that it plans to back Italian founders with global ambitions.
Global Italian startups include; Bending spoons, owner of popular apps and services like Evernote and Meetup, worth $2.55 billion. And with serial Italian businessmen returning home To found their next ventures, it seems only right that they now have a founder-led fund to support them.
IFF will be managed by PUBLIC Capitala private equity fund that is expanding into VCs and whose CEO, Marco Morgese, noted examples of founder-led funds in other markets, such as Founders Fund in the US or more recently, Galion.exe in France.
Seeing IFF adopting this model in Italy is another sign that the ecosystem is maturing. In terms of venture capital, the numbers are improving, but there is still more to do. “In Italy, challenging the status quo regarding processes, speed and an entrepreneur-focused mindset is essential,” said Franzi.
