Venture Capital, decline in 2023 but positive signs in the first quarter

A global context characterized by strong uncertainty about the company's business prospectsand startupscombined with the growth of interest rateshave led to a global decline in investments in Venture Capital In the 2023. However, some interesting points for reflection emerge: startups who develop or apply Generative solutions TO THE they have in fact attracted significant investments in 2023, reaching a total of 21 billion dollars, up compared to the previous year (4 billion dollars in 2022) and going against the trend of the total market.

Venture Capital, decline in 2023

It is the photograph taken from the third edition ofl Venture Capital Scanner by Bain & Company Italya, presented in Milan on the occasion of the usual event attended by Venture Capital funds, corporates and startups active on the Italian market. Also present Agostino Scornajenchi, AdminManaging Director and General Manager of CDP Venture Capital.

2023 has seen a contraction of the Italian Venture Capital market (-20% rcompared to 2022, the best year ever for the country), albeit more moderate than the European average (-41% vs. 2022). Investments in the country reached 1.1 billion euros, with a decrease mainly linked to the decline in the number of deals (-24%), although the average value of operations recorded a slight growth (+5%).

Positive signs in the first quarter

It is also observed a lower relevance of mega and large deals compared to 2022. IThe Tech sector represents 31% of the total value of VC investments in Italy in 2023, followed by the B2C sector with 27%. The Energy sector stood out for the average value per deal (10.8 million euros vs. average of 5.1 million euros), linked to the capital intensive nature of innovative solutions for the energy transition.

Analyzing the headquarters of the startups involved in the 2023 roundsLombardy confirms itself as the first region in the Italian Venture Capital market in terms of deal value, with 64% of total investments, followed by Piedmont, Trentino Alto-Agide and Tuscany.

The Italian innovation fabric shows a structural gap in terms of number and size of VC funds compared to other main European countries and a capacity to transform research into business that is not yet fully expressed.

“System response needed”

“The VC growth path iItalian towards a dimension aligned with the main European markets requires, in addition to the availability of capital, an adequate number of startups in which to invest. To date, around 16,000 startups and innovative SMEs are registered in Italy, and we estimate that the country's full potential can be reached with a number of around 27,000 registered companies. However, to further support market growth and encourage innovation, full collaboration must be guaranteed between various players in the ecosystem, including companies, research centres, financial institutions and policy makers. On this occasion we launched the Bain Startup Navigator, an innovative tool which, through the use of AI, allows us to monitor the Italian innovation ecosystem and support the creation of value, facilitating collaboration between businesses and startups”, he explains Emanuele Veratti, Partner and Digital Practice Leader of Bain & Company.

Finally, in the first quarter of 2024, there are positive signs for the ecosystem, with more dthe 60 rounds of fundraising of startups and a collection of almost 370 million euros (if we also consider the operations involving the platform Bending Spoons and MMI, born in Pisa in 2015 with headquarters in the US from 2023).