Yesterday, 18 December 2024, the New ‘Scaleup Act’ event was held at the Ministry of Enterprise and Made in Italy (MIMIT), where the new regulatory package to support Italian start-ups was discussed.
The Scaleup Act is the successor to the previous Startup Act (Growth Decree on 17 December 2012), which has been in force for twelve years and is now also known as Startup Act 2.0.
Opening the event was Minister Adolfo Urso, who offered an overview, pointing out that the difference between the Italian and American innovation ecosystems no longer lay in the number of start-ups – now aligned – but in the number of scale-ups. To remedy this, the minister highlighted the sectors on which MIMIT will focus in the future: the pharmaceutical sector, the blue economy, the space economy, and the defence industry. “With the DDL Concorrenza,” he said, “Italy has finally become a vanguard in innovative industrial and technological policy.
Agostino Scornajenchi, managing director and general manager of CDP Venture Capital SGR, said that with the new Startup Act ‘venture capital operators can be happy: at last the minister of enterprise has been able to say that venture means doing business, a business factory’. He added that ‘today in Italy this market is worth 0.1 per cent of GDP, a quarter compared to France and a third compared to the European average, we have a great margin to grow and bring value to the real economy. The DdL Concorrenza, as approved by Parliament, marks a turning point because after 12 years since the Startup Act it puts innovative entrepreneurship back at the centre of the agenda, rationalising the process of creation and development of new businesses and bringing institutional investors closer to the venture capital asset class through a plan of tax incentives and facilitations. In order to ensure a lasting impact, it is crucial that all players in the savings industry work together, pooling resources, skills and strategic vision. Only through synergic collaboration can we sustain this growth, create value for the economic fabric, and arrive prepared for the challenges of an ever-changing global market’.
Three pieces of legislation are included in the new Scaleup Act package: the DDL Concorrenza, the PDL Centemero and the Budget Law. The DDL Concorrenza, now no longer a bill but a ‘Competition’ Law, published in the Official Gazette and in force since yesterday as Law no. 193/2024, provides for several measures in favour of the growth of the Italian ecosystem. In a previous article we explored the topic in depth, but the most valuable measures, and the subject of debate during the event at the Ministry, were precisely those that have so far been absent in Italy, as opposed to other international ecosystems that have already been adopting them for some time.
First and foremost, we find the de minimis incentive for pre-seed investors who, from the 50% envisaged so far, with the Competition Law will enjoy a higher tax deduction, up to 65%, finally available immediately by subscribing to a SAFE. Not only that, but it is expected that the deduction will not be lost in the event of a dragging or bankruptcy of the company before three years and will also be usable through convertendo financing, i.e. with tax credit. After the third year, the allowance will drop to 30 per cent, aligning with the standard for investments in innovative SMEs. Companies benefiting from these incentives will have to comply with new parameters, such as the prohibition for taxpayers to hold qualified participations exceeding 25 per cent or to provide services to the startup for a value exceeding 25 per cent of the subsidised investment. The 30% deduction therefore remains as before, but will logically be used after using the larger one, exactly as happens in the UK with the SEIS/EIS incentives. Furthermore, stressed Giulio Veltri, head of the Cabinet Office at MIMIT, with the Competition Law ‘we have removed about 500 start-ups from the Startup Register that were not startups, because they were either agencies or did consultancy’. These companies will now be able to register in the register of innovative SMEs.
Then there is the long-awaited novelty that was still missing in our country, namely the possibility for pension funds and provident funds to invest a mandatory minimum percentage allocation in venture capital fund managers authorised in Europe, provided the underlying investment is channelled in Italy. It means that investment volumes will finally grow, breaking the traditional conservatism of managers, and making it possible for Italian start-ups to count on investments accessible to competitors based in other countries. This measure was introduced in the DDL Concorrenza through a precise amendment whereby pension funds, in order to maintain tax exemptions, will allocate at least 5% of their invested portfolio to venture capital funds by 2025, a quota that will rise to 10% from 2026.
These results were achieved thanks to the choral commitment of the sector’s trade associations and industry players who have so far pushed the government in the right direction, and also obtained the right corrections to the previous draft of the Bill, such as
– the exceeding of 20,000 euro of share capital plus employee after two years to be an innovative start-up.
– the exclusion of investments from the new cap on deductions in the Budget Law
– the reintroduction of the 750 million euro global turnover threshold for the application of the web tax
– the reduction from the feared 42% to the retention of 26% in 2025 and then to 33% in 2026 for the taxation of capital gains on crypto assets.
After the institutional speeches, Italian venture operators were also given the floor to comment on the new package and also to add further ideas on which to work and reflect in 2025. These included the intervention of Amedeo Giurazza, member of the Board of Directors and Chairman of the Venture Capital Commission of AIFI (Italian Private Equity, Venture Capital and Private Debt Association), who offered two new suggestions:
- “reviewing and coordinating the Business Crisis Act of 2021, which came into force in 2022, which speaks to Article 31 of the Startup Act of 2012, where already at that time there was an exemption: it was established that innovative start-ups cannot go bankrupt, but only have an over-indebtedness problem. So it is a different modality of crisis management, but now with the business crisis there is a provision that you have to see the business continuity, you have to do the negotiated settlement of the crisis, a whole series of procedures that are fine for normal companies, but not for start-ups, not so much because whoever invests in a start-up already knows that the start-up can fail, but because of the problem of investors: They have to understand that the investor invests knowing that he can lose money, that is normal, but he cannot lose reputation, and unfortunately if these things are not fixed, investment funds are unlikely to get on the boards of startups with less desirable consequences, because there is not the support that the fund manager can give to the startup’.
- “On the Golden Power regulation, I think it should be reviewed. We should create either preferential negotiations or even non-applicability to start-ups, because there is a lot of bureaucracy, a lot of red tape, long periods of time when start-ups have to think about doing business and cannot be distracted by bureaucracy, a slowdown in business’.
Among the speeches, representatives of some trade associations such as Francesco Cerruti of Italia Tech Alliance and Chiara Petrioli of Innovup also took the floor, congratulating the government on the result achieved. But the most piquant and spicy one was given by Marco Trombetti, who recently launched the new AI, Lara, with Translated:
“To innovate you have to learn to apologise before asking for permission. I am very happy to have done business in Italy. Translated deals with the translation of linguistic intelligence applied to translation. And this is one of the things we can do in Europe, and in Italy better than anyone else, because the Americans, the Chinese, do not perceive the problem of linguistic diversity. So there are some things that we can do here much better than the Americans. I am thinking of real estate or insurance, fashion’.
“And so the capital, the promises that have been made, are important promises, different from the past, that can create an incredible opportunity. Similarly, the infrastructure, the investment in computing infrastructure, which we are doing in Italy and they are new avenues, they are new wealth that is needed to create artificial intelligence. However, we have the capital, potentially, we have the computing infrastructure, now we have to try to attract the talent, to convert this money into something worthwhile. Because it is not a given to take money, take a million and create something worth a million and a half. In fact, it’s quite difficult. And to do that, especially when it comes to innovation, you don’t need a million workers, you need 50 people, 50 young entrepreneurs who make the multi-billion dollar companies in this ecosystem. So in all this effort that we are making, we have to ask ourselves, the 50 innovators, are we keeping them in this country? Are we growing them with the education system that we have? This is venture capital. Venture capital is a pyramid thing, extremely competitive. Innovation is like that, it’s not welfare, it’s not mass. And so I say to you that my concern, which is these 50 young innovators, they don’t want to be in Italy yet. So, you only attract talent when you tell them that the country where you live is beautiful, because you can do innovation and the ecosystem will allow them to develop whatever they want, better than the ecosystems around them. That is the competitiveness of the ecosystem. So, is Italy the place where doing innovation is easier than in other countries? I don’t know, in my opinion we have sent a series of messages over time. And given that it takes ten, twenty years to create a successful company, so far we have sent a series of messages that have scared these young people away. Let’s go and give some examples’. Trombetti referred to the fact that until 2010 it was forbidden for an Italian restaurateur to give wi-fi access to his customers, the issue of synthetic meat, Airbnb’s self-check-in rules, and scooters.
In short, a very impressive event for the plurality of the speeches, for their objectivity and for the additional news offered in this framework. First of all, as Massimo Bitonci, undersecretary at MIMIT, stated, “as far as tax deductions are concerned, an amendment to the Budget Law has excluded the ceiling that had been imposed on deductions and contributions to start-ups and innovative SMEs” and then, as Giulio Veltri added, “the SME Guarantee Fund will be equipped with a new regulatory instrument based on the provisions of the Competition Law that will allow the VC guarantee, i.e., the venture capital fund that invests in start-ups will be able to benefit from the Guarantee Fund”.
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