Linkem: a 300 million dollar startup

Founded in 2001 by Davide Rota, Linkem provides Internet services. It participated in Libera Impresa, where the founder told the story of his startup

Barbarians at the gate can bring you gifts. If you are a startup with great technology solving a real problem in a simple and competitive way. No matter if you are based in a country that is sick with the “spread” disease or, in other words, if you live in Italy in the middle of a political and financial storm like the crisis of the end of 2011. Foreign investors may not trust Italian government bonds, but they can smell a good business.

That’s how the legendary American investor Peter Cohen – who was one of the key players in the 1988 leveraged buyout of RJR Nabisco, as it’s told in the best seller “Barbarians at the Gate” – decided to give $60 million to the Italian startup Linkem with his firm Cowen Group and with co-investor Leucadia exactly in December 2011. «It was a crucial moment for us, and we were lucky they bet on our business, even though at that time there were concern about Italy leaving the Euro», recalls Linkem Chairman Stefano Siglienti.

So far Linkem has raised $300 million in all and it’s now thinking of an Initial public offering, which could happen either at the Milan stock exchange or at Wall Street. I was happy to learn about its success story at “Libera Impresa” (“Free Enterprise”), an event organized by the Italian asset management company Azimut in Milan on January 29. Linkem was one of the cases discussed in the panel “How to transform ideas, skills and passion in a business“, where I was the moderator.

Linkem was founded in 2001 by Davide Rota with seed money granted by a group of Italian angel investors organized by Gianfilippo Cuneo, but it totally reinvented itself in 2007. In fact initially its business was to provide wi-fi access in airports, a service that is still on and profitable, but with no big potential. That’s why Rota decided to participate in the 2008 public auction of WiMAX frequencies to become a provider of Internet wireless broadband access to the general public in Italy. At that point Linkem attracted the interest of Cohen, who knew the Italian telecom market very well,having been a partner of Carlo De Benedetti in founding Omnitel.

Rota – who is now in his 40s – was not a geek, but he was a marketing genius with 18 year experience in multinationals such as Procter & Gamble, and he understood the potential of WiMAX technology. So he was able to create a very simple product – a little box with an antenna – which is easily installed at homes. In last Linkem ad campaign it’s Belen installing the device! It’s “Internet Revolution” bringing high speed connection with no limits to areas where the traditional DSL does not arrive, so the publicity goes.

Linkem currently covers 40% of Italy, and it operates especially in South Italy. It has over 250,000 clients, and it should reach break even this year with €50 million revenues. It employs around 300 people, one third salesmen, one third tech-guys and one third in customer service. It decided not to outsource its call center, and opened one in Bari.

Linkem’s board meetings are held sometimes in New York and sometimes in Italy, where the four American board members are happy to spend a few days and enjoy La Dolce Vita. However they’d like to list Linkem on the Nasdaq, like its U.S. equivalent Clearwire used to be before being acquired by Sprint Corporation. «We’ll see, the important thing is to keep growing», says Siglienti.

I left Milan with the nice impression that the Italian startup ecosystem is indeed growing, thanks to entrepreneurs like Rota and also thanks to new initiatives like P101, the Italian venture capital fund managed by Andrea Di Camillo, who was one of the panelists at the Azimut event. Best image from that discussion? An audience of 1,000 people – financial consultants and their affluent clients, mostly entrepreneurs themselves – interested in startups and alternative investments. Times They Are A Changing in Italy too.