1. Implemented measures
Throughout 2013 the Technical Administration of the Ministry of Economic Development worked hard to implement the entire series of laws supporting innovative startups that were introduced with the decree Decreto Crescita 2.0 (Sezione IX, artt. 25-32) approved on 13 December 2012. In February, the Chamber of Commerce instituted a special section of the business register for innovative startups and certified incubators which are obligated to register and periodically update their status: the goal of this infrastructure is to guarantee transparency and accessibility to information regarding these two new types of enterprise.
There are no costs for constitution and registration of innovative startups and incubators with the Chamber of Commerce (apart from the processing and annual renewal fees). As for the ministerial decree, everything regarding startups and incubators has been published in the official journal dated April 18 (decreto del Ministro dello Sviluppo economico del 21 febbraio 2013), precisely defining the qualifying requisites for enrollment, which were determined by a consultation process that involved about one hundred structures from the private and public sector located throughout the entire Italian territory. It is possible to download the self-certification form and the enrollment instructions for the special business register section on the Ministry’s website. The decree that was approved by the Ministry Council on 26 June 2013 (Decreto Lavoro approvato dal Consiglio dei Ministri il 26 giugno 2013) simplified and amplified the requisites in defining an innovative startup. In particular, the obligation of the prevalence of physical persons in shareholding structures has been cancelled. There were also changes made to the three optional criteria for the identification of the innovative character of a startup, reducing the minimum spending quota in research and development from 20% to 15% and extendingaccess to enterprises whose work force is made up of at least 2/3 of employees with a Master’s degree and to companies who have original software that has been registered with SIAE.
Some of the simplification measures became automatically operative on 19 December 2012 when the conversion of the Growth Decree 2.0 (Legge 221/2012 di conversione del Decreto Crescita 2.0) went into effect: this is the case with the annulment of rules regarding shell companies and non operative companies with continuous losses, the postponement of recapitalization obligations and procedures aimed at rendering the liquidation process faster and less onerous when an innovative startup is unable to take off. Likewise, since the coming into force of the initial measure for startups and certified incubators, it has been conceded the right to pay collaborators with stock options, and suppliers and external services (for example, lawyers and accountants) through work for equity, thus using an advantageous fiscal and contributory regime that assigns part of a salary a value that varies depending on the performance of the company. Also, the introduction of a more flexible work contract in regards to other enterprises, conceived to favor an increase in employment, has not required implementation measures. To the contrary, tax credit of 35% for hiring highly qualified employees(those who possess PhD’s or the technical-scientific Master’s degrees included on a list created within the norm) has required a measure of a secondary nature. Signed recently by the Ministry of Economy and Finances following approval from Europeaninstitutions (which had actually occurred several months ago), the legislative decree foresees a reserve of 2 million euros for innovative startups and certified incubators on top of the general quota that is available for all enterprises. The decree will be published in the Official Journal shortly and will be applied to hirings made during 2013. The Ministry of Economic Development will make an internet platform available to access these benefits.
No less anticipated, was the norm regarding simplified, free and direct access for startups and incubators to theFondo Centrale di Garanzia, a government fund that facilitates access to credit through the concession of guarantees on bank loans. After having passed the careful inspection of the Court of Auditors, the decree of a non-regulatory nature created by the Ministry of Economic Development and the Ministry of the Economy and Finances of 26 April 2013, which identifies the simplified mode and criteria for access to the Fund, went into vigor at the end of June. With this measure, the guarantee of the fund for bank financing is freely conceded to innovative startups and certified incubators (operative newsletter of MedioCredito Centrale). The intervention covers up to 80% of credit obtained and operates with a criteria of extremely simplified access. The decree sets the sum of 2.5 million euros as the maximum that can be guaranteed to each startup or incubator and assigns priority to these two types of enterprises when the request is presented and processed for the Fund.
Tax breaks for investments in startups
In order to favor the private equity market, which is still inadequate in Italy, tax breaks have been introduced for investments in startups made by companies and individuals during the fiscal years 2013, 2014, 2015 and 2016: the incentives are valid both in the case of direct investments as well as for indirect investment through intermediaries from other companies that prevalently invest in startups. Those who invest in innovative startups benefit from the following fiscal incentives:
For individual income taxes a total of 19% can be deducted from cash contributions, for a sum no higher than 500,000 euros, made during each tax year; for company income taxes a deduction of 20% for cash contributions, with a total of no more than 1,800,000 euros for each tax year.
There are even higher fiscal benefits for investments in startups with a social inclination or that develop and sell high value technological products in the energy sector, foreseeing a detraction of 25% of the sum invested for individuals and, for companies a deduction of 27% of the sum invested. In all of these cases the investment for which a fiscal incentive was received must be maintained for at least two years, otherwise the tax break is forfeited. Following the authorization by European institutions in December and the consequent signing of the legislative decree by the Ministry of Economic Development and Finances, the measure is currently being scrutinized by the Court of Auditors.
Another important component regards equity crowdfunding, an innovative tool for collecting funding via online portals and regulated – the first country worldwide to do so – by Consob since July 2013, after a long consulting process that the Ministry of Economic Development actively participated in. The Register of equity crowdfunding managers counts two enrolled companies (one in the ordinary section and one in the special section). There is currently an evaluation underway for various other candidates. Under the profile for aid for the internationalization process startups can request assistance from ICE-Agenzia; last July the Agency launched a service list that foresees a reduction of 30% in tariffs that are applicable for other businesses. As well, in 2013 some innovative startups could participate in qualified international fairs and events pertaining to the world of innovation by using spaces available free of charge: this was the case for Pioneers e Bio Europe (Vienna), Game connection (Paris) andWebit (Istanbul). The last experience mentioned was particularly rich and satisfying for the Italian delegation made up of 10 innovative startups and the experience was even recounted in the e-book Italian Startups go International.
The framework for a politic to help startups is not static or unchangeable, but is open to revision and integration. Indications regarding this will come from a monitoring and evaluation system of the measures that will be prepared by ISTAT in collaboration with the Italian Revenue Service, Consob, the Ministry of Economic Development and independent experts via constant data gathering and analysis of the impact of these new norms. It has been explicitly noted that a part of the budget is destined to creating a data bank and conducting analyses on the startup ecosystem. In order to guarantee that it remains objective and that it can also be the object of public and scientific debate there is also the provision that the data must be made public and accessible to everyone. The measure that institutes the evaluation committee was recently signed by the Minister of Economic Development and will soon be published in the Official Journal.
2. Empirical evidence
At just a year after the publication of the Decreto Crescita 2.0 in the Official Journal on 17 December 2012, the innovative startups registered in the special section of the Business Register totals 1,478 ( Stefano Firporecently tweeted the new goal: 1500).
As for the geographic distribution, the most densely populated regions and provinces are respectively Lombardy (303), Emilia Romagna (166), Lazio (148), Veneto (126) and (119), and Milan (204), Rome (131), Turin (102), Trento (64) and Bologna (54), with a strong presence in northern Italy (59%), medium in the middle (23%) and low in the south (18%). Considering the “density” of the phenomenon, the classification of the regions and provinces with the most innovative startups per 10,000 enterprises registered are, respectively, Trentino Alto-Adige, Friuli Venezia Giuliaand Marche and Trieste, Trento and Gorizia (data from Infocamere dated 16 December).
In terms of distribution per sector, the service sector stands out (1,149), which includes, among other things, software production activities, IT consulting and connected activities (464), scientific research and development (263), information services (117), activities in architecture and engineering, testing and analysis techniques (64), activities in company management and consulting (53). Industry and artisan activities follow (264) – computer, electronic, and optical manufacturing (63), electric tools and non electric tools for domestic use (31), other manufacturing (22) and production of transportation vehicles (15) – commerce (53), and, lastly, tourism (6) and agriculture (3). In particular, 289 startups operate in the energy sector. This type of startup reveals some important practical results given that investments in private equity which has this category as a target foresees some very sizable deductions. These deductions also apply to innovative startups with a social vocation (that is, those startups that are created to help resolve social issues), but due to various complications in recognizing these startups they have yet to be included in the special section of the business register. However, the Italian parliament is working on getting about 50 of these qualified startups onto the list as soon as possible.
As for the value of startup production, 1,281 innovative startups are in the Class A category, which goes from 0 to 0.10 million euros, 168 in Class B (0.11-0.50), 17 in Class C (0.51-1), 7 in Class D (1.01-2) and 6 in Class E (2.01-5). The legal business makeup is dominated by limited liability companies (1,233), followed by limited liability companies made up of a single associate (89), simplified limited liability companies (87), there are 29 Joint-stock companies, 23 cooperatives, 14 limited liability companies with reduced capital, and 3 limited liability corporations.
630 innovative startups were created in 2013, 365 in 2012, 239 in 2011, 147 in 2010, 91 in 2009, and 5 in 2008.
3. Other measures
The Italian government’s effort to help new high tech enterprises does not stop with the measures introduced by the Decreto Crescita 2.0. The Ministry of Economic Development and the Ministry of Education, Universities and Research have also adopted a policy aimed at exposing students in Convergence Regions (Campania, Puglia, Calabria, Sicily) to an environment that is stimulating for the development of innovative entrepreneurial projects thanks to a proposal that was made in a Restart, Italia! report, which was elaborated by our readers. This goal will be achieved with the creation of the Contamination Lab in Italian universities where students and different disciplines can meet each other and the entrepreneurial and interdisciplinary culture is promoted as is the case in newer education models. The Ministry of Education, Universities and Research has made one million euros available for the creation of these structures; the value of the projects presented by universities during the competition for their creation could not exceed 200,000 euros. Four universities were chosen: Cosenza, Reggio Calabria, Catania and Naples. The projects, soon to be completed, will last 24 months and their evolution will be monitored by experts nominated by the above-mentioned entities.
Together with the mission structure created by the Ministry of Labor to elaborate the national strategy Garanzia Giovani (the European program to promote employment among young people that is set to begin in 2014), the Ministry of Economic Development is supporting the push to finance a new competition at a national level for more Contamination Labs. This ministry is also looking at numerous other proposals in terms of education, entrepreneurship and professional training. Of particular interest for enterprises active in the renewable energy sector is Cleanstart, a program elaborated by Progetto Corrente (an agency belonging to GSE, the government company that manages renewable resources) with the sponsorship of the Ministry of Economic Development. It consists of offering services with reduced tariffs for events and initiatives in information and matchmaking, competitions, and opportunities offered on national and international markets, training seminars, and publicizing activities.
On 25 October 2012 Italy and Israel signed an agreement of cooperation for startups and, more generally, for high-tech industries (in particular clean-tech and water management, health, cyber security and biomedical), with the goal of favoring the flow of talents, innovative ideas and investments between the two countries. Currently, the mixed panel made up of recognized experts and institutional representatives from both countries is beginning to implement the joint plan for 2014, defined during the Italy Israel Bilateral held in Rome last December 2nd.
The Italian Startup Ecosystem: the Who’s Who created by the Politecnico di Milano in collaboration with SMAU and Italia Startup and sponsored by the Ministry of Economic Development represents a precious tool offering an unprecedented mapping of Italy’s innovative entrepreneurial ecosystem.
The consignment of the Premio Leonardo Startup 2013 (set for 20 February 2014), on behalf of Italy’s President of the Republic at the end of a process coordinated by the Ministry of Economic Development, will represent a moment of great recognition and visibility for innovative startups.
The Piano Destinazione Italia is a plan to attract foreign capital and foresees, among its 50 measures, the creation of a politic dedicated to attracting foreign talents, with the goal of making Italy a hub for young enterprises and a destination for foreign investments through the facilitation of the mixing of innovative ideas. An initial urgent law, that implements about ten measures suggested within the Plan was already approved by the Council of Ministers on 13 December and published in the Official Journal last December 23rd. Among the measures that have been passed, there are interesting ones like the simplification in obtaining visas for researchers and innovative entrepreneurs and tax credit for research activities and business development.