Il Digestivo's First Edition🍾 | May 2024
Partech and Eurazeo bet on Italy, CDP raises a new fund of funds, and Musixmatch's CEO says Italian entrepreneurs are only getting better
Ciao amici,
Welcome to the first-ever edition of Il Digestivo, brought to you by me (Amy O’Brien), in collaboration with Made IT (Inès Makula and Camilla Scassellati Sforzolini).
Each month, I’ll be bringing you the news that matters in Italy’s new economy — from tech and VC to new moves by family offices — and I’ll also keep you up to date on innovation at the country’s oldest companies.
So let’s get straight to it.
It’s been a busy month reporting from Italy. Earlier this month, we gathered 100 investors, founders and corporates in Milan for the launch event of Il Digestivo, and the next day attended Plug and Play’s Italy summit — which marked five years since the VC firm opened its first Italy office.
This week, the Il Digestivo team was also at Milan’s Tech Emotion summit — where I sat down with seven (!) Italian early stage startup founders on stage. The startups operated in a wide range of sectors, from fintech to space tech, but they had a few things in common. All were focused on future-proofing businesses; improving sustainability; and building diverse and talented teams.
Last week I also chatted to Max Ciociola, CEO and founder of one of Italy’s OG tech companies — music lyrics data platform Musixmatch — to discuss all things Italian innovation. Scroll down for the full interview. Plus:
Exor bets big on healthcare
CDP Venture Capital raises its second fund of funds
One thing you probably don’t know about space
Amy
🏢 Partech has opened an office in Milan, led by Senior Principal Simone Riva, who counts Deliveroo, Sumup and Bending Spoons among his previous investments. The Paris-HQ’d VC firm, which invests in software, data and fintech companies in Europe, raised a new €360m venture fund in December. CDP Venture Capital, Italy’s state-backed fund, invested in the new fund. Partech’s first deal from the new fund was its lead investment into Trentino-HQ’d revenue management software startup Smartpricing’s €13m Series A in December.
It’s not just Partech that’s got its eyes on Italy. Keep your eyes peeled in next month’s Il Digestivo for the scoop on some more pan-European funds making their move…
💰 Italy gets a Founders Fund. It’s the worst-kept secret on the Italian tech scene. Last October I first reported that Lorenzo Franzi, previously a partner at now-defunct VC Global Founders Capital, had recently returned to Italy to set up a new Italian founders-focused VC firm — Italian Founders Fund (IFF). Seven months later, we finally know a bit more. IFF will lead pre-seed and seed rounds into startups with “global ambitions”, with initial investments of between €500k and €1.5m, according to its website. It’s managed by Milan-based investment management company Koinos Capital.
IFF has already publicly backed Jet HR’s €4.7m pre-seed round last summer, which it co-led with Exor Ventures, and Milan-HQ’d customer service startup Glaut’s €1.3m pre-seed round in April, which it also led.
👀 Luxottica founder’s son eyes up tech investing. Leonardo Maria Del Vecchio — the fourth son of the late billionaire founder of Luxottica, Leonardo Del Vecchio — is eyeing up tech investing, sources tell ll Digestivo. Del Vecchio Jr, who inherited a 12.5% stake in his father’s Luxembourg-based holding company Delfin, has recently launched a new family office, Dp Holding. Sources tell Il Digestivo he plans to begin backing some startups through the investment vehicle. So far, we’ve spied that Dp Holding has taken a 5.3% stake in Italian cybersecurity company Digital Platforms, according to the company’s website.
💸 CDP Venture Capital launches its second fund of funds. Italy’s state-backed investor, CDP Venture Capital, this week announced the first €475m close of a new fund of funds — VenturItaly II FoF — dedicated to backing Italian VC firms. The capital raising target set for the fund, which is backed by the Italian government’s Ministry of Enterprises and Made in Italy (Mimit) ministry, is €500m, with a maximum cap set at €700m.
🤑 Milan-based edtech Futura raises a €14m Series A, led by Eurazeo, alongside Axon Partners Group and existing investor United Ventures. The startup, which was founded in 2020, says it’s developed an AI algorithm that acts a study helper for students, catered to their individual needs. Futura says its revenues have tripled each year since it raised €1.8m in 2022. If you’re curious to learn how, listen to Made IT’s recent interview with founder & CEO Andrea Chirolli 👇🎧
⚡ Newcleo raises €87m, targets €1bn in ongoing fundraise. Europe’s only nuclear unicorn, Newcleo, has raised €87m in the first close of what the Italian-founded, UK-based company says is an ongoing fundraise with a €1bn target, Sifted first reported. Italian entrepreneur Stefano Buono’s nuclear startup has now raised €487m since it was founded in 2021 — making it the best-funded nuclear startup in Europe. Existing backers include Italy’s Exor Ventures and Azimut. If you’re interested in learning more, listen to Buono telling Newcleo’s story on this recent episode of Made IT 👇🎧
🏥 Exor Ventures bets big on healthcare. The VC arm of the Agnelli family holding company, Exor, deployed around $100m across 22 new investments in 2023, according to the company’s annual report. Of these investments, some 40% went to early-stage healthcare companies. This bold healthcare push comes after Exor CEO John Elkann told me last Autumn that if he took a 25-year investment view, the two most important things to him were “decarbonised energy at scale and cheap, and reducing the cost of healthcare.” He was bullish on Italian healthtech’s potential, citing Italy’s strong legacy in pharmaceutical production and the quality of its healthcare system as signs of its potential in this sector.
Also in the news…📣 Turin-based customer analysis startup Zefi.ai raised a pre-seed round of €1.6m this week, led by 360 Capital and 14Peaks, with participation from others including Exor’s Vento Ventures. Rialto Ventures, a new VC fund operating between Italy and the US, came out of stealth and announced it’s raised €55m of a €100m target for its first fund. The fund will invest in B2B startups at Series A — and says it’s already invested in eight. And lastly, Norwegian software company Visma entered Italy with a strategic investment in Italian tax accounting startup Fiscozen — also recently interviewed on Made IT 👇🎧
Italy’s tech catch up is down to an overdue shift in entrepreneurs’ mindsets, says Max Ciociola, CEO, chairman and founder of music lyrics data platform Musixmatch. TPG Growth bought a controlling stake in his company in 2022 for an undisclosed amount — one of Italy’s most significant tech exits to date. But Ciociola predicts the new wave of Italian startups founded after 2020 will bring investors much better returns than his generation did. In a nutshell, he thinks they have much better ideas.
A: What’s changed in Italian tech since you founded Musixmatch in 2010?
M: “When we founded Musixmatch and were first raising money, the term sheets were really shitty. Italian VCs had money, but also had a lot of fear — they weren’t really betting on real entrepreneurs, it was mostly e-commerce businesses.
Although Musixmatch and a few other companies like Tannico (a virtual wine shop that exited to Campari in 2020) achieved good exits, we were in the minority. If we want to dig into the last 15 years of tech in Italy, I’d look to the entrepreneurs — not the government, and not the VCs. We had a generation of entrepreneurs in Italy between 2010 and 2020 that didn’t put so much effort into solving big problems and complexities. It was the App Store wave, when Musixmatch was founded. Just like everyone is founding an AI company today, at that time everyone was making an app — but with no business model at all, and without thinking about scaling internationally or how they’d make real money. Weak ideas are to blame for the lack of good exits.
But after 2020, we’ve finally started seeing a new generation of entrepreneurs aged between 25 and 30 focusing on solving big problems. These companies are now finally run by actual tech people, focusing on software and AI, and not just starting an app or ecommerce business. We may need to wait until 2030 to see the outcomes, but I think it will have a big impact on the country’s economy. We’re finally seeing startups like Futura and Qomodo raise money from abroad. They’re learning from the mistakes that me and my colleagues in the first generation of tech entrepreneurs made. By 2040, I think Italy will finally be on a par with Germany, the UK and France, who understood the assignment before. I believe it’s not down to scarcity of capital — it’s all been down to the ideas.”
A: Do you think Italian tech can ever play catch up with more mature markets?
M: “I was in San Francisco a few weeks ago, and I was thinking that there wasn’t much to do there. There’s a reason why all the new AI companies are starting out of the Bay Area, and not New York or Miami, where you can have tonnes of fun. If you move to SF, you’re dedicating your entire life to building your company.
But Italy is a place that by nature pulls young people into a comfort zone, because the quality of life is so high. I believe we’ll never be like San Francisco, but we have something else that’s so powerful — if we dare to step outside our comfort zone and convert our expertise into building something new.
Milan has great finance talent, but it also has amazing art, food, fashion. We should embrace this diversity, and also think about how Italians can embrace our historical engineering success. Here in Italy, I’m surrounded by incredible examples of design at our amazing car companies like Maserati, Lamborghini, Ferrari, Bugatti. Our great engineers that train at these companies should now be thinking about how they can convert this expertise into the companies of tomorrow.
We also have great academic talent that needs to be converted into IP. Musixmatch could have been based in any other city in the world and it would probably have failed. But by keeping our HQ in Bologna, we’re surrounded by the University, and its excellent data scientists and language experts. This made it the right place for us to succeed. We speak English within the company — 60% of our employees are not Italians, but the proximity to this Italian R&D talent is what’s driven our success.
I believe the only barrier standing in the way of Italy building world-leading companies in sectors like robotics, healthcare and AI is staying in this comfort zone mindset. We need to focus on going into universities and encouraging talented Italians to take the leap and build their own company, instead of following the well-trodden path into someone else’s. It’s not where you’re based that matters, it’s about the quality of your team and the product you’re building. Students need to see it’s possible — from anywhere, especially Italy.”
Ever heard of a term called “space junk”? I hadn’t until I sat down with Ecosmic founder and CCO Imane Marouf this week in Milan, to chat about how her startup is working to make space more sustainable.
It’s not necessarily the first thing you think of when you think of outer space — but it turns out that it’s a huge problem. Humans are currently planning to launch 30k more satellites into space. But, ahem, there’s simply not enough space for them in space …
“That 30k is on top of the 9k satellites that are already active in space, which means the most useful orbits are getting overcrowded,” Imane told me. “Preserving orbital slots is a priority, that’s why space debris are a problem. Just one collision between assets travelling at kilometres per second can generate thousands of debris, that can threaten the everyday operations of our space infrastructure.”
Make sure to check the next edition of Il Digestivo to learn more about how Ecosmic plans to solve the sustainability problem in space.
That’s it from Il Digestivo this month, we hope you’ve enjoyed our first edition.
We’d love to hear your feedback — or even better, your news tips. Send us an email at ildigestivo@gmail.com to share your thoughts.