Italy's seed rounds are getting bigger | September 2024
How Jet HR wooed international investors with its plan to stay in Italy, and Sam Altman's advice for Italian tech
Ciao amici,
Happy ritorno a scuola. When this lands in your inbox, I’ll be just about to take the stage at Turin’s Italian Tech Week — Italy’s biggest tech event of the year.
Exor’s Vento Ventures has managed to attract the great and the good of European tech to this year’s edition. Yesterday, Exor boss John Elkann chatted to AI’s poster boy Sam Altman about leadership and the AI “revolution” on the main stage. Camilla also moderated a conversation between Italian-born Sequoia partner Doug Leone and Trade Republic’s CEO Christian Hecker about scaling in the Europe versus the US.
This morning, I’m hosting the Europe session on the conference’s main stage. If you’re reading this over breakfast in Turin, make sure you come down to the Fucine stage to catch my chats with some of Europe’s most successful tech leaders — including Supercell CEO Ilkka Paananen, Wise cofounder and Plural VC partner Taavet Hinrikus, Zalando co-CEO Robert Gentz, and ex-Amazon Senior VP and now Vento Chairman, Diego Piacentini.
It’s definitely a star-studded event. Who can refuse an invite to Torino in September? But the question is, will this translate into an acceleration for Italian tech? International investors tell me they’d readily invest in Italian startups, if only they were pitched quality ideas from local entrepreneurs that rivalled what they’re seeing in Berlin, London and the US. So if Vento’s intention behind ITW is to inspire the next generation of Italian founders, they’ve pulled out all the stops for budding entrepreneurs in the country to learn from the best minds in tech. Now Italy’s fledgling founders just need to get cracking.
If you missed the event this year, keep an eye on my LinkedIn in the next few days, where I’ll share my highlights from all these conversations — and the most relevant advice for Italian founders.
For now, it’s time to dig into the news of the month. Italy seems to have come back from its long summer holiday raring to go on the funding front. The main thing I’m noticing? The country’s startups are attracting larger seed funding rounds. Scroll down for September’s highlights, which include:
Jet HR CEO Marco Ogliengo on this week’s bumper €12m Picus Capital-led seed round
Milan-based quantum startup Ephos lands a €7.6m seed round
Sam Altman’s advice for fledgling founders in Italy
Amy
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🤑 Intesa Sanpaolo earmarks €500m for two new VC funds. Neva Sgr, the venture capital arm of Italy’s largest bank Intesa Sanpaolo, has launched two further flagship funds — Neva II and Neva II Italia — to invest in emerging companies. The bank is earmarking €400m for the Neva II fund to invest in global companies, and €100m for the Neva II Italia fund, to invest solely in Italian companies. It comes two years after Intesa raised its first €250m venture capital fund, for investing in European startups.
💵 Milan-based quantum computing startup Ephos raises €7.6m seed. The seed round was led by US VC firm Starlight Ventures, and joined by US VC Collaborative Fund, Exor Ventures, 2100 Ventures, Unruly Capital, and angel investors. Ephos has also received backing from NATO and the European government. The startup produces photonic chips made from glass, and it’s using this seed funding to open a new manufacturing facility in Milan for these chips.
💸 Scalapay cofounder Raffaele Terrone raises $3.3m for new startup. Terrone, former CFO and cofounder at Scalapay, has raised $3.3m for his new London-HQ’d startup Desia, an AI-powered investment due diligence platform. Ross Mason’s Dig Ventures led the round, which was also joined by 2100 Ventures, Exor Ventures, and Octopus Ventures. Operating with a SaaS business model, Desia is using artificial intelligence to develop technology that gives professional investors a helping hand when analysing data on potential investment targets. Desia now has a couple of years of runway, and plans to skip a seed round and go straight to raising a Series A in 2025, according to a person familiar with the matter. Four out of eleven of Desia’s employees are former employees of private equity giant Advent International.
This week, Milan-based HR tech Jet HR announced it’s closed a €12m seed round — Italy’s third-largest seed round to date, according to Dealroom data. It brings the total amount raised by the company to €16.7m.
Jet HR is an employee management system that aims to make administrative tasks like creating payslips, paying contractors, recording attendance, and hiring employees easier through its all-in-one platform. It’s solely focused on serving Italy’s vast SMB market.
Given Italy is famous for its complicated bureaucracy, it’s an idea that attracted the great and the good from the country’s investment scene at its €4.7m pre-seed round last June, which was the country’s largest-ever pre-seed fundraise. Now, Jet HR has bagged some big-name international investors.
When I sat down with CEO and founder Marco Ogliengo yesterday he said, “I think our cap table is a masterpiece.” And it’s easy to see why.
Personio backers Picus Capital led the round, and existing investors Exor Ventures, Italian Founders Fund and 2100 Ventures all increased their stakes. Ogliengo can now also pick the brains of an impressive roster of new angel investors from HR tech unicorns too — including Pennylane’s founder Felix Blossier, Workday’s former CTO David Clarke, and Oyster HR founder Tony Jamous.
“We have so many talented people on board now that we can just pick the right person for the right problem at the right time,” Ogliengo says.
So how is Jet HR attracting all this investor attention? I spoke to Ogliengo on the sidelines of Italian Tech Week to find out.
A: This round is huge for Italy. Was this always the plan?
M: “Yes it’s really big — in fact it’s more than we expected we’d ever raise. I always thought that if we were to raise €10m, I wouldn’t know how to use it. That’s because building for a single country is incredibly efficient compared to building across Europe. 75% of our customers arrive as inbounds through word of mouth and PR, so we have no massive marketing spend, and we don't need to have multiple offices.”
A: Where are you on the path to profitability? Did you need this cash?
M: “At our first round last year, we had a business plan that went to break-even, where we didn’t need to raise a second round. This month’s seed round was preempted by investors — we weren’t actively fundraising. We got a term sheet and so we decided to take the money because the majority of our spend is R&D — developers and designers — and we keep underestimating the complexity of the matter that we’re automating, which means we keep growing that team. So it made sense for us to double the size of the R&D team, almost double the burn, and postpone break-even, so as not to take 10 years to build out everything. Now, the current business plan still goes to break-even without any further raises, within a span of two or three years. I think the same thing will happen again — we’ll want to double the size of the R&D team once more, and postpone profitability. But I think the next round might actually be our last one.”
A: What kind of revenues gain that preemptive investor attention?
M: “Our first round was raised on the signals, which was our founder experience, and the market opportunity. This seed round is basically on traction. This year, we're going from €0.5m in ARR to €2.5m, so that’s 5x. We may do better than that because that was our target and we’ve already surpassed it.
And because 75% of our customers arrive inbound, our efficiency metrics are strong — it doesn’t cost much to acquire the customer.”
A: You’re staunchly focused on staying in Italy. Will this ever change? And how did you convince international VCs it would pay off?
M: “We won’t go outside of Italy. It's interesting, last year when we were talking about this with investors, they were like, “Ok, but at some point you will, right? You're very convincing and you have strong opinions, but I'm fairly sure that you will change your mind and see that's the way to go.” This year, I don't know if the market has changed, or if the traction simply lends us more credibility, but investors are actually getting more excited when we tell them that we won't go abroad.
Venture-backed entrepreneurship is definitely about building unicorns. Italian companies spend €4bn a year on payroll services. That’s an existing expense. The market leader has a 2% market share, but there was no tech-enabled service, and there’s a lot of frustration. So the market is big. We have a credible path to building the default solution to managing payroll and HR in Italy — default maybe meaning a 20-30% market share. A 20% market share is €600m in ARR, and that’s a $6bn company. Will we get there? I don’t know, it’s super difficult. But there’s a credible path to getting there, and I think that’s all the investors need right now.”
A: How have you found hiring tech talent in Italy? And how many more hires will you make in the next year?
M: “All our people are Italian, and we hire very senior people. We’ve gone from 20 to 80 people over the last year, and you can only do that if you hire senior people who are essentially self-managed. Right now, our CTO has 20 direct reports. We also have a slightly non-standard approach of delegating more to the developer. We don’t have product managers, but instead, the role of product manager and quality assurance is split between the designer and the developer. So the developer makes the full stack and deploys on their own. To do that, you need first-hand knowledge of the weird complexities of the Italian labour law, so they’re all Italian.
We also try to have this approach where we do all our new hires in three months, and then go on a hiring freeze, because it's much easier to manage a company that way. Next year we’ll have significantly slower growth. We will surpass 100 next year, but we won’t double from our current 80.
If you’re talking about mid-level tech talent, there’s definitely enough when hiring in and around Milan, made possible by our remote working policy. If you’re talking about executives, Italy is still very scarce.”
If you want to learn more about Jet HR, listen to Marco’s recent interview on Made IT 👇🎧
After a jam-packed 24 hours that involved losing his CTO and two senior research leads, OpenAI CEO Sam Altman took to the stage yesterday afternoon in Turin to be interviewed by Exor CEO John Elkann.
His advice for the Italian tech ecosystem?
“Italy is a place with such a rich history that it’s tempting to look back. What defines us at OpenAI is our relentless looking forward. Now is a very special time to do that — tech revolutions like what we’re witnessing now with AI don’t come along that often, maybe every couple of decades. And in your career, you only get a couple of moments like these.
So now is the time to really go for it and be creative. Startups have an incredible edge because they can move more quickly, which is so much more rewarding.
I would love to see Italy really embrace this. It’s not easy. It requires economic, policy and regulatory change. But don’t wait for what will change with regulation and policy. Ultimately, you have to push where you can and good outcomes will come out of it.
People will do incredible things no matter what, but the degree of success is dependent on environment. A way you can shape your environment is forming a community. I still ring up my contacts from Y Combinator years ago and have found those chats super important throughout my career. Grow a tech community and you can do so much more than what an individual startup can do.”
— Sam Altman
That’s it from Il Digestivo this month, we hope you’ve enjoyed our fourth edition.
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