Ready in Rome – inside Italy’s “exploding” startup scene

Rome – image credit Flickr User Moyan_Brenn
Rome – image credit Flickr User Moyan_Brenn

Italy’s startup scene is exploding faster than a tomato on Fruit Ninja. Our guest contributor Arianna Bassoli, in Berlin as part of Startupbootcamp 2012, talks us through the hottest startups right now and why investors still have catching up to do.

Rome – image credit Flickr User Moyan_Brenn
Rome at dusk – image copyright Flickr user Moyan_Brenn

After spending almost ten years abroad doing research on interaction design, I decided to go back to Italy three years ago to start my company, frestyl, in Rome. It was a crazy idea, everyone said, and they were partially right.

My co-founders and I spent the first few months organising events to gather the few startup-ers in town and find out how we could all contribute to creating a scene in Italy, which was at the time practically nonexistent. The economic crisis was starting to hit the country and the consciousness of its citizens: even with talent and ambition, finding a good job was becoming almost impossible.

Move over, Berlusconi

This is probably one of the reasons why the Italian startup scene exploded so suddenly. In a climate of uncertainties, the decision to follow your own ideas instead of endlessly searching for a job is just less risky than it would normally sound. Many young Italians began to think, “if our country doesn’t allow us to have a decent career path, we’ll build it ourselves from the bottom up”.

It’s not a secret that Italy has gone mostly unnoticed over the past few years for its startup scene. The press might have been busy following Berlusconi’s numerous scandals, but the truth is that there was not much going on until a bit over a year ago.

The scene began to gain international attention in December of 2011 when Mike Butcher published an article on TechCrunch titled “Shock Horror! Berlin VC Invests In Italian Startup. Is This The Start Of Something?

Just a few months later, in May 2012, Italy made news again when Glancee was acquired by Facebook. The growing international interest for the Italian scene was confirmed by TechCrunch itself with the event they hosted in Rome this September, showcasing more than 40 of the best local startups.

Today there are a few hundred startups in the country, and a sizeable subset of them have already received millions in funding or have exited.

The hot top 8 Italian startups (if we had to pick)

Arduino – image credit Flickr user mozillaeuMaking electronic buffs really happy – image credit Flickr user mozillaeu

It’s tough to create a shortlist of the best Italian startups; there’s too many to fit in a single article! More than one revolutionary product has already made waves outside of Italy. Arduino transformed the maker community and Balsamiq created a new standard for UX design.

Others already have a large international user-base, such as Stereomood, a music streaming platform that offers playlists to suit different moods, and Spreaker, a service that allows anyone to make their own radio station. Most recently there’s Atooma, an application for Android that lets people set up conditions that will automatically trigger certain actions on their phone (e.g. “When I leave the office, send an email to my wife”).

Atooma

Others are turning heads with their creative business models. Beintoo partners with popular games (like Ninja Fruit) to reward people for using them by distributing a virtual currency that can be spent with a number of resellers. Soundreef provides an alternative to music rights collection societies and offers background music to retail chains for a lot less than they would usually spend.

Meanwhile, iubenda generates automatic and simplified privacy policies for any kind of web service, a step forward to making legal documents financially accessible and understandable for everyone.

RomeRome – image copyright Flickr user Moyan_Brenn

Incubators – a powerful lobby

The Italian government has also finally started to acknowledge this phenomenon and decided to directly support the startup ecosystem. In the process of releasing a new set of laws this October, the government directly involved VCs and startup-ers in order to better understand their needs.

A series of incentives and bureaucratic simplifications have been introduced for both sides of the ecosystem, and hundreds of millions from public funds have been reserved to support the growth of the best startups.

“It is definitely a step forward,” Uribu co-founder and contributor to the Italian Huffington Post Andrea Stroppa commented. “Even though now it’s going to be hard for startups to get funded without going through incubators.”

Indeed, the new laws establish incubators as central players in the whole ecosystem. The problem is: there’s an increasing number of them and they’re becoming a powerful lobby.

Naples moped – image credit Flickr user podoboqItaly needs to beat the startup “brain drain”–
image copyright Flickr user podoboq

Investors still ask for a five-year plan at seed stage…

There are many positive signs that Italy is becoming more established and recognised for its startup scene, even though there’s still a long way to go.

Compared to what many might think, money is not really an issue (especially after the latest government measures). What is missing is a higher concentration of investors, adding more competition within this sector, and a more startup-like approach to investment.

Unfortunately, many Italian investors still ask for a five-year financial plan before even discussing a seed round. Also, despite the recent measures, the bureaucratic structure and costs associated with incorporating and maintaining a company make the life of startuppers excessively complicated.

Finally, Italy’s typical territorial decentralisation does not support the creation of a physical hub for the startup scene. From north to south, all the regions stand strong on their conviction they should be the leaders of this ecosystem. A single city, like Berlin or London, has yet to take the Italian crown.

Arianna BassoliThe author is feeling optimistic…

Beating the brain drain

These problems all contribute to the ongoing Italian brain drain. Many talented startuppers move to Silicon Valley or London looking for better growth opportunities. And it’s the same reason why I’m currently here in Berlin; my team was recently accepted as part of the Startupbootcamp 2012 class. There’s no such program in Italy but we wanted to be accelerated as we launched a big product pivot.

I had to leave Italy to grow my company, but even that’s changing.

Startupbootcamp is considering Rome for one of its next destinations, and I think this would be great for Italy. It would bring a more international environment to a scene which is still too local and not open enough to “external influences”. And it would create a bigger network of mentors which is lacking at the moment; the scene is still quite young and the “mentoring” mentality hasn’t totally caught on yet.

Not all the right conditions are in place to consider Italy the “ideal place for startups”, but the improvements over the last year have been amazing and give me hope for the near future. The creativity, resilience and hard work of Italian startup-ers is definitely the most promising aspect of the scene and it is ultimately what’s going to underpin the sustainability of the whole ecosystem. Keep an eye on us, I promise you won’t be disappointed.

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