STARTUPS IN ITALY FACTS AND TRENDS MIND THE BRIDGE SURVEY 2012

STARTUPS IN ITALY FACTS AND TRENDS MIND THE BRIDGE SURVEY 2012

STARTUPS IN ITALY FACTS AND TRENDS 2012 MIND THE BRIDGE SURVEY Startup Italy : At what point we are? EXECUTIVE SUMMARY Here we go with the second edition of the Mind the Bridge Survey, which offers its insiders (startuppers, institutional investors, practitioners, researchers and policy makers) an updated scenario of the Italian startup ecosystem. Through its privileged observatory, represented by thousands of companies that in 2012 got in contact with Mind the Bridge, the foundation, with the scientific support of CrESIT of the Insubria University of Varese, had the opportunity of analyzing this emerging section of the productive Italian universe in detail. The analysis presented in this report is focused mainly on the segment of companies in the early stage phase (seed financing and Series A). The main results emerging from the data analysis are summarized below. Please refer to the Survey for in-depth analysis, details and comments. STARTUP: DEFINITION AND SIZE OF THE PHENOMENON First of all, what do we mean by startup? For the purposes of the following survey, we refer to startups as: - companies recently created or entrepreneurial projects; - operating in innovative fields; - with solid plans for growth; - that need capital during their first stages. 1

Basically, new entrepreneurial initiatives characterized by an important commitment to innovation and strong ambition of growth. Since no national statistics census this category of companies, it is hard to provide an estimate of both this section and its growth rates. The order of magnitude, valid for a first approximation, is however identified as 800/1,000 new projects every year, with an overall consistency that lies between 4 and 8 thousand startups. The startups are often founded only after the business idea has been validated and, in some cases, after having collected the capital needed for its realization. This explains why a good 59% of the population investigated is represented by entrepreneurial projects ( wannabe startup ), which have not been structured yet. Already established companies, very young, with an average age of 1-2 years, represent around 36% of the total. Finally, the 5% is composed by corporate spin-off, new projects started by already existing companies with the purpose of supporting (through the creation of a new identity, the spin-off) processes of diversification and innovation of their own activity. OPERATING FIELDS The major operating field is represented by web (49.1%) and ICT (21.8%), which absorb around 70% of Italian startups, while only 4.8% is concentrated on consumer product and around 3.6% on electronics & machinery. A minor role is played by companies operating in clean technologies (1.2%) and by the ones in the biotech/life sciences field (0.6%). The remaining 19% (approximate) operates in other sectors, particularly services. Data confirms the existence of an inverse relationship between the number of firms in an industry and the level of investment required to start a project. In the web or software field the investment required at the early stage is minimal, contrary to what happens to the development of technologies in the biomedical or biotechnological sector or to devices and hardware. THE GEOGRAPHY OF THE STARTUP PHENOMENON The majority of startups already established as companies, is localized in the North (52%) and in the Center of Italy (21%), whereas the presence in the South and in the Isles (16%) is limited although it is growing compared to last year. Milan and Rome are confirmed as the poles of major attraction. It is important to underline that the most important percentage of Italian startups (11%) have decided to be incorporated abroad (especially in United States and 2

UK). This phenomenon, defined as corporate drain, (which has been raising in the last years, +20% compared to the previous year) can be read as a sign of the decreasing competitiveness of our country for the attraction of investment and specifically of new companies. Indeed startups - especially in their early stages - are characterized by very high mobility rates, due to the absence of operational constraints (personnel, plants, etc.) that link them to a specific place. Therefore, having a favorable regulatory environment for their establishment and growth (commonly called "corporate haven" in Anglo-Saxon countries) is strategic for attracting companies from abroad, at least to mitigate the escape of our most promising business realities. Whether and how the package of rules introduced by the government with Decreto Sviluppo Bis will be effectively able to mitigate this phenomenon that threatens to deprive our country from potential contributors to innovation and growth, should be examined. THE ITALIAN STARTUPPER PROFILE What is the profile of the Italian startupper? Thirty-three years old on average, male (female entrepreneurship is still quite limited, only 11% of the total), born and resident in the Center-North of Italy (however, compared to last year, we saw a slight increase of neoentrepreneurs from the South of Italy). Around 53% of entrepreneurs have a first level degree/bachelor, around 42% also have a master s degree. 11% got a Ph.D. or an MBA. Among them, 87% studied in Italy while the remaining 13% studied abroad. About 80% of startuppers had an experience as employees, equal to 8-9 years on average, and a good 23% are not on their first startup, data which confirms the phenomenon of serial entrepreneurship, even in Italy. 8% of startups previously founded were located abroad but only 50% decided to remain overseas. 8% of these serial entrepreneurs declared an exit, whereas the wide majority (87% of cases) is still involved in the previous initiative ("parallel entrepreneur"). Data on the average age and education highlights how startups cannot be improvised but require a high level of knowledge and experience (this last aspect is confirmed by the fact that one quarter of founders are on their second startup, confirming that the role of an entrepreneur is learned on the field). Another interesting aspect relates to patents. 4% of founders report having at least one patent (2 per person on average) and it is 3

interesting to notice how two thirds of all patents registered originate from founders with a Ph.D. THE ENTREPRENEURIAL TEAM Italian startups are comprised by a group of 2-3 shareholders and 4-5 employees, on average. Therefore, we are not talking about a one man band but to entrepreneurial groups who gather different skills and generate a contribution, in terms of occupation, not very large but important if considered in perspective. 72% of startups with a single founder are still at an initial stage ( wannabe company ). 39% reported having known their cofounders from work, 32% through existing friendships, and 26% met them in college. THE ORIGIN OF THE BUSINESS IDEA What inspires entrepreneurs to the point of starting a company? Research, in 67% of cases, with a major impact for applied research (27.3%) compared to basic research (7.3%). Such data indirectly confirms the difficulty and delay the Italian academic system has with regard to technology transfer. Previous working experience is another important factor that influences the genesis of the business idea (50%). LOCALIZATION DRIVERS What are the factors that seem to have a major influence on the location of a startup? In first place is the network of contacts (69%), followed by the possibility to access highly specialized human resources (engineers, programmers, managers, etc.) and the proximity to research centers (40%), which are, by nature, the source from which to draw on skills and highly qualified personnel (57%). The fact that the access to capital (43%) qualifies in fifth place, only highlights how relationships and competences play a fundamental role in the process of starting up a company; even better, the same entrepreneurial models are based on network. It is not a coincidence that knowledge, talent and network are often indicated as the fundamental factors at the basis of a successful entrepreneurial ecosystem. MOTIVATIONAL DRIVER 77% of the respondents are user entrepreneur, referring to those who reported starting a company to solve a problem they personally faced (an unsatisfactory product/service or an unmet need). Quite prevalent among the motivational factors (68%), is the desire to improve an existing market or preside over a slice of the market that 4

is still uncovered. For the remaining 53%, the desire of autodetermination (being their own boss ) and that of autorealization, win at 51%. ACCESS TO CAPITAL The most widespread instrument to raise funds among startups is bootstrapping (58%). 8% had access to a grant, 6% came from banks and foundations, while another 6% was financed by other industrial firms. 16% collected investment in equity from third-party investment, mainly angels (8%) and seed funds (7%). Only a very limited number had access to venture capital (1.2%). By eliminating the extremes in the distribution of funding, it becomes apparent that the average investment is approximately 65K (euro), a figure close to the typical amount of seed investment. Investments are primarily used for product development. THE NEEDS What are Italian startups looking for? First of all, capital (69%) at the seed investment level and 59% at the venture capital level. But more than 50% are looking for a partner as well, who could help them in the strategic development of their business idea. After all, data shows that 69% of companies decide to establish where the network of contacts is stronger. Therefore, capital and skills - together with a more startup-friendly cultural and normative environment - are the ingredients for giving a further sap to the Italian startup ecosystem, which is confirmed to be healthy and growing, looking through our observatory. Alberto Onetti Chairman Mind the Bridge Foundation Director, CrESIT - Insubria University of Varese 5

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STARTUP: WHAT IS IT? HOW MANY ARE THERE? Prospectively speaking, Italian startups represent the most dynamic and relevant component of the Italian productive ecosystem, despite being a numerical minority compared to other sectors. National statistics do not conduct a census on startups. They provide data on new companies, although most of them cannot be considered startups because they operate as traditional businesses. This lack of data, prevents us from carrying out structured analysis on the startup phenomenon in Italy. Furthermore, the study of the startup universe becomes even more complex if we consider the diversity and specificity of the factors related to this category of companies, such as the high mortality rates (which determines constant changes in the population) or the pivoting processes (referring to the activities undertaken by the founders for modifying, often radically, the object of the core activity) which lead the original project to assume a different shape for better responding to the market requirements. Finally, we cannot underestimate the fact that usually startups are founded only after having reached certain milestones, considered crucial for the product launch. As a consequence, in order to understand the phenomenon in its entirety, it becomes fundamental to conduct a census not only on the companies already founded, but also on the projects that are not yet formalized as a legal entity. Some attempts for identifying/quantifying and mapping the startup universe have been done in the past, at different levels. A first attempt tried to estimate the number of Italian startups on the basis of the funding requests made by the startups to the major funds of investment, net of any duplication. It is estimated that the venture capital funds and business angels networks grouped around the VC Hub, the informal group that gathers the most important Italian investors, collects around 800/1,000 fund requests every year. We consider that number quite representative of the size of the annual flow of Italian startups. Conversely, it is more difficult to appreciate the overall consistency of the phenomenon, given its high dynamic. A useful proxy, with all the 7

due limitations of the case 1, can be identified in the dimension reached by the social communities specialized on these topics. It is reasonable to estimate the current volume of the startups in Italy in the order of a few thousands (approximately between three and eight thousand companies). A world still quite small, but which is certainly growing fast. In the following paragraphs we will present the results of the analysis we conducted both on the companies and on the entrepreneurial projects participating in the Mind the Bridge Seed Quest 2012. The survey sample is composed by the startups that applied to Seed Quest 2012 and filled out the application form with all the information required. With the purpose of this survey, specifically, we analyzed data for 166 companies and 369 entrepreneurs 2. It is important to point out how the specificity of the Mind the Bridge Seed Quest program, which is aimed at collecting projects mainly from companies at the first stages of their life cycle, may influence the evidence emerging from the data analysis to some extent. In particular, given the number of participating firms, we believe this analysis represents the Italian startup population very well, or at least the segment comprised by the companies in the early stage phase, referring to all the firms recently founded or seeking for a first round of funding (seed financing or Series A). More structured Companies (those aiming to complete a round of funding subsequent to Series A) represent a minor segment, which requires, due to its lower numerical consistency, to be addressed with methods of investigation based on a qualitative approach. Below, we offer some useful definitions to better qualify the data presented in the following sections. STARTUP New entrepreneurial projects with a strong calling to innovation and solid growth ambitions. This entrepreneurial model is usually associated to a need for capital exceeding the founders ability to self-fund (the so called bootstrapping, defined by the Anglo-Saxon literature as the well-known model of the 3Fs, family, friends and fools ) and the company s capability to self-sustain (generally, for a 1 Following such approach, the numbers of the members of a particular group can offer orders of magnitude useful to estimate the phenomenon. However, one has to consider that the discussion groups involve people differently interested in the topics covered, and not just individuals active in startups. 2 Such numbers do not include applications partially completed, which are not included in the analysis. 8

certain period after starting the company, the entrepreneurial activity does not produce cash flow). Consequently, startups in the early stages base their development on the resources collected through external financing, which comes from investors specialized on equity, such as seed, venture capitalists and business angels. Therefore, for the purpose of this report, we defined as startups 3 : companies recently founded or entrepreneurial projects; operating in innovative sectors; with important growth plans; requiring capital injections in the early stages. SPIN-OFF It is a subset of the startups composed by those companies whose founders come from other companies (the so called corporate spinoffs ), universities or research centers ( academic spin-offs). Generally speaking, the term spin-off is often used to refer to firms that maintain a formal relation with the company or the university where the innovation originated: this is possible thanks to the participation of the organization of origin into the spin-off capital, and/or a contract of collaboration between the former and the spinoff. 3 The proposed definition is in line with the one of young and new technologybased companies, adopted by the most widespread literature on entrepreneurship (see also Onetti A., Zucchella A., Jones M.V., McDougall P., 2010, Internationalization, Innovation and Entrepreneurship: Business Models for New- Technology-based Firms, in Journal of Management and Governance (JMG), Special Issue: Entrepreneurship and strategic management in Life science. Business Models for High-Tech Companies ) and with the ones provided by the recent report RESTART ITALIA written by the Ministry of Economic Development. 9

STARTUPS VERSUS WANNABE- COMPANIES Startups are often legally formed only after having validated the business idea (or after having found capital) Startups are often formally founded only after the business idea has been validated and, in some cases, after having raised the capital necessary for its development. This evidence has already emerged from last year s Survey and it is confirmed by the data of this year. Hence, the importance, previously pointed out, to take a census not only on the companies already founded, but also on the entrepreneurial projects, which have not been formalized as a legal entity yet. The majority of the Italian startups (a good 59% of the population investigated) are represented by entrepreneurial projects ( wannabe startups ), which are not structured nor built as a legal entity yet. This phenomenon is extremely relevant because, despite the projects that are not formalized, they are to all intents and purposes operating companies, which raise capital and money. Indeed, we found that all around these entrepreneurial projects, there are teams of people supporting the activity with available funds (previously collected as a grant and/or risk capital, usually coming from family and acquaintances) and thus with resources to invest. With regard to already established companies, we are talking about very young firms, with an average age of 1 to 2 years. Furthermore, it should be noted that 5% of companies are corporate spin-off, that is new projects started by already existing firms with the goal of supporting (through the creation of a new entity, that is the spin-off) processes of diversification and innovation of their own activity. 10

TECHNOLOGICAL SECTORS ED BUSINESS AREAS Most of the startups are active in the web field (49.1%) and in Information and Communication Technologies (ICT) (21.8%). In addition to these areas we can count a 4.8% focused on consumer products and around 3.6% on electronics & machinery. Numerically less important is the role of companies operating in clean technologies (1.2%) and in the biotech & life science industry (0.6%). web and ICT are the prevalent businesses Data confirms that a relation (inverse) exists between the number of companies and the level of investments required to start up an entrepreneurial project. A project in the web or software field requires minimum investments in the startup phase, as opposed to the development of biomedical and biotechnological technologies or devices and hardware. The remaining 18.8% of the companies is focused on other activities, mainly services that are numerically prevalent (services of various types that support different sectors). 11

ITALIAN STARTUPS: WHERE? Milan and Rome are the poles with the highest density of startups The majority of the Italian startups are located in the North (52%). The Center of Italy contributes with 21%, while 16% originates from the South and the Isles. The percentage of companies based in the South and in the Isles is to be acknowledged, although still a minority, it increased sharply (+50%) compared to last year. Lombardy (25%) and Lazio (18%), which include Milan and Rome as dominant location poles, have been confirmed, even this year, as the regions with the highest density of startups, immediately followed by Emilia and Veneto (9%). It is important to highlight that an important percentage (11%) decided to incorporate abroad. This data, which has kept rising in the last years (+20% compared to the previous year), can be read as a signal of the decreasing competitiveness of our country in terms of lower investment attraction and incapacity to act as a magnet for new companies. As a matter of fact, the startups, particularly the ones in the early stage, are companies characterized by high mobility, at least potentially, since they do not have operational constraints (personnel, plants, ) that bind them to a specific place. Therefore, having a favorable regulatory environment to their establishment and growth (which is called corporate heaven in Anglo-Saxon countries) is strategic, not only for attracting foreign companies in Italy, but above all for mitigating the corporate drain effect. The set of rules introduced by the Italian Government with the 12

Decreto Sviluppo Bis to foster the birth and development of innovative startups, needs to be tested in order to understand if it can mitigate or invert this trend. Among the nations that show the highest capacity to attract Italian startups, United States and United Kingdom emerged. It should be noted that the choice to locate the company abroad could be led by specific corporate strategies, such as the research of specific skills and/or specialized workers and of markets able to support the startup development and to foster fundraising. Startups arise where there are networks and competences In both cases, the United States, either for the dimension of their internal market or for the stage of development of the venture capital industry, represents a very interesting destination for a company with ambitious development plans. FOCUS: LOCALIZATION DRIVERS But what are the factors that can influence the location of a startup? The answers provided to this question by the founders, allowed us to identify a ranking of the location drivers considered most important. In the first place, there is the network of contacts (69%). Followed by the possibility to access to highly specialized human resources (engineers, programmers, managers, etc.) and the proximity to a research center (40%), which are by nature a source from which to draw expertise and highly specialized personnel (57%). Access to capital (43%) is another determinant factor in the choice of location. From this data, emerges that relations and competences play a fundamental role in the start up and development of a company; better yet, the entrepreneurial models themselves are based on network. It is not a coincidence that knowledge, talent and network are often identified as the fundamental factors on the basis of a successful entrepreneurial ecosystem. 13

THE ORIGINS OF THE BUSINESS IDEA A question that almost all scholars in innovation have tried to answer, is the one related to the sources of innovation. In an attempt to provide an answer, we asked the entrepreneurs where and when the business idea - on which the startup is based - originated. In this case, the indications that emerge from the data analysis are quite clear. Research is the basis for innovation. In 67% of cases, research is the source of the business idea. It should be underlined that applied research (27.3%), thanks to its proximity to final application, appears to have a more direct impact on the creation of companies compared to basic research (7.3%). This data indirectly confirms the difficulties and the delay of the Italian university system towards technology transfers. As highlighted in previous studies 4, the great potential of the Italian research struggles to become a firm, as confirmed also by the small number of academic spin-offs we report yearly. Another important place for the genesis of the business idea is the job: in 50% of cases the stimulus for launching a new company has accrued during previous employment. 4 Onetti A., Vietor R.H.K., Napolitano F., Italy. Europe s Investment Opportunity, White Paper, New York, May 9, 2011 (http://italianbusiness.org/white-papers/). 14

FOCUS: MOTIVATIONAL DRIVERS What are the factors that spur an individual to create a startup and to take up the entrepreneurial adventure? From the analysis three entrepreneurial profiles emerge, better defined as attitudes : - ghepensimi (Italian expression to state I ll do it myself ) - voglio un mondo diverso (I want a different world) - qui comando io (I am the boss) As stated before, these profiles are not alternatives but we can refer to them as approaches that coexist in the same person, even if in a different mix. The first profile ( ghepensimi ), connoted by the almost totality of the interviewed startuppers (77%), is exactly what the literature on entrepreneurship identifies as user entrepreneurs, namely individuals who declare to have started up a company to solve a problem they faced personally (an unsatisfactory product or a service, an unsatisfied need ). Very widespread among the motivational factors (68% of cases) is also the will to change the market where they have decided to compete. In this case the driver is the vision, typical the entrepreneurial vision, of a possibility/opportunity to improve the existing market or a market segment not yet addressed. Other engines for the creations of companies (connected to the third profile identified above) can be described as the will of selfdetermination (the wish to be boss of oneself, reported in 53% of cases) and of self-realization (indicated by 51% of entrepreneurs). Another aspect studied concerns the people ( supporters ) who sustained the entrepreneur in the finalization of the business idea and in the early stages of starting up the company. Data confirms a fundamental role of the 3Fs in the startup phase: among them, family (48%) and friends (43%) play a role of primary importance. We will see, in the section devoted to fundraising, how family and friends support the business idea, both economically and financially. Moreover, a significant role is played by the colleagues (38%); a further confirmation of the influence that strong ties and dense relationships can have in the initial moments that precede the creation of an entrepreneurial initiative. The size of the network and the weak ties tend to gain importance later in the company s life cycle. 15

THE STARTUPPER S PROFILE The Italian startupper is 33 years on average and in most of cases he is male (89%), he has a quite high education level and has cumulated previous working and entrepreneurial experiences. The majority of entrepreneurs were born in the North/Centre (48% in the North and 23% in the Centre), whereas only 24% come from the South or the Isles (the remaining 5% abroad). If we consider the residence of entrepreneurs (instead of the place of birth), the gap between North and South is widened, since the percentages related to the latter has dropped from 24% to 17%. Education as one of the factors that present a stronger correlation with the propensity to create a firm, also emerged in last year s Survey. By analyzing the startupper s study path in details, as already reported, a quite high level of education was revealed: around 52% of entrepreneurs have a bachelor (in 6% of cases they got it abroad) and around 42% have a master degree too (9% of cases got it abroad). Around 42% got a master s degree 11% Ph.D. or MBA as well. Of this perce ntage, 87% studie d in Italy, while the 16

remaining 13% abroad (with United States, United Kingdom, Spain, France and Switzerland as the most frequent places for studying). The fact is, that studying abroad is a frequent trait in the startuppers profile, which does not concern only high specialization, but also the university s study path, although with a less pronounced incidence (6-9% depending on whether it is bachelor or master degree). Along with the education, a relevant aspect is represented by the working and entrepreneurial experiences that entrepreneurs have before the creation of the current startup. It is not casual that entrepreneurs in their first working and entrepreneurial experience are only 19% of the total. In particular, we have separately categorized and analyzed three main typologies of experiences that can precede the creation of a startup and influence its success: - previous working experiences (as an employee); - previous entrepreneurial experiences (startup previously founded by the same entrepreneur); - previous working/research experiences in the academic field. With reference to the first aspect, about 80% of startuppers, before starting their own entrepreneurial activity, had experience as an employee. The working period is equal to 8 or 9 years on average. It should be noted that a good 17% of them have spent a working period abroad. The startup s success depends strongly on what the founders have done and learned before A good 23% of founders are not at their first startup. This data confirms even in Italy the phenomenon of serial entrepreneurship, that is the propensity to start up more than one company in one s life. 8% of these serial entrepreneurs had an exit, whereas the wide majority (87% of cases) is at some extent still involved in the previous initiative (technically defined as parallel entrepreneur ). 8% of startups previously founded were established abroad. Despite that, only 50% of them have decided to stay out of border, whereas the other 50% reentered in Italy or are planning to do so. Conversely, the contribution to startup creation from university researchers seems limited. Only around 8% of startuppers have previous experiences in the academic field (at universities or public research centers). On the contrary, the correlation between previous experience in the research field and patent protection is high. It is not random that 64% of the patent registered by Italian startups comes from entrepreneurs who have a Ph.D. and spent a research 17

period at the university or in other research centers. THE TEAM Startups are a team network and gather different competences Startups are built around a group of 2 to 3 founders, of age ranging between 26 and 35 years, and employ on average from 4 to 5 employees. They are not a one man band, but entrepreneurial groups that aggregate different skills and contribute in terms of employment (not big numbers, but important in perspective). It is interesting to point out how the 72% of startups with only one founder are still in the planning stage ( wannabe company ): therefore, it is possible that along with the maturation of the idea, it follows a widening of the entrepreneurial team. Another interesting aspect of this study is related to the opportunity for the group of founders to aggregate. 39% of founders get to know each other at work. In 32% of cases the entrepreneurial adventure began among the existing relations of friendship, whereas in 26% in the university environment (18% during the degree course, while 8% during the Ph.D.). Only in 10% of cases the entrepreneurial group crosses with the family. 18

ACCESS TO CAPITAL The sources of financing mapped for the purposes of our analysis are the following: Bootstrapping: capitals collected from the group of founders, namely resources directly possessed or collected inside the family or from the network of acquaintances ( family, friends and fools ); Grant: funding generally devoted to the support of research activities in the university field; Seed Financing, Super Angels, Micro VCs, Accelerators and Incubators: funding received by investment funds focused on early stage companies and generally connected to activities of incubation or acceleration; Angels: funding received by individuals that generally make investments together (in network); Venture Capital: funding from investment funds specialized in risk capital; Corporate Venture Capital: funding received from other nonfinancial companies. It is important to remark that the distinction among different sources is often not easy, above all in contests, such as the Italian one, in which the industry of seed/venture capital is still in the consolidation and growing phase. Startups that have already raised capital (in any shape or form) are around 70%. The most common instrument used to raise funds is bootstrapping (58% of cases). 8% of startups had access to grants 5 too (mainly from regions/districts) to cover part of the developing costs from idea to the initial stages. Another 6% comes from banks and foundations, while the remaining 6% of the startups were funded by other nonfinancial companies. 5 From the data analysis it emerges that 30% of startups that received a grant have a founder with previous working experience in research and university. 19

16% has collected investments in equity from third parties investors, mainly angels (8%), and seed funds (7%). Only a very limited portion had access to venture capitals (1.2%). This data is consistent with the specificity of the population observed, which is connoted by early stage firms, as previously stated. The capital collected by startups - as highlighted in the following table, which offers a distribution in classes of investment presents a high variance (it is noticeable that the extremes vary from a few thousands to some million of euros!). By eliminating the most extreme parts of the distribution, the average investment is settled at 65 thousands euro, a value closes to the typical seed investments size. Most of these financings are used for the product engineering (in 75% of cases), followed by the investments in marketing & sales (57%), R&D (38%) and, minimally, for general and administrative expenses. 20

WHAT ARE THE ITALIAN STARTUPS LOOKING FOR? What do the Italian startups ask for? Most of the Italian startups affirm they are seeking for capital, specifically 69% for seed investment and 59% for venture capital. They are not looking only for money. The analysis shows that the Italian startups are seeking for strategic partners as well who can help them in their development stages. Indeed, more than 50% are looking for a partner who can help the founders in the development of the business idea. Speaking about targets, 57% aim at achieving an exit through M&A, whereas 32% are not interested in selling the company. 10% think about an IPO, goal almost prohibitive in these times but who knows Why should we limit ambitious projects? Only those who cultivate big projects can have the chance to realize them. 21

WHO IS MIND THE BRIDGE The Mind the Bridge Foundation is a non-profit initiative founded by Marco Marinucci. A Google manager in his day job, Marco got inspired while involved in a business plan competition and mentoring project in Africa. Inspired by the radical impact such an initiative played, he decided to replicate the model with the hope to have a similar impact in his own country, Italy. The Foundation is led by a Board of Directors with Marco as Executive Director. Alberto Onetti, an Italian university professor with an in-depth startup experience and knowledge of the Silicon Valley ecosystem, serves as its Chairman. The Board steers the direction of the initiative and defines its organizational objectives. The goal of the Foundation is to foster a sustainable Italian entrepreneurial ecosystem, spur more innovative ideas, and reinvigorate the complex new venture economy, providing Italian entrepreneurs with direct exposure to potential venture capital investors from the most experienced, entrepreneurial ecosystem in the world - Silicon Valley. The ultimate goal of Mind the Bridge is to create a new generation of Italian entrepreneurs and Italian success stories. Every year Mind the Bridge organizes a business plan competition - renamed Seed Quest in 2012 - with the purpose of selecting the best innovative business ideas among all the talented Italian applicants. Mind the Bridge offers, to selected startups, an intensive training program (Boot Camp and Coaching sessions) and the possibility to participate in the MTB events (the Venture Camp in Milan and different roadshow in the USA). Thanks to its own investment fund (Mind the Seed) the Foundation carries out an acceleration program that qualifies entrepreneurial ideas with the goal to create new Italian success stories. Such activity is developed in Silicon Valley at the Mind the Brige Gym (One Market Plaza, Steuart Tower 5th Floor, San Francisco). Through the promotion of an entrepreneurial culture, the support for policy-making activities and the valorization of successful role models, the Foundation aims at achieving its ultimate goal, that is to be relevant for a generational change in the approach to entrepreneurship, impacting significantly on the production of Italian technology. 22

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The report is written by Mind the Bridge Foundation with the scientific collaboration of CrESIT Research Centre for Innovation and Life Science Management at Insubria University in Varese. The research has been coordinated by Prof. Alberto Onetti and Alessia Pisoni, Ph.D., and includes Marco Talaia, Ph.D., and Simona Bielli. Photos are courtesy of Michele Criscuolo (Mind the Bridge Alumni Startup School). Mind the Bridge Survey is published annually and it is free available on line in PDF format at www.mindthebridge.org The rights of disclosure, use of data and information, translations, electronic recordings, reproduction and total or partial adaptation by any means (including presentations and photocopies) are reserved. Data and information contained in this Survey can be used only if reporting the source as follows: Startups in Italy Facts and Trends Mind the Bridge Survey (2012) Graphs and tables must report the source as indicated in the document. Mind the Bridge Foundation San Francisco (CA) - USA www.minthebridge.org information@mindthebridge.org Twitter: @MindTheBridge Blog: siliconvalley.corriere.it/ 24