«Italy continues to offer very valid ideas, at a good price, but for foreign markets. The 21 Italian exits are a good example of this. But it is precious little, and it won’t get us very far». Fernando Napolitano, 50, entrepreneur, president and managing director of Italian Business & Investment Initiative (IB&II), made this comment yesterday in response to the data released by StartupItalia! on the biggest exits of the past 3 years.
Born in Naples in 1964, he has an academic resume that includes the Federico II University of Naples, the Harvard Business School, and the Polytechnic Institute of New York. He is ex-managing director of ENEL, and member of the consulting committee for the Innogest investment fund. In 2010, he founded IB&II, an organization that has the goal of facilitating investments in Italian startups in the U.S. Obviously he likes to keep an eye on what is happening across the ocean, for historical and personal reasons. «But let’s clarify something: my argument is not linked to the role I play. It is the data that tells us this».
We continue to be a country with marvelous ideas, that possibly even become enterprises here, but to become big they must leave. We are appetizing, and this is good news. We have the highest percentage in Europe of ideas in the scientific sector that become business opportunities.
So what’s missing in Italy?
The main problem is that we cannot emulate the models that already work. And there is an example that is similar to us: Israel. They set up a vast public financing program with a fund that then created a direct link with the United States. Even the miracle of Silicon Valley, after all, was created with a grand public investment plan.
It is also true that Israel has historically had much closer relations with the U.S.
But we aren’t missing anything. In fact, something in this sense is starting to move. I am looking with interest at Smart&Start and the work that Invitalia is doing, it is at least the first step in getting closer to what Israel has been doing for decades. But we need to understand what we’re doing. Will we be capable of being more aggressive at an international level? Of looking abroad? If not, then it is pointless. We will be financing startups that are destined to remain dwarves.
What was your first impression upon reading the Who Is Who report?
That the need to look abroad, especially towards the U.S., is not even contemplated as an issue. But this is an old conviction of stakeholders in Italian startups: everything can be done from here as long as there is internet. But this is a clamorous error.
Did it strike you that many Italian exits are from foreign investments?
Not at all. What struck me is that it is about such small numbers, on such a small scale. Pharmaceutical startups aside, there is very little digital. In this manner we are confining ourselves to the periphery of the empire. Rome, today, is somewhere else and we are Galilee.
What can we do to avoid this?
The only way is through the U.S.. Europe is not enough: 27 countries with very high language and fiscal differences. There are two alternatives: either do like the U.S. does (but we don’t have the economic force to permit a vast investment plan. Or, like Israel: create the conditions here to make big exits in the U.S. We must do this, to avoid misleading our young citizens and give them concrete prospects for the future.
It could be easy to accuse you of being biased: after all, you have interests as an investor in the U.S.
I’m not doing this for myself, in the end I am only involved in the time I dedicate to IB&II and for a bit of money that I add. If it is true that I am making an argument in my own interests, my home is actually Italy.
What do you propose?
Strengthening programs like the Best program scholarship. We take young people who we think are very talented, we send them to Santa Clara, when they finish their training they do a sixth month internship, then they return to Italy and they help us with our enterprises. There have been success stories. Cosimo Palmisano, the women ofD.Orbit, Rossettini and Panesi, have been through our program. Why are they success stories? Because they came here and Palmisano himself has stated this many times. He is a symbolic case. He tells of how when he came here he discovered that other people were already working on his idea. Initially this depressed him, but then he understood that he could do better and he founded Ecce Customer. But he is just one of 60 startuppers who have done a program like ours. Imagine if we sent 600.
And how can we reach 600?
With a public intervention (I am thinking of the regions, for example, that could use the structural European funds) and medium and large enterprises that could finance scholarships. Beretta has already done this with us and things went really well. It was a minimum investment for them, 35,000 euros that, however, could possibly create projects and developments that in just a few years could have a value of 35 million. But sending these young people might not be enough.
In what sense?
The Italian startup ecosystem needs a physical presence in the U.S. This is my longtime conviction. I would like to create a coworking space like WeWork in Lower Manhattan, below 28th (a highly concentrated area of hitech startups). To say that we are here, bringing our young people here, and we are putting them in contact with investors. Do you know what the steps are to meet a venture capitalist here in New York?
No. Please, tell us.
First they ask you where you reside. And, often, if you are not from New York they won’t even make an appointment with you. Then a call of about 3-5 minutes is organized. Then, if all goes well, a meeting. Personally, I would like to overcome at least the first obstacle. But without a physical presence this is difficult. And not just Fernando Napolitano says this. Israel, China, and Germany are already here. Within a year the New York area will have the highest density of venture capitalists after Silicon Valley. We should be there.
Riccardo Donadon of H-Farm suggested some time ago that small and medium enterprises should “buy” startuppers to become innovative. His discussion seems similar but opposite.
What do you think?
We are moving in the same direction, but from two completely different roads. It’s easy to say buy startuppers if the money is not yours. It is a generalistic proposition by someone who has never been personally involved in investments. We are doing a different job. My approach is more pragmatic. We are going to entrepreneurs, we are asking what their technological challenges are, and we present young people to them. Targeted projects. After which, if the project works they can decide to finance a scholarship. It is a completely different approach.