The difficult path for startups in Italy, the most expensive country where to create one

The winning weapon? Convergence between legal smart and digitalization to support young startuppers

Over the last 50 years, the Web has created great professional opportunities. Starting in the 1970s, in the United States of America, the business world began to look with increasing interest at those small independent entrepreneurial realities, endowed with considerable growth potential thanks to the digital technology that was just then evolving. 

But it was in the 1990s that the start-up market began to proliferate, where, in the heart of Silicon Valley, it found an environment characterised by a huge concentration of highly computerised companies.  It is important to point out, however, that although not all Start-Ups operate in the field of technology, the term became widespread internationally during the speculative bubble of the late 1990s, when finance witnessed the rapid increase in the economic value of companies active in the technology sector and the Internet. 

Hands up who among us, and even more so among the younger generations, do not dream of setting up a Start-Up to give wings to an idea they consider to be a winner? What is preventing this? Certainly also their start-up cost. 

According to the Centro Studi Impresa, Italy is among the European countries where the cost of setting up a start-up is among the highest. To take stock of the situation, we spoke with Valentino Megale, professor at Valentino Megale, of the Master in Artificial Intelligence and the MBA, who confirmed:

“In our country it is not ideas that are lacking, but rather a more streamlined process to cut the costs of starting up a company”.

Difficulties in Italy

The current incorporation procedure is still quite cumbersome. From this point of view, the government and the institutions need to digitise the services required to open and run a company. This would bring us into line with international standards, for example by cutting registration and notary costs. All this would help to support, especially in the first months of development, a very interesting and dynamic ecosystem of young entrepreneurs. 

“Italy is still the most expensive country in Europe in which to start a startup, 10 times more than in Germany and 15 times more than in France”, says Megale.

Other significant examples come from European excellences such as Estonia – the most digitally advanced country in the world – or Croatia, where the digitalisation of bureaucracy has facilitated access to innovation not only for local talent but also for foreign talent, through the launch of visa programmes for digital nomads.

The issue is now more topical than ever, as more and more jobs are being done almost exclusively remotely, and opening up to the world allows even small economies like Estonia to become internationally competitive, with access to talent wherever it may be.

As described by the Wall Street Journal, Estonia produces more start-ups per capita than any other European country. 

At the same time, according to Valentino Megale, we are living in a golden historical period, propitious for a cultural leap supported by an appropriate legal framework, able to overcome some heavy dogmas of the past. Rapidly evolving technologies and services with great potential require smart regulation, capable of preserving end users first and foremost, but also capable of appreciating and dialoguing with the timing and needs of “doing business today”.

Business Schools and Universities

In this context, business schools and universities can represent added value. By becoming even more international, they will be able to play the fundamental role of connecting the Italian entrepreneurial fabric with foreign realities and promoting contamination between extremely different skills. Universities, through their specialists, could develop transversal mindsets based on lifelong learning approaches, a method of continuous learning in line with the evolution of a complex society such as ours.

However, a further step is needed because the transition from the educational world to the business world is too often left to the free initiative of the student. 

Business Schools and Universities should therefore aim to place students in companies: this would create a valuable intersection because students need to have a concrete understanding of how the know-how they have acquired can be applied in real solutions, and they need to understand immediately the economic impact and social implications of innovation processes.

The new vision of crowfunding

In this context, it is also essential to use the fundraising tool to seek supporters to finance start-ups. According to Megale:

“While crowdfunding platforms can sometimes be a useful operation for launching new projects and sounding out the preliminary interest of the market, they should often be planned as a useful step to concretise the relationship between one’s innovation and one’s network of investors or users. Seen in this way, a crowdfunding campaign provides external groups with a concrete, monetisable tool to take part in the development of the company, based on trust derived from the traction gained from the project, made of research, evidence and concrete achievements. Crowdfunding should therefore be presented as a further confirmation of the concreteness of a company, rather than hopeful confidence in future results”.

Over the last decade, start-ups have found special support in so-called incubators or accelerators, all entities that have helped so many companies grow and develop in the very early days. 

Start-Up Studios and Venture Studios

Nowadays, other innovative models such as Start-Up Studios and Venture Studios have been added to this panorama. These are companies committed to creating new start-ups (parallel entrepreneurship) by developing validated market ideas and assembling teams of co-founders from pools of specialists with significant prior professional experience. 

The ultimate goal of Startup Studios and Venture Studios is to standardise the innovation process, making it replicable and scalable, minimising risk and streamlining the launch of successful businesses, starting from a strong foundation of concreteness. In Italy, there are some like Mamazen: Startup Studio in Turin and Startup Bakery in Milan.

According to Megale, the real innovation represented by Startup Studios is the possibility of having the know-how of experts able to provide their skills on demand. The concepts of staff on demand, of CEO on demand, make it possible to further reduce risks because if an idea has trouble getting off the ground, governance can divert resources to other ideas and other start-ups within its assets.

In a changing world, the rigidity of professional figures is another limitation to be overcome by opting for more fluid models that can be adapted to individual circumstances.

VALENTINO MEGALE

Entrepreneur in digital technologies, focused on digital health and mental well-being. Biologist, with Ph.D in Neuropharmacology. CEO of Softcare Studios, Advisor to the Medical XR Council of XRSI Safety and Privacy Initiative, and Guest Associate Editor of Virtual Reality in Paediatrics on Frontiers. Lecturer at Rome Business School, TEDx speaker and author on the topics of emerging technologies, health and social impact.

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