The COVID-19 pandemic has disrupted production and investment plans in Italy and around the world, generating uncertainty and disorientation even among analysts and professionals who, at the start of the year, were estimating much more positive economic scenarios.
The fears of a deep depression linked to uncertainty over the evolution of the pandemic and the ability to contain it, together with the difficulties in understanding and measuring the effects of the monetary and fiscal policies adopted, have created generalised conditions of strong market instability.
Italy, which as we know has a structurally weak economy and a growing debt in relation to GDP even in the pre-COVID-19 era, is a candidate to be among the countries that will suffer most from the negative effects of the pandemic, as the 8.9% contraction in GDP in 2020 clearly indicates.
In the context described above, there are counter-trend signals and, above all, opportunities to be explored. Equity crowdfunding is no exception among the new ways of interpreting investments. Not only has the market been growing strongly in unsuspected times like 2019, but also throughout 2020 the signs have been very positive.
The roots of crowdfunding in Italy
Few people know that fifteen years ago Italy was one of the first countries in Europe to develop a real crowdfunding laboratory. The first initiative of this kind in the Bel Paese dates back to 2005, with the Produzioni dal Basso platform, to which even the famous Kickstarter, launched in 2009 in the USA, appeared as a follower.
Despite the pioneers, we will have to wait until 2013 to see the phenomenon emerge and manifest its desire to grow in Italy. In fact, 2013 was the year of the proliferation of platforms, but it was also the year in which Italian legislation regulating this form of collection was born.
Interest grew and it was realised that access to crowdfunding tools could be an extraordinary boost for our economic fabric, 99% of which is made up of SMEs. Consob extended the possibility of crowdfunding to innovative SMEs, thus overcoming the initial restriction that only innovative start-ups could raise capital through this instrument. In 2018, a further change extends the use of equity crowdfunding to all SMEs.
Crowdfunding and the democratisation of access to capital
Crowdfunding and the democratisation of access to capital may not yet be a true democracy in terms of access to financial resources, but it is certainly a process of opening up that is also giving small innovative businesses in our country new opportunities to raise fresh funds for their development.
Thanks to crowdfunding, investment is also becoming a phenomenon of democratisation: investors large and small can finally access the real economy in complete freedom, without fees, portfolio managers or banks.
The real novelty is the increase in the average investment (almost €9,690 in March 2020 compared to €6,280 the previous month) against a drastically lower number of investors (161 in March 2020 compared to 67 the previous month), which is probably a sign that the equity crowdfunding audience is changing: less retail customers, more high-profile investors.
Small and medium-sized Italian companies are proving that you can create value even a few years after you are born, if you have an innovative idea, a high-level team of professionals and sustainable business models.
In Italy, the start-up world has always been on the sidelines of entrepreneurship: investments are very small compared to those in other European countries, about one tenth. The needs of start-ups are felt less by Italian politicians than those of other small and medium-sized enterprises.
Equity crowdfunding has filled this void by putting investors in direct contact with the opportunities of new business initiatives, and offering entrepreneurs the possibility of accessing capital quickly and directly.
Growing interest in innovative Italian companies
According to the Open Innovation and Corporate Venture Capital Observatory, investments in technology startups by Italian and foreign companies are growing. In fact, Corporate Venture Capital is increasingly present in innovative start-ups and is doing so with the aim of betting on companies that are somehow linked to their sector of expertise.
In this context, the Ministry of Economic Development could not stand idly by. At the beginning of 2020, the National Innovation Fund (NIF) was created. Its raison d'être is the conviction that technological innovation is essential for the growth and competitiveness of our country.
FNI is a multi-fund SGR that operates through venture capital methods, combining public and private resources. It has one billion euros as a starting fund with the aim of bringing together and multiplying resources for start-ups, which will not only have more interlocutors to whom they can ask for capital, but also larger ones.
The conditions for a promising 2021 for Italian equity crowdfunding are all there. What can we expect in the future?