In Italy, the Business Angel phenomenon is largely growing thanks to the wide profit margins and the possibility of accessing tax incentives that this alternative form of investment offers.
Business Angels are informal investors that differ from formal investors, banks and credit institutions, which generally invest in venture capital and private equity funds. They are often professionals and 'wealthy individuals' who have experience in the sector they want to invest in and can therefore offer the capital-hunting company both specific knowledge to develop their idea and capital to invest. The investment generally ranges from EUR 25,000 to EUR 500,000.
According to a survey by IBAN, the Italian Association of Business Angels, in 2021 this category of investors participated - independently, in syndication with Venture Capital funds and through equity crowdfunding campaigns - in investment operations in Italian start-ups or with Italian founders for a total of 935.8 million euro, an amount that more than doubled compared to 402.5 million in 2020.
Investment in syndication with venture capital funds is confirmed as prevalent for Italian business angels. This category, in fact, represents 72% of the operations monitored by the IBAN Survey. The increase in amounts raised has almost tripled, reaching EUR 812 million in 2021 compared to EUR 325 million in 2020. There were 116 transactions, compared to 108 in 2020. The investment of Business Angels in equity corwdfunding operations has also grown steadily over the last three years, reaching EUR 32.5 million for 124 operations in 2021.
As it is not difficult to imagine, the majority of Italian angel investors are male entrepreneurs (48%) and freelancers (24%). The weight of women Business Angels, after leaping from 5% to 23% from 2015 to 2016, has steadily declined, settling at 14% in the last year. One third of female Business Angels have made at least one investment in companies founded by other women.
The most attractive sector for investment is information and communication technology, which managed to obtain 30% of the resources made available by Business Angels in 2021. In second place in this ranking, a good 12 percentage points off the top, is the consumer goods sector. Rounding out the podium is a crowded third place, with the food, pharmaceutical and biotech, healthcare and other services sectors tied at 7%.
For the first time, the IBAN survey also investigated the importance of ESG (Environmental, Social and Governance) aspects and impact investing, revealing that 65% of investors apply ESG and/or impact investing criteria when assessing investment opportunities.
Paolo Anselmo, president of IBAN, commented on the research results: "The role of Business Angels in venture capital in Italy continues to grow. More than one out of every two deals and more than half of the approximately one billion raised in investment transactions in Italian start-ups in the last year involves Business Angels. Italian individual investors are confirmed to be more active than those in other European countries, such as France: in 2021, French Business Angels independently invested around EUR 70 million, while in Italy this figure was over EUR 91 million. A good 21 million euros more invested by Italian Business Angels without the support of funds, in a market, such as the French venture capital market, that is about six times larger than the Italian one in terms of the amount invested in start-ups'.
For more information:
https://www.iban.it/2022/05/27/survey-iban-2021-2/