Italy’s VC ecosystem matures into €10B engine — but structural gaps still hold it back

P101’s latest report highlights strong growth in venture investment and startup value, but flags weak exits, limited international capital, and structural constraints as ongoing challenges

Today, VC firm P101 released the tenth edition of the “State of Italian VC” report, an analysis of the evolution of the Italian innovation industry.

The Italian tech sector includes more than 14,000 innovative companies – nearly 12,000 of which are startups – that, in 2025, generated a production value of 10 billion euros and employed around 62,000 people. Of these, about a third work in startups that, alone, last year, recorded a production value of about €2.8 billion.

According to Andrea Di Camillo, Founder and Managing Partner of P101, we are today looking at the evolution of an industry that barely existed in Italy a decade ago. 

Italy has moved from a handful of operators with limited resources and marginal impact to a venture capital ecosystem with solid foundations, consistently investing between 1 and 2 billion euros per year into the real economy.

“Corporate participation is essental”

Di Camillo shared that the broader context has also changed dramatically: the era of incremental innovation is over:

“We are now facing a phase of deep technological discontinuity, with AI and critical infrastructure reshaping capital allocation, alongside a growing awareness that digital sovereignty is no longer a choice, but a strategic necessity. 

Everything is moving faster, and if we want to keep pace, growing capital alone will not be enough — despite the support of institutional investors such as CDP and EIF, and players like Azimut.” 

He asserts that corporate participation will be essential, as it remains limited to a few virtuous cases, along with a more efficient public capital market. 

“Above all, what is needed is a truly international perspective: from funds, which must look beyond national borders; from companies, which must compete globally; and from investors, who must become increasingly international. In a continent that remains too fragmented, the future of this industry — central to innovation — will depend on strengthening venture capital as a European asset class.

The ‘28th regime’ represents a first step in this direction.”

Evolution of investments: VC quadruples, but Italy slips in the European ranking

Over the past decade, the Italian VC has invested a total of about €10 billion in startups, 7.5 of which in the last 5 years. This growth trajectory has led to a fourfold increase in annual investment capacity, from €363 million in 2016 to €1.4 billion in 2025.

However, despite Italy being the fourth-largest economy in Europe, per capita VC investment remains disproportionately low:

Fewer deals, bigger tickets: 2025 marks the maturation of the market

In 2025, investments in Italy reached €1.4 billion, up 17 per cent compared to 2024, despite a decline in the number of transactions to 637 (-35 per cent). This trend reflects an increase in average deal size, with the median doubling to 1 million euros.

Startup valuations in Italy have increased over time, from €1.8 million in 2016 to nearly €5 million in 2025. However, this remains roughly half of European levels and significantly below the US, where average valuations approach €49 million.

Exit: the structural bottleneck of public markets In 2025

Italy recorded 22 exits, down from 31 in 2024, mainly due to lower corporate acquisitions (from 25 to 14 transactions). Buyouts increased from 6 to 8, indicating a growing role for financial investors.

As in 2024, no IPOs were recorded for VC-backed companies.  Over the last decade, only 22 IPOs in Italy have involved VC-backed companies, confirming the limited role of public markets in the industry.

In 2025, fundraising totalled nearly €400 million across 9 funds (-13 per cent year-on-year), with the market heavily concentrated on smaller fund sizes and no vehicles above €150 million.

Overall, over €8 billion was raised in Italy over the last decade through 123 funds. 

Although Italy has doubled its fundraising capacity in ten years, it still accounts for a small fraction of Europe’s funding, with total funding reaching almost €11 billion, down sharply from € 25 billion in 2024. 

Investors: institutional are growing, but domestic capital still dominates

Italian venture capital remains heavily reliant on domestic investors (71 per cent), highlighting limited international diversification:

European investors account for 19 per cent of funding, followed by North American investors at 4 per cent, while Asian investors are notably absent.

The Middle East contributes 6 per cent, making Italy unique among its peers in attracting a meaningful share of capital from the region.

The LP base is relatively balanced despite concentration:

• Direct investments: 17 per cent
• Banks: 15 per cent
• Funds of funds: 14 per cent
• Foundations: 10 per cent
• Pension funds: 9 per cent
• Insurance companies (4 per cent) and corporates (12 per cent) remain underrepresented, compared to more mature ecosystems such as France, where they account for 14 per cent and 21 per cent respectively

In general, the interest of institutional investors is growing, thanks to the support of investors such as CDP, EIF, and Fondo Italiano, which have invested 63 times in Italian funds over the last 10 years, as well as Azimut, and driven by new regulations aimed at incentivising investments in VC. 

Universities: Bocconi and Politecnico drive new entrepreneurship 

In the last five years, startups founded by former students of Italian universities have raised over €7.3 billion in capital from the broader innovation ecosystem, which, alongside Italian VC, includes business angels, private, foreign, and corporate investors. 

Bocconi University (3.1 billion) and Politecnico di Milano (2.2 billion) lead the ranking, followed by:

• The University of Bologna (1 billion),
• LUISS (505 million),
• La Sapienza in Rome (338 million), and
• The Polytechnic University of Turin (196 million) contributed more modest, but still significant, investment flows.