Nuvolab seminar for Accelmed 2014: "Doing Business in Italy"

DOING BUSINESS IN ITALY

Accelmed Accelera6on Programme October 8 2014

Summary

¨  Introduc6on ¨  Italia Startup Visa ¨ Startup Law ¨ An useful map

¨ Something you need to know

¨ Conclusions

Nuvolab is a business accelerator and a catalyst of change dedicated to all the reali?es in the (Italian) entrepreneurial ecosystem.

What is Nuvolab?

What about Italy?

Italy: a na?on-‐state in 1861; a democra?c republic replaced the monarchy in 1946 and economic revival followed. Italy is a charter member of NATO and the European Economic Community (EEC). It has been at the forefront of European economic and poli?cal unifica?on, joining the Economic and Monetary Union in 1999.

Source: Fact Book, CIA

What about Italy? Italy has a diversified industrial economy, which is divided into a developed industrial north, dominated by private companies, and a less-‐developed, highly subsidized, agricultural south, where unemployment is higher. The Italian economy is driven in large part by the manufacture of high-‐quality consumer goods (3F – food, fashion, furniture – a.k.a. “Made in Italy”) produced by small and medium-‐sized enterprises, many of them family-‐owned. Italy is the third-‐largest economy in the euro-‐zone, but its excep?onally high public debt and structural impediments to growth have rendered it vulnerable to scru?ny by financial markets.

Source: Fact Book, CIA

Impact of the crisis Public debt has increased steadily since 2007, topping 133% of GDP in 2013, but investor concerns about Italy and the broader euro-‐zone crisis eased in 2013, bringing down Italy's borrowing costs on sovereign government debt from euro-‐era records. The government s?ll faces pressure from investors and European partners to sustain its efforts to address Italy's long-‐standing structural impediments to growth, such as labor market inefficiencies and widespread tax evasion. In 2013 economic growth and labor market condi?ons deteriorated, with GDP growth at -‐1.8% and unemployment rising to 12.4%, with youth unemployment around 40%. Italy's GDP is now 8% below its 2007 pre-‐crisis level Source: Fact Book, CIA

Italia Startup Law and Startup Visa à h]p://italiastartupvisa.mise.gov.it Italian government knows these

problems and that a new Renaissance is possible only by suppor?ng the crea6on of more innova6ve companies (startups) and by a]rac6ng foreign entrepreneurs in Italy. In the last few years (2012-‐2014): •  Startup Visa à pro foreign entrepreneurs

•  Startup Law à pro innova?ve startups

Made in Italy: a key driver for the scaling-‐up of your startup Italy is celebrated throughout the world for its art, culture, crea6vity and manufacturing quality. These are the founda?ons on which the unique supply chain for “Made in Italy” products is built. Italy has brought industry, culture and lifestyle together in a way that does not only concern design and the superb quality of fashion, food and furniture, but also sheer ar?s?c expression in all of its forms. Tellingly, a KPMG report recently stated that “Made in Italy” is the 3rd best known brand in the world. By establishing your startup in Italy, you will have the chance to leverage our most celebrated sectors, add value to your products and scale up your business.

Source: Italia Startup Visa, MISE

High-‐quality and compe66ve skills Italy boasts an extensive network of high-‐quality universi6es (300,000 graduates per year) as well as science and technology parks. According to OECD, Italian researchers have one of the highest produc6vity ra6os in the world. At the same ?me, universi?es and research centers are ?ghtly linked with industry. Coopera?on between academia, R&D subsidiaries of mul?na?onals located in Italy and domes?c industrial clusters lead to spillover effects that your startup may easily benefit from. And do not forget that, compared to more celebrated global innova?on hubs, our talents are available at reasonable costs. Source: Italia Startup Visa, MISE

Italians do it be]er: how our grassroots manufacturing culture can boost your startup Italy is the 2nd manufacturing country in the European Union and the 5th in the world. Manufacturing is made up of clusters of SMEs spanning all industries, from high-‐quality leather goods to aerospace, from apparel to med-‐tech, from agro-‐food to industrial automa?on. If your business has to do with manufacturing, you will be able to rely on a wide, flexible and highly-‐developed network of SMEs, able to act as high-‐quality and low-‐cost suppliers in countless sectors. You will discover how easy it is to grow a startup in Italy with limited investment, since manufacturing facili6es are already available at compe66ve costs.


Rome wasn’t built in a day: Italy’s ar6s6c and cultural heritage is an untapped asset


Italy is ranked 1st worldwide for UNESCO World Heritage sites. This inexhaus?ble ar?s?c, historical and cultural capital of ours has always inspired crea?ve minds and innovators from all over the world. In spite of its vastness, this huge wealth is s6ll largely underexploited and represents a sector with a superb business poten?al. If your startup operates in the fields of art, culture and tourism, being based in Italy will unleash a tremendous mul?plier effect.

All roads lead to Rome: Italy is a gateway to strategic markets


Italy is a crossroads strategically located in the heart of the Mediterranean Sea, and represents the main thoroughfare linking Southern Europe to Northern and Central Europe by land. It is a gateway to 500 million consumers across the European Union and to 270 million in Northern Africa and the Middle East. The new EU trade agreements with several countries, currently in a nego?a?on phase, i.e. TTIPS with the USA, will increase business opportuni?es for Italy and for your startup as well.


Italy offers robust investment incen6ves and has pioneered capital raising tools for startups Corporates, business angels and VCs inves6ng in Italian innova6ve startups can benefit from the 2nd highest tax relief discipline in the European Union. Moreover, your startup could raise capital in exchange for shares through dedicated online portals, under the umbrella of a solid legal framework: in fact, Italy has been the 1st country on earth to introduce a specific set of regula?ons for equity crowdfunding.

Living in Italy is uniquely a]rac6ve. The appeal of our cuisine, which is the most celebrated and imitated in the world, needs no introduc?on. Toss in being the country that ranks 2nd worldwide for life expectancy at birth. Add the historical charm that exudes from of all of our ci?es, and the fascina?ng landscape you can quickly reach by car or by high-‐speed train from just about anywhere.

The Great Beauty: Italy’s lifestyle as an asset to enhance your working environment

Snow-‐covered peaks, beau?ful lakes and fer?le valleys in the North; hills covered with vineyards and olive trees in the Center; an eternal sun, volcanoes and unique islands with breathtaking beaches in the South: can any other working environment be more desirable for you and your team? Source: Italia Startup Visa, MISE

Italian startups can benefit from a flexible, tailor-‐made employment law The Italian government’s startup policy has introduced a flexible labour law with 6 to 36-‐month temporary contracts applicable for the whole startup’s life cycle (up to 4 years). Moreover, startups have the chance to introduce performance-‐related pay and remunerate workers and external consultants with stock op?ons and work for equity respec?vely, with a privileged tax treatment for stock op?ons. Finally, there’s a 35% tax credit for hiring highly-‐qualified personnel with open-‐ended contracts. When you hire a developer cos?ng 50,000 euro a year (which is not much, is it?), the Government will pay 17,500 for the first year! Not bad, uh? Source: Italia Startup Visa, MISE

Solidity and vastness of the internal market, countless opportuni6es for expansion


Italy’s 1.5 trillion euro GDP is 10th among OECD countries and 4th among European countries. The economy is largely export-‐driven, with a WTO rank at 9th place in world trade for merchandise. Star?ng your company in Italy means having access to a large internal market, with 60 million residents, and to unique export know-‐how. With tens of millions of internet users, Italy offers countless opportuni?es to businesses opera?ng in strategic sectors such as logis6cs, IT, life sciences, cleantech and tourism.

Strong commitment by the government to develop a robust startup ecosystem Recent Italian governments have become very serious about improving the business friendliness of the country, and the country has started amrac?ng significant investment as a result. In the last two years, high-‐tech businesses and innova6ve startups have been at the top of the Italian Ministry of Economic Development’s agenda. This makes it the right ?me to invest in Italy and tap into the unique opportuni?es the country has to offer you. We can’t wait to blend our talent with yours!


Summary

¨  Introduc?on ¨  Italia Startup Visa ¨ Startup Law ¨ An useful map


¨ Conclusions

Italia Startup Visa The Italian Government policy to amract innova?ve entrepreneurs from all over the world includes 2 provisions for facilita?ng the VISA (necessary for non EU entrepreneurs) release:

•  Direct Applica6on 1.   Online è Applica?on form for ISV + Cover lemer

DEMONSTRATING 50,000€ capital available for startup èCer?ficate of no impediment for ISV

2.   At the Italian Embassy è Cer?ficate of no impediment for ISV + Cer?ficate of suitable accommoda?on in Italy (i.e. hotel booking) + Cer?ficate of minimum income for previous year + Copy of submimed Applica?on form for ISV + Copy of submimed Cover lemer + Passport è ITALIAN STARTUP VISA

3.   Upon Arrival è Applica?on for residence permit’s (at post office) + 4 photos è1 year residence permit

Slide 19


Italia Startup Visa The Italian Government policy to amract innova?ve entrepreneurs from all over the world includes 2 provisions for facilita?ng the VISA (necessary for non EU entrepreneurs) release:

•  Through Cer6fied Incubator 1.   At Home è Undertaking by incubator to host startup + Cover

lemer DEMONSTRATING 50,000€ capital available for startup èCer?ficate of no impediment for ISV (backed by incubator)

2.   At the Italian Embassy è Cer?ficate of no impediment for ISV (backed by incubator) + Cer?ficate of suitable accommoda?on in Italy (i.e. hotel booking) + Cer?ficate of minimum income for previous year + Copy of submimed Applica?on form for ISV + Copy of submimed Cover lemer + Passport è ITALIAN STARTUP VISA

3.   Upon Arrival è Applica?on for residence permit’s (at post office) + 4 photos è1 year residence permit

Slide 20 Source: Italia Startup Visa, MISE

Summary



¨ Conclusions

Italy‘s “STARTUP ACT“ – Defini6on of Innova6ve Start-‐up With Law 221/2012 – “Startup ACT” the Italian Lawmakers established an official defini?on of Innova?ve Startup and a series of measures for facilita?ng the incorpora?on and registra?on of these, access to financing and key resources. For the Italian Law, an Innova6ve Startup must possess all of the following requisites:

a)  it must have been established for no longer than 48 months; b)  it must reside or be subject to taxa6on in Italy; c)  it has no turnover or has a turnover that does not exceed 5 million € (around 6.4 million $); (d) it does not

distribute profits; d)  its core business consists of innova6ve goods or services of high technological value; e)  It does not originate from a merger, demerger or divestment process. f)  Finally, a startup can be qualified as innova?ve if either:

a)  15% of its costs are related to R&D; b)  At least one third of the team is made up of people who either hold a PhD or are PhD candidates at an

Italian or foreign university or have conducted research for at least three years c)  At least two thirds of the team is made up of people holding a Master’s degree; d)  It is the owner or the licensee of a patent or a registered sorware.

Slide 22

Source: Italia Startup, MISE

Italy‘s “STARTUP ACT“ – Incen6ves for Startup If a startup meets the afore men?oned requirements it will have access to a series of tailor-‐made benefits which include: 1.  Registering of the company ONLINE, for FREE 2.   FLEXIBLE Labor Law applicable for the whole startup’s life cycle (Temporary

contracts for 4 years!) 3.  Fixed + (performance based) Variable Compensa6on Packages 4.  Possibility of remunera?ng workers & consultants with STOCK OPTIONS &

WORK FOR EQUITY

Slide 23

Italy‘s “STARTUP ACT“ – Incen6ves for Startups (cont‘d)

5.   TAX CREDIT of 35% for hiring highly-‐qualified personnel (Masters and PhDs)

6.  Robust (19-‐27%) TAX RELIEF on investments into startups’ equity (incen?ve for BAs, VCs and Corpora?ons)

7.  Fundraising through EQUITY CROWDFUNDING online portals (1st country to fully implement equity crowdfunding regula?on)

8.  Free, fast-‐track PUBLIC GUARANTEE ON BANK LOANS (covering 80% of the debt)

9.  Tailored support by the ITALIAN TRADE AGENCY (ICE) for interna?onaliza?on

Slide 24

Summary



¨ Conclusions

Who is Who map

The Italian Startup Ecosystem: “Who Is Who” Italia Startup is the associa?on represen?ng the Italian innova?on ecosystem. Founded in 2012, Italia Startup associates startuppers, investors, companies, ins?tu?ons and people willing to create a more startup friendly ecosystem in Italy. Italia Startup promotes the Who is Who project. Please visit: www.italiastartup.it/whoiswho Bring together, map out and promote the main players and protagonists in the Italian startup ecosystem in a single reference. This is the aim of the Who is Who project, the first permanent Observatory focusing on startups and the world of business innova6on in Italy.

“Who Is Who”: Funded Startups •  120 Funded Startups (mainly

seed round) with their direct (email) contacts: good source of infos about their industry, investors, poten?al partners and service providers.

•  Sugges6on: start by telling them what YOU can do for them and not by asking for something.

Source: Who is Who, Italia Startup

“Who Is Who”: Investors •  31 Investors (business angels

network, super angels, VCs): good source of funding, contacts and advice.

•  Sugges6on: see the previous seminar about “Approaching Investors”

•  Memo: their business is inves?ng in startup, not being an info point (and they are more likely to invest in you if you are already funded in your home Country)


“Who Is Who”: Incubators and Accelerators •  103 Incubators & Accelerators

(private players providing business support and seed inves?ng for startups): they could be good business enablers / sor landing plasorms for you.

•  Sugges6on: look at their website to understand their industrial focus (most of them are digital oriented) and if they have an “interna?onal attude”


“Who Is Who”: Science and Technology Parks •  40 Science and Technology Parks

(public players providing business support for startups): they could be good business enablers / sor landing plasorms for you.

•  Sugges6on: look at their website to

understand their industrial focus (most of them are digital oriented) and if they have an “interna?onal attude”


“Who Is Who”: Coworking Spaces •  71 Coworking Spaces: nice offices

with some smart guys / startups around for an affordable price (see also www.coworkingfor.com)

•  Sugges6on: they will surely provide

you with cheap offices without asking for equity but.. the rest is out of their core business.


“Who Is Who”: Startup Compe66ons •  34 Startup Compe??ons: different

ini?a?ves aimed at suppor?ng / celebra?ng / funding brilliant business ideas and high-‐poten?al startups.

•  Sugges6on: they can provide you

with network, coaching, visibility, “in kind” prizes and.. some?me money! Read their rules carefully (most of them required an Italian branch already up & running)!


“Who Is Who”: Associa6ons & Communi6es •  28 Associa?ons, Online Resources

and Communi?es: sources of infos and a good star?ng point to build your network in Italy.

•  Sugges6on: different kind of

Associa?ons and communi?es with different aims.


Summary



¨ Conclusions

Doing business… in Italy •  The Doing Business Project (doingbusiness.org)

is promoted by The World Bank and provides objec?ve measures of business regula?ons and their enforcement across 189 economies and selected ci?es at the regional level.

•  The Doing Business Project, launched in 2002, looks at domes?c small and medium-‐size companies and measures the regula?ons applying to them through their life cycle.

•  Provides a good benchmark of how easy/difficult is “doing business” in any Country (compared to yours)

Source: Doing Business 2014, The World Bank

Doing business… in Italy •  The ease of doing business index ranks economies from 1

to 189. •  For each economy the ranking is calculated as the simple

average of the percen?le rankings on each of the 10 topics included in the index in Doing Business 2014 (for 2014 “employing workers indicators” are not included) -‐  star?ng a business -‐  dealing with construc?on permits -‐  getng electricity -‐  registering property -‐  getng credit -‐  protec?ng investors -‐  paying taxes -‐  trading across borders -‐  enforcing contracts and resolving insolvency


Doing business in Italy: an unconvenient truth


•  Italy is 65th out 189 •  Other countries:

-‐  UK: 10th -‐  Germany: 21st -‐  Estonia: 22nd -‐  Portugal: 31st -‐  Slovenia: 33rd -‐  France: 38th -‐  Spain: 52nd -‐  Greece: 72nd -‐  Egypt: 128th

Doing business in Italy: an unconvenient truth


For this reasons having “supporters” is useful… •  Several issuses and some way to fix them:

1.   star6ng a business à incubators / accelerators / scien?fic park 2.   dealing with construc6on permits à probably you don’t need to 3.   geung electricity à your incubator / coworking will take care of that 4.   registering property à good IP advisory / lawyer (good means finding not

a “NO WHY” person but a “YES HOW” smart guy) 5.   geung credit à being an Innova?ve Startups may help 6.   protec6ng investors à it’s their problem J 7.   paying taxes à good accountant (good means finding not a “NO WHY”

person but a “YES HOW” smart guy) 8.   trading across borders à combo between good lawyer and accountant 9.   enforcing contracts and resolving insolvency à it depends not only by

legal environment but also by how you have wrimen contracts (good lawyer needed again). Asking for “visure di bilancio” or using services like “Cerved” or “e-‐Speek” can prevents problems with customers.

10.   employing workers à good labour consultant may help

…and you can ask Italian Government as well… The ICE-‐Italian Trade Promo?on Agency is the government organisa?on which promotes the interna?onalisa?on of the Italian companies, in line with the strategies of the Ministry for Economic Development. ICE provides informa?on, support and advice to Italian and foreign companies. In addi?on to its Rome headquarters, ICE operates worldwide from a large network of Trade Promo6on Offices linked to Italian embassies and consulates and working closely with local authori6es and businesses. ICE provides a wide range of services overseas helping Italian and foreign businesses to connect with each other: •  iden6fica6on of possible business partners •  bilateral trade mee6ngs with Italian companies •  trade delega6on visits to Italy •  official par6cipa6on in local fairs and exhibi6ons •  forums and seminars with Italian experts For more details, contact your local ICE office or visit www.italtrade.com

..keeping in mind that there are s6ll some “structural” limits (tax rate) •  “ P a y i n g T a x e s

2014” (PWC) provides an indicator of “total tax rate” (amount of taxes a n d m a n d a t o r y contribu?ons payable on commercial profits) for every Country in the world

•  Italian total Tax Rate is 65,8% (138th out 189 Countries)

..keeping in mind that there are s6ll some “structural” limits (Days Sales Outstanding) •  DSO (Days of Sales Outstanding) in Italy between companies is

96 days (EU average is 49), and between Public Administra?on and companies is 170 (EU average is 61).

Summary



¨ Conclusions

Conclusions •  For specific industries Italy is “the place to be” (food, fashion,

furniture, tourism, industrial manufacturing) in order to leverage the “Made in Italy” brand and Italian lifestyle, well renown all over the world.

•  For most of the other industries Italy is for sure a good target market with 60M poten?al customers.

•  Italian economy has some structural limits but Italian Government is working to reduce the “appeal spread” with the rest of the EU

•  There are a lot of player in the innova6on ecosystem willing to support foreign startup for their “sor landing” in Italy

•  The sooner you will test this Na?on, the sooner you will taste the Italian hospitality!

Thanks for your 6me & a]en6on

@francingu @nuvolab

[email protected]

www.nuvolab.com ivysoul2000

Ref: Francesco Inguscio

Nuvolab seminar for Accelmed 2014: "Doing Business in Italy"

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Transcript of Nuvolab seminar for Accelmed 2014: "Doing Business in Italy"