1. The Italian Literature Survey IFISE Meeting A.I.F.I. Italian Venture Capital and Private Equity Association Roberto Del Giudice Milan, 2nd February 2001

2. The evolution of the Italian Venture Capital & Private Equity Market 1900198619901996today Informal VC First Institutional VC movers The LBO wave attracts more PE players Back to genuine VC The VC Market takes off With 30 PE players the market starts to grow Constant growth of the later stage market Part of the market moves back to genuine VC and pure tech deals Driving forces: Telecom deregulation and Internet Number of players 0 15 30 38 75 Driving forces

3. A.I.F.I. Members A.I.F.I. 15 28 22 24 30 49 38 34 57 3031 30 58 75 55

4. 1 st Sem 2000 - Number of investments by type of investors A.I.F.I.

5. 1° Sem 2000 - Stage distribution of investments by type of investors A.I.F.I.

6. Seed/start up investments by type of investors A.I.F.I.

7. 1° Sem 2000 - Italian Venture Capital and Private Equity Industry Concentration A.I.F.I.

8. 1° Sem 2000 - Italian Venture Capital Industry Concentration A.I.F.I.

9. The convergence to Venture Capital A.I.F.I. VENTURECAPITAL CORPORATE VENTURE CAPITAL Profit oriented incubators Non profit incubators University incubators

10. Corporate Venture Capital: some Italian examples - Enel; - Telecom Italia; - Seat; - ……. A.I.F.I.

11. Business Incubators: two different kinds Incubator PROFIT ORIENTED private operators; fee/equity oriented; connected to the VC and PE market NON-PROFIT ORIENTED public operators; purpose of economic development (fill the gap); use of public resources A.I.F.I.

12. Main characteristics of Italian University Incubators Distinctive features : absence of VC funds; interest on scientific research projects; physical presence in the university building; focus on universities subjects; incubation of ideas and projects of graduate and undergraduate students; strong relationships with industry that usually sponsor university research; patent development. A.I.F.I.

13. ITALIAN FOR PROFIT INCUBATORS

14. Percentage distribution of Italian for profit Incubators by Sponsor A.I.F.I.

15. Leaders background by % A.I.F.I.

16. Sources of funds raised on the market by % A.I.F.I.

17. Funds immediately available (Euro mil) A.I.F.I. N° players 7

18. Geographical breakdown of total funds raised by % A.I.F.I.

19. Incubators main characteristics Italian Incubators average size: A.I.F.I. - 307 mq of space to work - 35 working places for the incubated companies - 15 full time consultants

20. The offered services by % A.I.F.I.

21. Incubators internal competences by % A.I.F.I.

22. Average time to start the activity* A.I.F.I. * Between the approval of the business plan and the entrance of the company inside the incubator.

23. Average amount invested and average number of companies A.I.F.I.

24. Number of incubated companies and average time spent inside the incubator A.I.F.I.

25. Average stake into the company A.I.F.I.

26. Distribution of investment sectors* by % A.I.F.I. * Multiple choice

27. Internet business focus* A.I.F.I. * Multiple choice

28. Revenue model by % A.I.F.I.

29. Available capital Fee Equity Mix Financial Corporate Consulting Private Individual Italian incubators: reference model Variables: Incubators sponsor Referred capitalNo capital Incubators sponsor Available capital Revenue model for start ups 57% 50% 33% 67% 50% 100% 50% 43% A.I.F.I.

30. Available capital Fee Equity Mix Entrepreneurial/ managerial Financial Consulting Italian incubators: reference model Variables: Leaders Background Referred capitalNo capital Leaders Background Available capitals Revenue model for start up 14 % 50% 33% 67% 50% 100% 50% 72% A.I.F.I. 14 %

31. Some final issues

32. …concerning incubators A.I.F.I. There are many networking opportunities between incubators, venture capitalists and other institutions; cooperation can be based on a structured network; the incubators industry is still in its start up phase, leaving many spaces for new entrants; there are many basic services over which it would be important to reach scale and scope economies; incubators are important in the internationalization process of enterprises; incubators are deal selection facilitators for VCs.

33. … concerning the high tech start ups: the main weaknesses 1.lack of a synergic dialog and relationship between the worlds of research, enterprise and finance; 2.lack of adequate human resources on the enterpreneurial side; 3.difficulties on technology auditing activities; 4.inadequate legal framework.

34. 1. Lack of a synergic dialog and relationship between the worlds of research, enterprise and finance  Universities, venture capitalists and entrepreneurs just started to work together, in order to create a creative entrepreneurial context;  The distance between these fundamental actors has created a strong gap;  To fulfill this gap, it is necessary to work hard to better link finance, enterprises and research.

35. 2. Lack of adequate human resources on the entrepreneurial side  It is necessary to push the Italian Universities in mixing technological knowledge and entrepreneurial capabilities;  In a recent survey conducted by the EVCA and the University of Antwerp, Italy has been defined “hesitator” in opening the university context to the business community*. * ENN – EVCA Network News – No. 1 December 2000, EVCA Zaventem, Belgium

36. 3. Difficulties on technology auditing activities  The absence of an extended network of technology auditing firms makes it harder for the VCs to make the necessary evaluations of high tech start ups;  Even if there could be a great potential in terms of “brains”, these brains too often move to those countries where technology is considered a strategic resource, providing added value to their Nations.

37. 4. Inadequate legal framework  In the recent past R&D laws were too old to take the pace of the great evolution of high technology;  The Italian law is too old in terms of bankruptcy issues:  If an entrepreneur fails with its first venture, the Italian legal system does not give another chance;  No VC likes to seat in the Start ups’ Board of Directors, due to the risk of being personally prosecuted in case of failure.