What is FOF VenturItaly's approach with respect to the overall strategy pursued by CDP Venture Capital?
"The Fund of Funds was established with a dual purpose," says Cristina Bini, Fund manager, “that is to generate financial returns for its investors, but at the same time to support the launch of private venture capital funds active on the Italian market".
The goal, therefore, is clear: to find talents – that is, managers who are launching venture capital Funds – and to analyse every aspect, from actual investment and deal sourcing skills, to fund raising skills.
"Our work consists both of providing financial resources as a cornerstone investor of the target funds, and of collaborating with the managers of these funds in the implementation of an appropriate governance, which can attract other investors alongside us, including international ones" continues Bini.
A maieutic role, in short, which is all about providing support to the private sector in order to give the market a boost. A market that has changed significantly over the last 10 years.
We are witnessing an evolution, therefore, also in terms of venture capital entrepreneurship, which allows us to have an optimistic outlook, in the belief that, in the long run, it will also be possible to bridge the gap with other countries.
"The market is maturing", continues Bini, "and we can also see it from a certain progressive specialisation of the Funds, both in terms of sector – an example of which is Primomiglio SGR's Primo Space Fund, specialised in the space economy, or Blacksheep dedicated to Madtech – and in terms of phase – as in the case of Prana Ventures, dedicated to the seed stage”. "Only a few years ago it so happened that we had to take a plane to find someone abroad who wished to engage in venture capital in Italy”, says Bini. “Today, on the other hand, we are witnessing a burgeoning entrepreneurship also on the front of fund managers, not just startups”.
The way forward would be for all managers on the market to become stable and diversified management companies, so as to create more solid structures in the long term.
"At this stage we still need to slightly increase the number of operators", says Bini, "always with a forward-looking perspective: when selecting a target, it is necessary to ask ourselves whether that manager will have what it takes to stay on the market in the long term, otherwise we have not acted in the market's best interests''.
With specific attention to generational turnover, because in analysing a team, it is necessary to consider, in addition to their skills, whether there are young people capable of becoming prospective partners of the subsequent funds.
Perhaps a few years down the line, because “you need to have a background, a network, a wealth of diverse prior experiences and skills gained even at an international level, if possible”.
The Fondo di Fondi VenturItaly, however, also looks beyond the national ecosystem, aiming at international expansion.
"This aspect is essential, for example, for funds such as UV T-Growth of United Ventures and the scaleup funds of Vertis Venture, because they specialise in innovative entities in advanced development stages, and their role is also to guide scaleups in making a leap towards globalisation'', says Bini.
Furthermore, tech by its nature has international ambitions, since no technology is developed without looking to make it global.
"Generally speaking, I believe that every venture capital fund, when selecting an investment, has in mind whether the target company's business has a global aspiration or not", continues Bini, "and if the answer is no, to justify its inclusion in the portfolio, it means that the local market is wide enough''.
In addition to transactions in funds specialised in technology startups, the Fondo di Fondi VenturItaly has also invested:
in two funds dedicated to life sciences
in a vehicle dedicated to impact investing, hence with the aim of generating benefits for society
How are transactions of this kind able to support innovation in Italy?
“Everything can be defined as impact, depending on the final objective”, says Bini. “It is certain that there are issues that can be more clearly defined as impact, for example when it comes to personal services, environmental sustainability and gender balance”.
Investor attention is certainly growing, and the issue is very topical. However, measuring the impact is by no means simple: “The important thing is that there is a mix of performance and impact objectives, both components must be present”.
The realm of life sciences creates an impact in people's lives, as Bini explains: “We have recently completed two closings of two venture capital funds in our portfolio, namely Claris Biotech I and Panakès Purple, which are alongside one another in the value chain. Claris deals with the very early stage biotech, hence the very first phase of the development of a molecule designed to respond to an unresolved need. Panakès operates, again in medtech/biotech but at a later stage, for example when the molecule is ready to be tested on humans'”.
Opes, on the other hand, is unequivocally positioned as an impact fund.
“Its aim is precisely to seek deal flows in sectors and areas with a strong social impact”, says Bini.
But it is not just about non-profit organisations or charities: all impact venture capital investments must be economically sustainable and generate returns.
So much so that "an impact fund has a remuneration structure for the fund managers which combines the profitability component of the fund with the component related to the achievement of the impact objectives".
Private investors in Italy are few and far between. How can the need to generate returns for investors be reconciled with transactions involving innovative startups and SMEs in the early stage and hence far from generating profits?
"Today we are in a good place compared to the past, despite the fact that there are still few investors in the funds", comments Bini, "because the funds that have now passed the investment period are witnessing their investee companies being given increasing valuations by investors, including international ones, and are starting to make significant exits, thus demonstrating that returns do come at some point''.
In short: as the market becomes mature, it is hoped that profitability times will be shortened.
And the entire Italian ecosystem benefits from it, because Italy is finally starting to be seen as a place to do business. With this perspective, the number of private entities that choose to invest in a venture capital fund will also increase.
The next objectives of the Fondo di Fondi VenturItaly, concludes Bini, ''are to continue to support the market, with increasingly greater conviction, and in all its evolutions. With even more resources and possibly by also involving foreign funds willing to invest part of their assets under management in Italy''.