Ventures To & Fro
12 Gennaio Gen 2012 1128 12 gennaio 2012

Great News for Italian Venture Capital: Better Regulations for Investment (or the price of rutabaga or a visit from ET)

Great News for Italian Venture Capital! (?)

I think I just read some important news. (Of course, with my knowledge of Italian, the article might have talked about the price of rutabaga or a visit of ET from outer space, so I apologize.)

According to il sole 24 ore, The Bank of Italy will change its regulations next Friday to permit more institutional investments into venture capital. See the article at http://www.ilsole24ore.com/art/economia/2012-01-11/fondo-italiano-apre-startup-064305.shtml?uuid=AaGA3fcE&mid=577

This is very big. This is very important.

If I understand the article, it means that pension funds will be able to invest in venture capital (probably into venture funds themselves).

People forget that regulatory changes in the US are what led to massive investment there in venture capital. Thirty years ago, the government change the regulations to permit pension funds to invest in “risky” investments, using a more flexible standard then before. This led to hundreds of billions of dollars going into venture capital and, eventually, into large-scale private equity funds.

With luck, that’s what’s happening now in Italy.

Lots of Startups

Two figures also caught my attention.

882
603

882 startups applied for funding. That is an amazingly high number. That’s says a lot about the Italian world of innovation.

603 applicants were rejected in the first round of analysis—rejected because they did not meet the criteria of the investment fund.

This begs the question: What were those criteria?

And it raises another question: What can be done to “salvage” some large number of those 603 companies—i.e., to change their business plans and models so that they can receive funding? This same question applies also to the others that did not make it through the next round of analysis.

All in all, this article suggests great news for Italian venture capital. Unless, that is, the article really is about the price of rutabaga. Or if ET is supposed to phone home.

If you want to be a guest blogger, or you want to showcase your startup in this blog, please email me at jcresq@globalcaplaw.com.

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