Italy is known for many things — pizza, pasta and the leaning tower of Pisa to name just three — but its tech industry hasn’t traditionally been among them. However, it seems like things are changing.
Research shows that venture capital funding in the country reached €1.7 billion in 2022, with a projected growth of 64% year-on-year. This is a far cry from the comparatively small growth in investment just a few years ago.
What does Italy’s tech boom look like in reality, what is behind this upsurge, and what does the future hold for the sector?
Italy’s biggest tech sub-sectors
In order to see just how far Italy’s tech industry has come, it makes sense to look into the specific sub-sectors and companies seeing success.
Given Italy’s strong agricultural heritage, it’s no surprise that agritech is a burgeoning sector within the country’s tech industry. Agritech startups are leveraging advanced technologies such as precision agriculture, drones, and IoT devices to optimise farming processes, enhance crop yields, and promote sustainable practices, among other things.
Examples of thriving companies in the Italian agritech sub sector include the likes of Phenom Networks, Evja and Elaisian. Moreover, EcoRobotix, one of the world’s largest agritech companies, has a significant presence in Italy, showing just how much of a fertile ground the country is for such businesses.
Italy’s SaaS sector has also gone from strength to strength, a trend that is only likely to continue. Statistics show that the industry is expected to enjoy an annual growth rate of 7.11% over the next four years, resulting in a market worth of $4.33bn by 2028. Testament to Italy’s SaaS strength is the success of homegrown companies like Kampaay, iProd and Deliverart.
As is the case with agritech, Italy has also attracted various international SaaS companies to the country thanks to its growing SaaS ecosystem. This includes the likes of Salesforce and SAP, which have global offices there. This is also unsurprising considering the extent to which Italy has embraced SaaS technology in general, something that has created numerous job opportunities as a result. As SAP recruiter Eursap notes about the company’s presence there: “SAP consultants are in high demand across a number of industries in Italy, ranging from fashion to technology.”
Italy’s fintech sector has witnessed remarkable growth, with startups disrupting traditional banking and financial companies. According to the EY Fintech Waves 2023 study, loans raised by the sector rose by a compound annual growth rate (CAGR) of over 60% between 2016 and 2022.
More specifically, companies like Satispay and Moneyfarm are making waves on the global stage, providing everything from convenient payment solutions to online investment management services. Many Italian fintech startups are exploring blockchain and cryptocurrency technologies too, contributing in myriad ways to the changing of the global financial landscape.
How Italy transformed its tech prospects
So, the rise in Italy’s tech fortunes is apparent, but how exactly did the country achieve this? Below are a few of the main factors:
Research and development
Italy’s commitment to research and development (R&D) has played a huge role in its tech success.
For example, the government offers significant tax credits to organisations that undertake “experimental development in science or technology.” This not only directly encourages business innovation but the development of tech expertise generally, something that can only benefit tech businesses more broadly.
Venture capital and funding
Similarly, the availability of venture capital and funding in Italy has proven crucial for the growth of tech startups.
As explored earlier, Italy has seen a huge increase in such investments in recent years. For example, the first national fund for technology transfer was rolled out in 2021 by the Italian Ministry of Economic Development. Meanwhile, the likes of CDP Venture Capital and Italy’s National Innovation Fund have also received huge government support.
Italy’s tech industry is actively engaging in global collaborations. Partnerships with international companies, research institutions, and startups are fostering cross-cultural exchanges of tech knowledge and expertise, enhancing Italy’s competitiveness and contributing to the diversity and richness of the country’s tech ecosystem.
This is epitomised by the United Nations University (UNU) setting up a research and training institute dedicated to AI and big data in Bologna last year.
What the future holds for Italy’s tech sector
While Italy’s tech industry is flourishing, it is not without challenges. The country faces issues such as bureaucratic hurdles, a sometimes slow adoption of new technologies, and a need for further investment in infrastructure. However, these challenges also present opportunities for improvement and growth. As the government continues to streamline regulations and invest in digital infrastructure, Italy’s tech industry is poised to overcome these hurdles.
The future of Italy’s tech industry looks promising, with continued innovation, investment, and collaboration on the horizon. As the country navigates the challenges and seizes the opportunities presented by the digital era, Italy is carving a niche for itself in the global tech realm. This renaissance is not only helping to transform the nation’s economy but also contributing valuable solutions to global challenges.