Every year, IBAN (Italian Business angels network) conducts a Survey to analyse the Italian market of informal venture capital, both from the point of view of investments made and from that of the characteristics of business angels, publishing a survey that for over 10 years has represented the only true updated picture on the behalf of angel investing in Italy.
We report a summary.
Key factor in 2013 Survey
– The census sample is comprised of 246 Business Angels, totalling 324 operations; Italian informal venture capital, which has been steadily growing over the last few years, has stabilised with operations amounting to circa €32 millions;
– 68% of the investments were less than €100,000;
– The sector which has most benefitted from Italian Business Angel financing is ICT, followed by media&entertainment and medtech;
– In 2013, 19 divestments, mostly in the ICT and cleantech sectors, were registered.
“Also 2013, thanks to an improvement in the financial markets and, more generally, in investor confidence at national and European level, showed the vitality and importance of the operations of angel investing in Italy in the venture capital sector”- said Paolo Anselmo, President of IBAN – “it is hoped that improvements in the overall scenario will still allow plenty of room to spread and increase the Angel Investing phenomenon in Italy, where it is still marginal compared to similar European countries.” Anselmo underlined that “The forceful entry of tax breaks for investors in innovative start-ups by MISE is an important innovation this year that has allowed a realignment with best practice, already well-established at European level in the economies with the highest rates of growth.”
Census sample
For 2013, the census sample is comprised of 246 Business Angels, totalling 324 operations, made up of a relevant part of aggregated replies (from BAN and the Club of Angels), showing the constant development of investments in the Angel unions (teams). The study reveals that the typical Italian Business Angel is a 40-50 year-old man, with a degree, affiliated with IBAN, with one on the local BAN, or with an investor Club in Northern Italy; usually, he is an entrepreneur with a managerial history and capital of less than €2,000,000, of which less than 10% is dedicated to angel investment.
Graph of the Iban Survey statistics over the three las years
Investments
The Italian market of informal venture capital is steadily growing and in 2013 registered operations totalling €31,857,000: in 2013, 324 investments were surveyed, of which 84% were used to buy equity, 11% for financing companies and 5% as bank guarantees.
68% of the investment amount was less than €100,000. 46% of Business Angels invested alone, while 31% co-invested with 8 or more Business Angels (which is in line with previous years); 74% of the investors own less than 15% of the share capital of the company financed; 35% of investment had as a target a company with no revenue and, in most cases, companies based in Northern Italy.
The graph below shows the mount invested by each Business Angel in each individual project
The main criteria taken into account when assessing the business plan are the potential growth of the market, the quality of the management team and the characteristics of the product/service.
The sector that benefited most from the funding of Italian Business Angels was ICT, followed by media & entertainment and medtech.
Below, the distribution of investment with regard to the various sectors financed (by number of investments not by capital contributed)
Distribuzione degli investimenti con riferimento ai diversi settori finanziati (come numero di investimenti e non capitale apportato)
Divestments
Only 10% of the sample said they had completed at least one divestment in 2013, with a total of 19.
Sectors with the highest number of exits were ICT and cleantech. Half of the divestments resulted in a loss or recovery of invested capital only, while 14% achieved a return of over 50%.
Below, the distribution of the exit strategies actually made by the Business Angels
