– What is an innovative startup?

Paragraph 2 of Article 25 of Decree Law 179/2012 lists a number of requirements to be met in order to qualify as an innovative startup.

Without going into too much detail on each individual requirement, for which please refer directly to the above-mentioned legislation, first and foremost an innovative startup is a joint-stock company, also established in cooperative form; it must also meet the following objective requirements be a new company or one that has been established for no more than five years; reside in Italy, or in another country of the European Economic Area but with a production site or branch in Italy; have an annual turnover of less than €5 million; not be listed on any regulated market or multilateral trading platform; not distribute and have not distributed profits; have as its exclusive or prevalent corporate purpose the development, production and marketing of a product or service with high technological value; not be the result of a merger, demerger or sale of a business unit.

In addition, it must meet at least one of the following three subjective requirements: it must incur R&D expenses equal to at least 15 per cent of the higher of cost and total production value; employ highly qualified personnel in the form of PhDs, PhD students or researchers for at least one third of the total personnel, or in the form of PhDs with a master’s degree for at least two thirds; and be the owner, depositary or licensee of at least one patent, or the owner of software registered with the SIAE.

With the so-called ‘Decreto Rilancio’, measures were introduced to strengthen and support the innovative start-up ecosystem, and among the various dedicated facilities, here we will take a closer look at subsidised finance.

To learn more about all the other measures: 

Innovative Startup Incentives

– What are public fundigs?

Public fundinge represents a specialised branch of corporate finance, the main objective of which is to facilitate companies’ access to advantageous sources of finance compared to standard market conditions. This sector is characterised by the availability of public financial instruments, made available by the competent authorities at EU, national and regional level, with the aim of supporting economic development on the territory and enhancing the competitiveness of enterprises. These facilities aim to foster the growth and solidity of the economic system as a whole, as well as to strengthen the local business fabric, promoting the creation of new business opportunities and innovation. Thanks to these instruments, companies can benefit from more advantageous financial conditions, such as non-reimbursable tenders, subsidised interest rates, extended repayment periods and public guarantees, which enable them to access capital needed for investments and strategic projects. In this way, subsidised finance acts as a catalyst for sustainable economic development and long-term value creation, contributing to the well-being of communities and the growth of the entire economy.

– Smart&Start Italy

Putting the dots together, the most important national subsidised finance programme dedicated to the birth and growth of innovative start-ups is Smart&Start Italia, a one-stop instrument managed by Invitalia.

Teams of individuals intending to set up an innovative start-up in Italy can also apply.

Without going into detail on the items of expenditure that can be financed, Smart&Start provides an interest-free loan for business plans ranging from a minimum of EUR 100,000 to a maximum of EUR 1.5 million, to purchase capital goods, services, personnel expenses and business operating costs. The funding covers 80 to 90 per cent of eligible expenses.

To receive funding, the business project must have one of the following characteristics 

– be characterised by significant technological and innovative content; 

– be aimed at developing products, services or solutions in the field of digital entrepreneurship, AI, blockchain and IoT; 

– be aimed at the economic exploitation of the results of the system and of public and private research.

It is important to emphasise that by taking advantage of this instrument, the start-up does not sell equity to public entities, and should equity be sold to a private investor, the start-up would have the option of converting part of the debt into non-repayable equity, up to a maximum of 50 per cent of the investment!

In addition, for the Mezzogiorno, there is a non-repayable portion of 30% of the funding, which means only having to repay 70% of the loan received!

I want to apply, how do I proceed?

Applying for subsidies is one of the most complex, and it is strongly recommended that you take care of it with the support of a consultant.

On the other hand, as it is a one-stop procedure, there are no set deadlines to meet, and a possible rejection of the application does not exclude the possibility of resubmitting it after a project review.

Even once the financing has been obtained, the support of an advisor is decisive in the search for private investors, who, as mentioned in the previous paragraph, would make it possible to convert a substantial part of the debt into grants.