With 50 million euros to invest, the Italian Founders Fund is looking for entrepreneurs with global ambitions

Although funding for Italian startups is growing, the country is still in eighth place in Europe for VC investments, according to Dealroom.

Newly created Italian Founder’s Fund (IFF) hopes to help catch up, both in quantity and quality. With €50 million to invest in 25 companies, it also positions itself as a sector-agnostic, founder-friendly fund that understands the pain points of entrepreneurs.

IFF’s portfolio already includes four companies, and a fifth job is in preparation. Two have been discovered so far: Before customer research platform Glaut in April, IFF led the 2023 funding round HR technology startup Jet HR.

«IFF addresses the challenge for early-stage founders in Italy to find a lead investor with high conviction in the pre-seed and seed stages,» IFF founder Lorenzo Franzi (third from right in the image above) told TechCrunch.

Some may disagree with the diagnosis; VC firms operating in Italy already include CDP venture capital, Exor Ventures, LVenture Group, Milan Investment Partners, Pariter Partners, Primo Venturesand United Ventures.

Franzi, however, thinks that still leaves a gap for early-stage capital. In any case, IFF is emerging as a new source of capital for a market whose startups collectively receive far less funding than, for example, France, despite the fact that the two countries have similar populations.

IFF is also complementary to accelerators such as H-FARMand a step up from the angel investing that Franzi and other entrepreneurs-turned-backers were engaging in.

Former President of the Management Board in launch of the Laundrapp laundry turned partner into Global founding capital by the end of 2022, said that the «unstructured» approach inherent in angel investing can lead to several problems such as limited analysis, complex cap tables and too small funding rounds. IFF can bring the structure of the fund into its investment process, but also be practical after the investment.

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For example, IFF has been able to assist portfolio companies with key hires, commercial expansion and strategic partnerships, Franzi said. Jet HR CEO Marco Ogliengo agreed, noting that IFF’s added value comes from the fact that «almost all successful Italian founders support it.»

That may be hyperbole; but according to Franzi, about 100 of the IFF’s backers are indeed Italian entrepreneurs. He added that they come from different generations and sectors, but with a common goal: to put Italy on the map of the best places in Europe to open a company.

That’s an ambitious goal, especially since some of the pain points are outside the IFF’s purview: there’s not much a private equity firm can do to counterbalance high taxes and paperwork. There have been recent public efforts to increase the attractiveness of the country and its technology sector; but unlike CDP Capital which is with the support of state agenciesIFF is fully privately financed.

In the absence of public funding or institutional LPs, IFF is free to invest wherever it sees fit. It will use this geographic flexibility to support Italian founders operating abroad as well as foreign startups interested in entering the Italian market.

Foreign ties go both ways, and IFF aims to get foreign VC funds to co-invest in its portfolio, either initially or in subsequent rounds. It will also help that some of his LPs are GPs of foreign funds and that he plans to back Italian founders with global ambitions.

Global Italian startups include Bending spoonsowner of popular apps and services like Evernote and Meetup, which is estimated at $2.55 billion. And with serial Italian entrepreneurs returning home to start their next ventures, it seems fitting that they now have a founder-led fund backing them.

IFF will be managed KOINOS Capitala private equity fund expanding into VC, whose CEO, Marco Morgese, noted examples of founder-led funds in other markets, such as Founder’s Fund in the US or recently, Galion.exe in France.

Seeing IFF adopting this model in Italy is another sign that the ecosystem is maturing. When it comes to venture capital, the numbers are improving, but there is still a lot to do. «In Italy, rethinking the status quo of process, speed and an entrepreneur-centric mindset is key,» said Franzi.

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