Italy's Public LPs Keep VC Domestic, and Keep It Small

Only 29% of venture firms backed by Italian public LPs are based abroad, against 48% in Germany and 75% in Denmark. That gap, mapped in the Italian edition of Scout's Public LP Database, shows what happens when nearly every public euro carries a domestic condition — and it caps Italy's venture industry at roughly 0.07% of GDP.

Alberto Oliveti, president of Enpam and AdEPP, put the policy in one image at the "Pensions and investment strategies in venture capital" conference, held in the Italian Chamber of Deputies in summer 2025: "I think venture capital is like salt. Soup without salt has no flavour, but soup with too much salt can be unpleasant." Then came his qualification: "We favour sea salt, and Italian salt in particular. But remember that the salt that does most good is iodised." The iodine is the tax exemption the Casse di previdenza, Italy's professional pension funds, enjoy on qualifying venture investments.

What does the data show?

The database, compiled with Francesca Baillieu, maps 18 public and quasi-public LPs active in Italian venture. They include CDP Venture Capital as the national anchor, the European Investment Fund, regional finance companies such as Finlombarda and Lazio Innova, and the Casse, which perform a public function and hold much of the country's institutional capital.

Together they back 25 Italian venture firms with combined assets of around €5bn. Sixty per cent specialise in early stage; only 8% focus on late stage. CDP Venture Capital appears in 24 of the 25 firms, and 76% of them count two or more public LPs. A manager raising a fund in Italy rarely lands one anchor and fills the rest privately. They assemble a coalition of public institutions, each with its own mandate.

What conditions come attached?

Every institution sets a geographical condition, and the picture is close to "the money must stay in Italy."

• CDP's domestic funds-of-funds serve Italian managers, with most money from the Ministry of Enterprises and Made in Italy, which by law can only invest in funds whose portfolio companies have an operating base in Italy.
• CDP's international fund-of-funds, around €307m, backs foreign managers if they invest in Italy and open a local presence. Partech did exactly that, opening a Milan office in 2023 and making the fund's first investment in an Italian start-up.
• Finlombarda doesn't invest in the main fund but in a parallel vehicle co-investing in Lombard companies, leaving the main fund unrestricted. The ring-fenced share can be tiny: in Energy Dome's €32.5m round, the regional contribution was €1.25m, about 4%. Even so, all six managers selected across the two Lombardy programmes are based in Italy.
• The Casse's tax exemption, reformed by the 2023 annual competition law, now requires a rising share of venture investment: 3% in 2025, 5% in 2026 and 10% from 2027. Qualifying funds must invest at least 70% in Italian companies.

Where does the system break?

Each rule has its own logic: a regional finance company answers for local jobs, CDP answers to Parliament, and the Casse's exemption is a political bargain. Ten years ago, when Italian venture was tiny and foreign funds ignored it, a domestic preference was arguably the price of having an industry at all. But the conditions add up to a system that is safe for each LP and, as a whole, structurally small. EY puts Italian venture investment at about 0.07% of GDP in 2025, against 0.15% in Germany and 0.22% in France.

The crunch comes at Series B. Only 8% of Italy's publicly backed firms focus on late stage, against 22% in Germany and 15% in Denmark. When an Italian start-up needs €30m or €50m, the domestic system thins out and the lead investor almost always comes from abroad. The Venture Capital Monitor counts just over €1.6bn raised by start-ups headquartered in Italy in 2025 — and almost €600m by those founded by Italians but based abroad. If the capital must stay, what keeps the company?

The risk is stark: Italy finances the riskiest years with public money, while the growth stage, where much of the value is created and priced, gets financed and owned elsewhere.

Is the money really missing?

No. FABI's analysis of Bank of Italy data puts Italian household financial assets at around €6.5 trillion, including €1.6 trillion in bank deposits. Italian start-ups raise roughly one euro of venture capital for every thousand sitting in current accounts. The problem isn't capital — it's channels between private wealth and the companies that need it.

The ECB finds government entities account for around a third of LPs in EU venture funds, against 4% in the United States. Italy is the extreme case of a European pattern. New pension money may follow the same route: CDP's domestic fund-of-funds already runs a pension compartment, "Previdentia" — sensible, but again routed through a single intermediary.

The question now sits with Europe's private allocators: family offices mid-generational handover, pension funds, wealth managers, corporate venture arms and foundations. Italy's rules preserve an industry well; whether they can grow one depends less on the state's next move than on whether private capital finds a way in.