Key Takeaways
- • Italian venture capital investment activity surged in H1 2025, with deal volume reaching 370 transactions and total capital deployed growing 17% to €5.2 billion compared to 2024, demonstrating robust deployment despite fundraising headwinds.
- • New fundraising collapsed 40% year-over-year to €1.7 billion despite an increase in active operators from 18 to 29, indicating capital scarcity among domestic investors and raising sustainability concerns for medium-term investment capacity.
- • International operators dominated the market, accounting for over three-quarters of invested capital, underscoring Italy's dependence on foreign capital to sustain venture activity and exposing vulnerability in domestic funding infrastructure.
- • Regulatory uncertainty surrounding pension fund venture capital mandates—specifically interpretation doubts regarding competition law—is constraining allocation decisions by Italian pension funds and private pension funds, limiting a critical institutional capital source.
- • Pension fund participation remains structural priority for market growth, with regulatory frameworks (including proposed 5-10% allocation mandates by 2026) and fund-of-funds mechanisms positioned as essential instruments to stabilize venture capital volumes.
Summary
The Italian venture capital market exhibited divergent performance across investment and fundraising metrics in the first half of 2025, according to monitoring data from Liuc - Cattaneo University conducted in collaboration with Aifi, Intesa Sanpaolo Innovation Centre, KPMG, Cdp Venture Capital Sgr, and Iban. While deal activity and capital deployment accelerated—with 370 deals representing a 24% increase and €5.2 billion deployed marking a 17% gain versus 2024—the sector faced a critical constraint: new fundraising collapsed by 40% to €1.7 billion. This bifurcated outcome reveals a market actively investing from existing dry powder and international sources, but facing structural weakness in domestic capital formation.
The fundraising decline occurred paradoxically as the number of active venture capital operators increased to 29 from 18 year-over-year, indicating that more players competed for available capital with diminished aggregate results. According to Anna Gervasoni, Rector of Liuc and Director General of Aifi, this dynamic creates a critical vulnerability: "Without new funding, it will be more difficult to maintain the same capacity to support the real economy." The reliance on existing capital pools is amplified by international operators' dominance, which accounted for more than three-quarters of total amounts invested in the period. This dependence on foreign capital highlights Italy's gap relative to peer markets in France and Germany and exposes execution risk for sustained venture support of the domestic startup ecosystem.
Institutional capital from pension funds has emerged as a focal point for addressing the funding gap. Regulatory uncertainty has hindered pension fund participation, with interpretation doubts surrounding competition law compliance creating hesitation among Italian pension funds and private pension funds regarding venture capital allocations. Industry advocates have called for regulatory reform to clarify mandates and enable pension funds to increase venture capital allocations. Proposed frameworks under consideration include mandatory allocation targets—such as 5% by 2025 and 10% by 2026—coupled with dedicated fund-of-funds structures designed to channel social security savings and pension capital into private equity and venture capital vehicles. These structural initiatives, spearheaded by entities including Cdp Venture Capital, represent the primary mechanism for stabilizing and scaling domestic venture capital funding beyond reliance on international operators.
The fundraising decline occurred paradoxically as the number of active venture capital operators increased to 29 from 18 year-over-year, indicating that more players competed for available capital with diminished aggregate results. According to Anna Gervasoni, Rector of Liuc and Director General of Aifi, this dynamic creates a critical vulnerability: "Without new funding, it will be more difficult to maintain the same capacity to support the real economy." The reliance on existing capital pools is amplified by international operators' dominance, which accounted for more than three-quarters of total amounts invested in the period. This dependence on foreign capital highlights Italy's gap relative to peer markets in France and Germany and exposes execution risk for sustained venture support of the domestic startup ecosystem.
Institutional capital from pension funds has emerged as a focal point for addressing the funding gap. Regulatory uncertainty has hindered pension fund participation, with interpretation doubts surrounding competition law compliance creating hesitation among Italian pension funds and private pension funds regarding venture capital allocations. Industry advocates have called for regulatory reform to clarify mandates and enable pension funds to increase venture capital allocations. Proposed frameworks under consideration include mandatory allocation targets—such as 5% by 2025 and 10% by 2026—coupled with dedicated fund-of-funds structures designed to channel social security savings and pension capital into private equity and venture capital vehicles. These structural initiatives, spearheaded by entities including Cdp Venture Capital, represent the primary mechanism for stabilizing and scaling domestic venture capital funding beyond reliance on international operators.
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