The north-western Italian region of Piedmont has shifted its development strategy to provide more support for start-ups by partnering with global innovation hubs as a way to create new opportunities for local companies.

Piemonte Agency, the region’s investment, export and tourism promotion body, signed a partnership in July 2023 with Israel’s Margalit Startup City. It aims to “build new bridges” between tech start-ups, traditional businesses and economic organisations in the Piedmont region and Margalit’s centres in Israel and the US.

“Start-ups now are crucial,” says Dario Peirone, the chairman of Piemonte Agency. They are crucial to test new ideas and bring innovation to small and medium-sized enterprises (SMEs), he says, which are the “backbone” of the region’s economy.

Piedmont has an industrial heritage and is home to several Italian multinationals, including confectionery company Ferrero and computer maker Olivetti. It is also an aerospace manufacturing base for major companies such as Boeing, Thales and Leonardo, an Italian defence company with three locations in Caselle, Cameri and Piedmont’s capital Turin.

However, the region’s traditionally strong automotive industry has been in decline and is being disrupted by the shift to electric vehicles (EVs). This has been led by the fall of Fiat, a locally founded automaker which is now part of Stellantis and has limited production left in the region. Between 2004 and 2018, manufacturing jobs in Piedmont declined by 17%, according to the OECD, higher than the average across other regions. 

Piedmont’s next chapter, enabled by start-ups, is pitched to be one backed by innovation. But founders and investors say the region needs to boost the availability of capital, reduce bureaucracy and do more to retain engineering talent from strong local universities.

Innovation collaboration

Erel Margalit, the founder and executive chairman of Margalit Startup City and Jerusalem Venture Partners (JVP), tells fDi that he has been “very impressed with certain technologies” in the aerospace, car, food and fintech industries in the Piedmont region.

With about 60 companies in JVP’s portfolio, the partnership with Piedmont aims to bring together Israeli and Italian tech companies and find ways in which they can share ideas and facilitate their expansion into new markets.  

More start-up ecosystem stories: 

• Salt Lake City becomes new tech paradise
• UK Midlands universities to boost spin-outs with investment vehicle
• Algeria's grand start-up plan faces teething issues
• Silicon Zanzibar: an island's bid to diversify its economy

Mr Peirone says that instead of just concentrating on trade shows, the region’s new focus on start-ups is a way to develop international business. He adds that local SMEs need to talk to start-ups, investors and foreign players in order to adjust their strategies, innovate and grow, including spinning off in-house technologies into new companies.

“The Italian economy is much less dynamic than it should be,” he says. “We are completely relaunching the activity of [Piemonte] Agency as a powerful instrument to develop the international perspective of the region.”

This approach is lauded by local business leaders. Pietro Sella, the CEO of Sella Group, a private bank based in Biella that invests in several Italian VC funds, says Piedmont and Turin are well positioned to be “frontrunners in Europe”.

“An economic system with a thriving start-up environment speeds up the innovation process, resulting in a positive impact on employment, attractiveness, international relations, visibility, and many other aspects,” he says. 

Funding deficits 

While there are a few “outstanding” fields in Italy with strong technologies and companies, Mr Margalit says there has not yet been the “start-up fever” that has happened in tech hubs such as London, Berlin or Tel Aviv.  

Start-ups in Italy as a whole raised €35 of funding per capita in 2022, significantly less than competing European countries like Spain (€61), France (€149), Germany (€153) and the UK (€369), according to EY’s Venture Capital Barometer.

Last year, start-ups in Piedmont raised €427m of funding, about a fifth of the Italian total, but the vast majority of this was from a €300m round for nuclear start-up Newcleo. 

“There is an imbalance between tech entrepreneurs and availability of capital [in the Piedmont region],” says Massimiliano Magrini, the managing partner of Milan-based United Ventures, one of Italy’s most active venture capital (VC) funds.

This deficit is echoed by founders of prominent local start-ups, who say a lack of major VC funds in Piedmont and surrounding regions is hampering the ability of start-ups to scale.  

“Northern Italy is underrepresented in the financial space versus the quality and quantity of innovation it brings to the table,” says Francesco Taiariol, the co-founder and CEO of Tau Group, a Turin-based producer of magnet wires used in EVs and other electrification technologies.

“It is a very competitive environment” with “a top-notch supply chain”, according to Mr Taiariol, who notes the depth of specialised equipment and part suppliers and experts in industrial processes such as mechanics, automation and mechatronics.

R&D hub

When assessing where to set up a research and development (R&D) hub in Europe, US-based battery software start-up Electra Vehicles assessed Munich, Frankfurt, Paris and Turin. They eventually decided to set up in Turin because of its well-established automotive ecosystem and significant support from Piemonte Agency in recruiting talent and making connections. 

Fabrizio Martini, the Italian co-founder and CEO of Electra Vehicles, says there is a deep pool of talent in Piedmont due to a number of nearby universities such as the polytechnic universities of Turin and Milan, and the Italian Institute of Technology in Genova. Electra currently has 50 employees and expects to double that by the end of the year, including 30 more people in Italy.

As it scales up its operations, Electra Vehicles has received job applications from several candidates from major automotive tier one suppliers and original equipment manufacturers. 

“There is an opportunity to transition people that might have lost their jobs to join a start-up that can bring new technology to market,” says Mr Martini. 

Switzerland’s Microlino also chose to partner with local automaker and designer Cecomb to produce its small electric commuting car at its facilities in Turin. The CEO of VC fund P101, Andrea Camillo, who was born in the Piedmont city of Biella, believes the region has “all the elements on the ground” — including strong talent, universities and an entrepreneurial culture — for it to play a prominent role in Italy. 

Addressing bureaucracy

While Piedmont’s diversified local ecosystem has great potential, company founders say more work needs to be done to reduce bureaucracy, including the cumbersome and expensive process of setting up a business. 

The region also faces a challenge in retaining its top talent, who often move to Milan and other major tech hubs. The small city of Cuneo in the central province of Piedmont was the hometown of Satispay, a payments unicorn that has now grown to be one of Italy’s most successful tech scale-ups at home and abroad. 

As Piedmont tries to shape its future through closer collaboration with the global tech ecosystem, Mr Peirone hopes it will create more routes for local companies to exit. “Until now this has not happened in a systematic way. I would like to push more SMEs to create a market for the start-ups.”

This article first appeared in the October/November 2023 print edition of fDi Intelligence