The Scaleup Act: Italy’s Leap into Innovation-Driven Growth

Italy has taken a bold step to redefine its entrepreneurial landscape with the introduction of the Scaleup Act (L. 193/2024), a comprehensive reform aimed at fostering innovation, enhancing scalability, and attracting both domestic and international investment. Complementing the Startup Act (L. 162/2024), this landmark legislation positions Italy among the global leaders in nurturing high-growth businesses.

 

As the world’s ninth-largest economy, Italy’s potential to become a global innovation hub has often been hindered by structural inefficiencies, limited access to capital, and bureaucratic barriers. The Scaleup Act seeks to address these challenges, creating a fertile environment for startups and scaleups to thrive. Here’s an in-depth look at what makes this legislation transformative and its potential to reshape Italy’s economic future.

 

Building Strong Foundations for Innovation

One of the key components of the Scaleup Act is its reimagined registry for innovative startups and scaleups. The law extends the registration period from 5 to 9 years, offering more time for young companies to stabilize and grow. However, inclusion in this registry now requires meeting stringent criteria, such as demonstrating revenue growth, holding patents, and investing significantly in research and development (R&D).

By excluding non-scalable business models like consultancies and agencies, the law ensures that resources are directed toward businesses with genuine growth potential. Additionally, the removal of the previous €20,000 minimum capital requirement opens the doors for a broader range of entrepreneurs, enabling them to focus on innovation rather than initial financial hurdles.

 

Incentivizing Investment: Private and Institutional

The Scaleup Act introduces groundbreaking fiscal incentives to attract private capital. Pre-seed investments made within the first three years now benefit from a 65% tax deduction, which can be immediately utilized through instruments like SAFE agreements. This approach not only reduces the risk for investors but also enhances liquidity by allowing excess deductions to be converted into tax credits.

 

Moreover, reinvested capital gains are exempt from taxation, creating a cycle of reinvestment and growth. Anti-abuse measures have been carefully designed to ensure that these benefits are channeled only into genuinely innovative ventures.

For institutional investors, the law mandates a minimum allocation of 5% of managed assets to venture capital starting in 2025, increasing to 10% by 2026. This provision alone is expected to channel approximately €3 billion into Italy’s innovation ecosystem, with priority given to domestic startups.

 

Accelerators, Venture Builders, and Global Competitiveness

Recognizing the pivotal role of accelerators and venture builders, the Scaleup Act offers an 8% tax credit on investments in these entities, capped at €500,000 annually and €1.8 million overall. This incentive directly supports the infrastructure that nurtures startups during their critical growth phases.

By aligning with global best practices—drawing inspiration from successful reforms in countries like the UK and Israel—Italy positions itself as an attractive destination for both foreign and domestic investors. The Scaleup Act not only builds on these precedents but also adapts them to Italy’s unique economic and cultural landscape.

 

Transformative Impact on the Ecosystem

The potential impact of the Scaleup Act extends across several dimensions:

- Financial Inclusion: The elimination of capital barriers and the introduction of tax incentives make entrepreneurship more accessible to diverse groups of innovators.

- Steady Capital Flows: The combination of private and institutional investment ensures a reliable and growing funding pool for startups and scaleups.

- Focus on Scalability: Resources are concentrated on high-growth businesses capable of reshaping markets and driving economic progress.

- Sustainable Growth: Extending the registration period to 9 years gives startups the time they need to achieve maturity and global competitiveness.

 

A Visionary Framework for Italy’s Future

The Scaleup Act is more than a piece of legislation; it’s a visionary framework that bridges Italy’s rich entrepreneurial spirit with the demands of a globalized innovation economy. By addressing long-standing structural issues such as access to capital and bureaucratic inefficiencies, the law creates an environment where startups and scaleups can not only survive but thrive.

As these measures begin to take effect, Italy is poised to redefine its economic narrative. The Scaleup Act is a statement of intent, signaling the country’s commitment to fostering a vibrant, inclusive, and globally competitive entrepreneurial ecosystem. With continued support and execution, this reform has the potential to position Italy as a leader in the global innovation landscape.

 

The Scaleup Act is not just a legislative milestone but a catalyst for a new era of economic growth in Italy. By empowering startups, incentivizing investment, and streamlining growth opportunities, it lays the groundwork for a more dynamic and sustainable economy. As the world watches, Italy’s bold steps could serve as a model for other nations seeking to harness the transformative power of innovation.

See latest Equity lab Show on Channel 31 @Nexth Cast iTV+