Bootstrapping the innovation rainforest in Italy: the Working Capital storyPosted: August 14, 2012
There is a new generation of startups active in Italy today and a growing entrepreneurial movement gaining momentum and media attention in the country. This is of particular importance these days as the global economy and Eurozone crisis are biting hard into the lives (and wallets) of people thinking about growth and economic development. It wasn’t like this in 2009 when Telecom Italia – the largest telecom operator in the country – launched ‘Working Capital’ the most successful entrepreneurship program in Italy to date.
The collapse of the tech bubble in 2000 resulted in a stagnation of startup and venture activity for many years in Italy and it was only in 2005 that the topic seemed to reemerge. A handful of angel investors and serial entrepreneurs started to appear and look for new startups and technology entrepreneurs to support. A small part of the community, catalyzed by the ‘Partnership for Growth’ entrepreneurship development program launched under the leadership of Ambassador Ronald Spogli was inspired to action. Working Capital started to come together as an idea within the Telecom Italia group in those years, championed by Salvo Mizzi, a successful Internet entrepreneur who later landed in company as Corporate Innovation manager.
Initially Working Capital was designed as a corporate social responsibility program and a community building project. A ‘startup exploration’ tour with the idea of scouting and supporting the newly born tech entrepreneurship movement of the country. The program launched officially in 2009, and initially there was a fair amount of skepticism surrounding this effort with a number of people questioning why a large incumbent ‘telco’ was interested in startups at all. There was no financial support available for startups in the program, but “factual” support in kind – however the fact that the Telecom Italia was behind it was functional to capture media attention. The first projects started to come in, but it was not an easy task at all to restore trust in the system and convince entrepreneurs to come out from the dark in order to present their ideas to a 20 billion euro company. Nevertheless the first edition was considered a success, some notable ideas came forward, and the program was renewed for a second edition in 2010.
One of the most interesting developments in the first year was that the quality of ideas and talent submitted to Working Capital was very high. So much so that it gathered the attention of the Human Resources department of Telecom Italia, which then decided to participate in the second edition. HR was involved in the talent selection process and provided the first direct funding in the form of grants for researchers/explorers. Working Capital targeted universities, searching for fresh innovative ideas needing seed money for feasibility studies, building prototypes, or developing their business plan. It worked out that the program began to gain significant traction in terms of communication and reputation, also thanks to a nationwide tour of events and barcamps across Italy which were aimed at connecting and giving exposure to relevant entrepreneurs in the high tech sector, universities, institutions and startups.
The flow of business plan and research ideas started to grow significantly. In the first two years of Working Capital, over 600 projects were submitted online (www.workingcapital.telecomitalia.it), most of them in the second edition. The management board of the program analyzed 165 pitches and business plans, 13 startups entered the incubation program, 58 research grants were handed out and 37 projects entered into a ‘pre-incubation’ radar program. But the most important result of all was that Working Capital was able to ‘break the ice’ of skepticism in the country and gain significant credibility in the startup community.
In 2011 the program partnered with the ‘Premio Nazionale dell’Innovazione’, the most important university business plan competition, in order to further penetrate the academic environment. The three years of investment paid off: in the third edition 2,139 business plans were submitted, while 15,000 hopeful entrepreneurs joined the official site. Overall 60,000 people participated in Working Capital events, 32,000 followed activities on Facebook and Twitter making it the number one innovation community in the country.
These numbers alone underline the success of the program, openly backed by Telecom Italia’s Domestic CEO, Marco Patuano. Working Capital acted as a critical hub and active connector within the ecosystem, and most of all built significant social trust among the younger generations. Talented entrepreneurs started to emerge and give it a chance, encouraged by some early signs of success. Some startups that were scouted by the program entered the market and got funded. Among them, examples like Mashape (www.mashape.com) funded by top tier US investors and Timbuktu, now in Dave McLure’s 500 Startup Program.