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Italian Innovation Ecosystem Stalls as Startup Investment Slips in 2025

Milan - Italy's innovation ecosystem struggled to maintain momentum in 2025, with startup and scaleup investment slipping from the record highs seen just a few years prior, according to new data from the Milan Polytechnic University.

Equity investments in high-tech startups and scaleups reached €1.456 billion last year, a modest 2.8% increase from 2024's €1.416 billion but well off the peak of €2.160 billion set in 2022. The findings underscore the fragile state of Italy's startup landscape, where growth has stagnated despite pockets of success.

The Polytechnic's analysis reveals a market increasingly polarized around a handful of standout performers. Formal venture capital funds, corporates, and government investors maintained investment levels from the prior year, cementing their role as core infrastructure. However, international investors were the lone bright spot, growing 8% as they sought to back Italy's most promising scale-ups, led by global unicorn Bending Spoons.

"2025 confirms a fragile equilibrium for Italy's innovation ecosystem," the report stated. "The overall volume of equity investment remains stable, but is increasingly concentrated around a few success stories, while the middle tier of high-potential startups continues to struggle for capital."

The findings underscore the challenges facing policymakers and industry leaders as they work to cultivate a more vibrant startup scene. Experts say unlocking growth will require interventions across the entire venture capital value chain - from fostering more early-stage funding to supporting scale-ups seeking to expand internationally.

"It's no longer enough to simply wait for new 'unicorns' to emerge," the report cautioned. "Action is needed to strengthen the entire innovation ecosystem."

Industry insiders point to a range of factors weighing on investment, from economic uncertainty and tightening monetary policy to a lack of domestic risk capital and challenges in building a deep pool of experienced founders and operators.

"The numbers show Italy is at a critical juncture," said a senior partner at a leading European venture firm, speaking on condition of anonymity. "The country has produced some impressive success stories, but the broader system remains fragile. Sustaining momentum will require a concerted, multi-stakeholder effort."

As Italy's startup ecosystem enters a pivotal phase, policymakers and industry leaders will be closely watching to see whether 2025 marks a temporary blip or the start of a more protracted slowdown.