We spoke to Federico Cuppoloni, Director for Cleantech for Italy.
The scaleup of Europe’s cleantech industry promises great prosperity for the entire continent. What was once a peripheral market for innovation within the EU, Italy is now booming with promising scaleup companies working climate such as Cleantech for Europe coalition member Energy Dome as well as Tau and SQIM.
To better understand the promise and challenges facing Italy’s burgeoning cleantech scene, we spoke to Federico Cuppoloni, director of the newly formed initiative Cleantech for Italy. Federico joins a pan-European movement of cleantech organisations from his previous role as deeptech venture capital investor. He entered the venture capital industry in 2021 joining the space tech fund Primo Space, one of the first deeptech funds in Italy. There, he had the chance to research on climate applications of space technologies – in particular, the use of Earth Observation to monitor climate metrics.
Cleantech for Italy recently organised its inaugural event in Rome. There, participants from across the ecosystem came together to discuss the findings of Cleantech for Italy’s first report, co-produced with MITO Technology. The purpose of this event was to convene key stakeholders in the Italian cleantech space for the first time and rally the movement to strengthen Italy’s cleantech leadership.
“Venture capital is but one part of the solution.”
Let’s look at our strengths. Italy is the third biggest economy in the EU, and the Union’s second manufacturing country. The quality of our research is outstanding, even if the rate at which these technologies get out of the lab is still too slow.
Even if the venture capital volumes are lower in Italy than in other EU member states, we can observe a positive upwards trend. Cleantech funding in Italy surged to a record €322.3 million in 2023, marking a 68.6% increase from 2022. Of that amount, venture capital investments accounted for €222.4 million, a 42.0% increase since the previous year. On top of that, we also see positive news such as larger deals being closed.
According to our data, the average deal size in Italian cleantech grew from €1.9 million to €2.7 million between 2022 and 2023. The median deal size increased from €0.4 to 0.8 million euros. This size discrepancy between median and average is indicative of the fact that even though VC deals under €2 million decreased, the number of deals in the Series A range increased by 60.0%. The smaller deals are on average larger than before, but also more plentiful. This shows the attractivity of Italian innovations, and highlights growing investor confidence in our cleantech market.
Furthermore, we recognise that even though venture capital is a central element of the cleantech investment landscape, it is just one part of the solution.
We need to define funding paths for Italian cleantech scaleups that include sources such as banks and incumbent industrial powers. That means identifying the different opportunities to unlock the cleantech space such as creating bankable offtake agreements and having a conducive investment environment.
Even with a smaller VC contribution, Italy can tap into its strong industrial base and be at the forefront of technology adoption and value chain structuring – as well as late-stage funding. By building a diverse capital stack, Italy has the opportunity to become a cleantech champion.
To unlock this, Italy needs to act with greater coordination and align on a high-level cleantech leadership plan that can strengthen its industrial and innovative spirit.
This is where Cleantech for Italy comes in. We build a bridge between the policy and cleantech communities to inform policymaking. By articulating the policy changes required to overcome the challenges at each stage of innovation and cleantech scaleup, we will turn this new cleantech wave into a roaring success.
“Deeptech can be one of the most powerful forms of impact investment”
Climate-related investments are exceptionally policy-driven. The urgency to address climate change drives governments to make pledges and subsequently implement regulation. This has the potential to send strong market signals to investors who then place their investments in strategic sectors.
Additionally, cleantech is characterised by a need for even the early-stage investors to come on with a funding and commercialisation path already in mind. It requires active, supportive investors who join the innovators on their journey towards scaling up. Access to market depends on many factors, including an excellent path from lab to demonstration to FOAK commercial scale plants. Typically, this is where funding falls short for cleantech champions ready to go from innovation to industrialisation.
When I got into VC, funds across the US and EU were starting to embrace tech risk again, reconnecting with their historical roots. This hadn’t been the norm for many years – VC would invest in companies with market risks but wouldn’t put their money behind less-proven tech solutions with high capital needs and long go-to-market horizons. This new attitude ultimately translated into a new cleantech investment wave, strongly sustained by a new policy environment characterized by long-term pledges and widespread endorsement.
The event represented something new and unique in the Italian cleantech ecosystem. It was the first time all existing and upcoming cleantech funds convened to discuss the future of the cleantech asset class alongside other industry players and thought leaders. This event was about the vision of Italy as a cleantech industrial giant.
The meeting offered a chance to discuss the roles of startups, scaleups and investors in bringing about the cleantech industrial revolution. Attendees could discuss the challenges and the opportunities within the Italian market and discuss the internationalising of Italian cleantech.
It was insightful to see how people from the most diverse backgrounds perceive the scaleup hurdles across sectors, as well as the early-stage tech transfer challenges in the Italian cleantech market, just to name two areas. Banks, policymakers and investors are all aware of the need to tackle these types of problems. To that end, Cleantech for Italy will provide a platform for these diverse groups to exchange, discuss challenges, and formulate recommendations on what Italy should do to unlock its potentials.
“There’s way more to fixing a problem than just understanding it.”
We will now proceed to forge our coalition out of the cleantech community. Our vision is to welcome and forge partnerships across a range of cleantech actors – such as startups, scaleups, universities and venture capital funds – as well as financial organisations such as banks and ecosystem players such as foundations. In building this group, we look for highly motivated organisations and individuals willing to work on these challenges at both the Italian and European level. Many synergies can be created by connecting all local movements across the Cleantech for Europe constellation.
A lot of stakeholders across various sectors understand the issues Italy faces. However, they lack a platform that can help them coordinate and deliver the recommendations and messages in a collective fashion. There’s way more to fixing a problem than just understanding it. We saw this at our inaugural event in Rome. The next task is to bring these different actors and start building common and multifaceted solutions. The best is yet to come, and it’s time to chart a path towards Italian cleantech leadership.
Thanks for sharing your insights, Federico! We look forward to working with you!
