Crises can be a blessing or a curse for entrepreneurs. The optimistic view suggests that others’ difficulties might represent unique opportunities depending on how new companies entered the pandemic.

Some data might indicate that several new companies have enough cash to hold on to the initial plan with minor adjustments, using it to buy additional competencies at lower prices. According to Invest Europe, the European Association of Private Equity, in the last ten years, investments in Europe grew by 10% yearly, reaching €94B in 2019. These trends might suggest that a cycle which started after the 2008 crises will end, and that in particular younger and riskier investments will be at stake in the next months.

Therefore, it is not surprising to see many governments come to the rescue of their entrepreneurial systems with generous stimulus packages deployed worldwide such as tax deferrals, wage compensation schemes, grants, and loans targeting companies’ immediate liquidity needs. Specific income supports cater to self-employment and existing necessity-based entrepreneurs. In addition to these, we can also see specific actions targeting start-ups.

In Italy, the so-called “Decreto Rilancio” of May 14, 2020 included a set of measures directly targeting the country start-up ecosystem. Some explicitly addressed the availability of new resources to support investments in start-ups, as was the case for the other countries reviewed. Others are tailored to the country’s institutional environment’s specificities, building on the 2012 reform mentioned above. Two of these focused on equity investments: the National Innovation Fund, which was launched in 2019 and started at the beginning of the year before the crisis, added €200M to its €1B capacity to invest and co-invest in venture-backed companies However, investing in entrepreneurship to sustain the future growth of the country, especially after the Covid-19 pandemic, requires a more widespread effort considering the different forms of entrepreneurship, their determinants, and where Italy stands.

The Covid-19 pandemic has called for an extraordinary governmental presence in the economy. Promoting an entrepreneurial nation, however, is different to building an entrepreneurial state. We can use this opportunity to increase our dependency on state-led initiatives or design a genuinely entrepreneurial nation. Building on our journey through what we know about entrepreneurship, we need to act on three levels: contexts, companies, and individuals.

Italy’s context offers many opportunities for improvement. Investing in education infrastructure, teachers, universities, and public research organizations increases future chances to see new ideas developing and turning into companies. It encourages opportunity-based over necessity-based entrepreneurship. It favors the retention of high-class human capital to grow our regional entrepreneurial ecosystems. Italy lags behind many other EU countries in all these areas. The unprecedented amount of resources available after the crisis should contribute to filling the gap.

The ease of doing business is vital for the overall health of an economy and is particularly critical for an entrepreneur. No society will ever stop fighting against unnecessary bureaucracy, but Italy can and should do more to radically shift the burden of proof, acting at different levels to simplify business entry, operations, and exit is not particularly original.

Italy has always been at the forefront of telecommunication. We had one of the most reputable corporate R&D centers up until the late ’90s, our academic productivity and reputation are still highly ranked globally. We have been quick in consuming telecom services and demanding new ones. However, like all other EU countries, the costs of upgrading the current infrastructure are prohibitive for any single operator. The idea that multiple proprietary networks could be funded is simply not realistic. A third opportunity to stimulate new companies and services is related to two particularities of this country: its unique cultural heritage endowment and the economic relevance of its so-called “third sector”, two different fields but both managerially weak, both operating in markets highly dependent on public spending and both very fragmented and act locally.

The third area to funnel our efforts in building a new entrepreneuring Italy focuses on individuals, as they are the essence of any new entrepreneurial initiative. Operating in a more dynamic context and accessing new markets would already stimulate opportunity-based choices. Still, some dedicated programs catering directly to individuals could increase their overall impact. First, education should support entrepreneurial behavior during the different phases of an individual’s personal development journey. Entrepreneurs are not all young adults, and previous work experience matters. Specific packages targeted at individuals in their career transition, not only during crises but also as ordinary opportunities, should represent a structural component of labor market support. It is necessary to increase our level of entrepreneurship in the country and to make it head in the right direction. It is a unique opportunity, and we cannot miss it.

Authors: Riccardo Fini and Maurizio Sobrero

part 1: Entrepreneurs: born or raised?

part 3: The entrepreneurial renaissance after Covid-19 in Italy

This is the second of three articles from “Why Italy needs an entrepreneurial renaissance after COVID-19” published in the recently released book The italian economy after COVID-19: Short-term Costs and Long-term Adjustments edited by Giorgio Bellettini and Andrea Goldstein. Credits Bononia University Press / Fondazione Policlinico Sant’Orsola.