Innovative Start-Ups in Italy: Their Special Features and the Effects of the 2012 Law

42 Pages Posted: 3 Nov 2016

Date Written: July 21, 2016

Abstract

In 2012 the Italian Parliament introduced into Italian law a special section in the Companies Register and a large number of financial incentives to create a favorable environment for the development of ‘innovative start-ups’ (ISUPs). In this paper we compare ISUPs with other start-ups. In accordance with the eligibility criteria established by law, ISUPs show a striking capacity for innovation apparent in a higher incidence of intangible assets and the longer time it takes to begin selling their products. ISUPs also report higher investment rates and stronger growth in sales and assets, while their financial structures are characterized by higher capitalization and greater availability of liquid assets. Based on propensity score matching, we also highlight some direct effects of the 2012 law on their financial structures, almost exclusively on ISUPs operating in the service sectors: their external funding, either debt or equity, increases more than for other similar firms; higher investment rates are specifically associated with a stronger upsurge in their capital.

Keywords: start-ups, financing innovation, equity, financial structure

JEL Classification: G24, G32, H81, O38

Suggested Citation

Finaldi Russo, Paolo and Magri, Silvia and Rampazzi, Cristiana, Innovative Start-Ups in Italy: Their Special Features and the Effects of the 2012 Law (July 21, 2016). Bank of Italy Occasional Paper No. 339. Available at SSRN: https://ssrn.com/abstract=2863871 or http://dx.doi.org/10.2139/ssrn.2863871

Paolo Finaldi Russo

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Silvia Magri (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Cristiana Rampazzi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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