It is a form of business financing that is proving essential for fostering innovation and enhancing the competitiveness of economic systems. Let's explore what it is, how it works, why it is so important, and the role played by Intesa Sanpaolo Innovation Center in this ecosystem
Venture capital is a form of equity financing aimed at startups and innovative companies with high growth potential. Unlike traditional financing, it is not based on the repayment of a loan but on the investor acquiring an ownership stake in the company (equity). In other words, investors become shareholders in the business and share both its risks and opportunities.
It is therefore an investment focused on the future, often made in highly uncertain environments. Startups, particularly in their early stages, may not yet have an established track record, but they bring with them a business idea, a technology, a team, and a vision. Venture capital enables these elements to be transformed into a structured company by supporting its growth and development.
Institutions such as the European Commission and the OECD (Organisation for Economic Co-operation and Development) emphasize that venture capital is an essential tool for financing innovation, particularly when traditional funding channels are unable to support initiatives characterized by high levels of risk and strong technological content.
The role of venture capital unfolds across different stages, supporting a startup’s growth journey over time and closely aligning with its life cycle.
This is the initial stage, when a startup is born from an idea and begins developing its first concept or prototype. Funding is primarily used to validate the idea and build the team. The level of risk is very high, as the business model has not yet been tested.
The startup begins to take shape and develop its first product or service. The goal is to validate the market and determine whether there is genuine demand for what it offers. It is often at this stage that the first external investors come on board.
During these first two stages, investors specializing in seed capital assess the opportunity. They evaluate the team, the problem the startup aims to solve, the target market, and its growth potential. This is a particularly delicate phase, as much of the company’s value is still prospective and tied more to its vision than to tangible results already achieved. If the opportunity is considered attractive, the investment is made through a capital increase, allowing the startup to receive financial resources in exchange for an ownership stake.
The investor therefore becomes part of the company’s governance structure, often playing an active role in supporting strategic decisions and growth.
This is also a critical moment, as the startup may fall into the so-called “valley of death” and fail. At this point, the company has already incurred development and validation costs but has not yet generated sufficient revenue or secured the level of funding required to scale its operations.
The company now has a functioning product and begins to generate its first revenues. The focus shifts to early-stage growth, customer acquisition, and refining the business model. Investments at this stage are used to strengthen the team and expand the company’s market presence.
The startup has validated its business model and is now aiming to scale rapidly, including in international markets. Funding is used to support expansion, marketing activities, and operational consolidation. While the level of risk decreases, capital requirements and organizational complexity increase.
During these stages, venture capital investors work alongside founders, contributing not only financial resources but also managerial expertise, strategic guidance, and access to valuable networks of contacts, including customers, industrial partners, and other investors.
The company is now well established and approaching maturity. Investments are primarily aimed at strengthening its market position or preparing for strategic transactions. This is a more stable stage, characterized by established metrics and greater predictability.
The venture capital cycle is completed with the exit: the investor exits the company’s equity, realizing their financial return. This can occur through the sale of the company (for example, via a strategic acquisition), the entry of a new investor into the capital structure, or an initial public offering (IPO). It is at this final stage that the success of the investment is ultimately measured.
It is a well-known fact that, compared with the United States, which remains the largest and most mature venture capital market, securing a successful exit in Europe is often more challenging. This is due to factors such as market fragmentation, a limited number of large technology acquirers, and the lack of financial markets that are sufficiently developed and receptive to listing startups.
It is important to remember that, over time, a startup may raise multiple funding rounds (known as Series A, Series B, Series C, and subsequent rounds), each aligned with its stage of maturity. Indeed, every phase of a startup’s growth requires different resources and tools: funding sources should be selected in a manner that is consistent with the company’s level of development and capital requirements.
For startups, access to venture capital can be a pivotal milestone.
The first advantage is financial: the funds raised enable startups to develop their products, enter the market, hire talent, and scale their businesses more quickly.
Investors also bring valuable experience. Having supported the growth of other companies, they understand market dynamics and can help founders make strategic decisions. In many cases, they also enhance a startup’s credibility: having a well-established investor on board can strengthen relationships with customers, partners, and other sources of funding.
Another key asset is the network that venture capital provides. It gives startups access to international ecosystems, facilitates the development of industrial partnerships, and opens doors to opportunities that would be difficult to reach independently.
Finally, venture capital introduces a growth-oriented discipline. The presence of investors encourages startups to build stronger organizational structures, set clear objectives, and develop sustainable business models. This is a factor that can significantly accelerate the professionalization and long-term development of the company.
Did you know there’s a dedicated hub for innovative startups, featuring practical guidance on how to launch one in just six simple steps? Inside, you’ll also find a section devoted to funding opportunities and financing sources!
By its very nature, venture capital is a high-risk form of investment, as many startups fail to achieve sufficient growth or ultimately do not succeed. However, this very logic is what makes venture capital a fundamental driver of innovation. Without risk capital, many ideas would never become businesses. Emerging technologies, new business models, and even entire industries often take shape thanks to investments willing to embrace a high degree of uncertainty.
In this sense, venture capital plays a systemic role. It does not simply finance individual companies; it contributes to the transformation of the economy by accelerating the adoption of innovation and creating new opportunities for growth.
Globally, the venture capital industry is experiencing a phase of recovery and transformation. After a slowdown in previous years, global venture capital investment surpassed $400 billion in 2025, up from approximately $368 billion in 2024.
This growth has been driven by a greater concentration of capital. Investments are increasingly focused on a smaller number of startups, accompanied by a rise in mega-rounds. These large funding deals, typically exceeding $100 million, accounted for 65% of total venture capital investment value in 2025. Artificial intelligence is playing an increasingly central role, attracting 48% of total venture capital investment worldwide.
The growing concentration of investment is also highlighted in the Global Startup Ecosystem Report 2026 by Startup Genome. Produced in collaboration with the Global Entrepreneurship Network (GEN), and with contributions from Intesa Sanpaolo Innovation Center and Fondazione Compagnia di San Paolo, the report shows that the recovery of venture capital remains uneven and is being driven primarily by artificial intelligence.
Between 2021 and 2025, funding for AI-native startups increased by 218%, while overall investment across the broader technology sector declined by 36%. Capital is also becoming increasingly concentrated in the most mature ecosystems, with North America accounting for approximately 64% of late-stage funding and 86% of advanced-stage investment in AI-native startups.
The result is an increasingly polarized landscape in which access to capital, the ability to attract talent, and access to international markets have become critical factors in helping startups successfully scale.
Compared with other G7 European countries, Italy still has significant room for growth in venture capital investment. In terms of venture capital invested in 2025, the United Kingdom ranked first with €13.9 billion, followed by France and Germany with €10.7 billion and €7.0 billion, respectively. At the lower end of the ranking were Spain, with €2.6 billion, and Italy, with €1.6 billion.
And what about Italy? According to the Venture Capital Monitor (VeM), produced by AIFI (Italian Private Equity, Venture Capital and Private Debt Association) and LIUC - Università Cattaneo with the contribution of Intesa Sanpaolo Innovation Center, the Italian venture capital market continued its growth trajectory during the first half of 2026.
Investments in Italian startups and scaleups reached €679 million, representing a 37% increase compared with the same period in 2025, with a total of 117 deals completed.
When including foreign startups founded by Italian entrepreneurs, the market recorded a total of €917 million invested across 127 funding rounds, compared with €589 million across 158 rounds during the first half of 2025.
Growth continues to be driven primarily by high-tech sectors. ICT remains the leading sector, accounting for 42% of investments in early-stage companies, followed by financial services (13%), healthcare (12%), and biotechnology (8%). Within ICT, enterprise technologies are gaining particular momentum, representing 90% of new initiatives.
Intesa Sanpaolo Innovation Center also contributes to supporting innovation through strategic partnerships that help startups access funding opportunities tailored to their specific needs and stage of development. One example is its collaboration with Neva SGR, a company within the Intesa Sanpaolo Group and controlled by Intesa Sanpaolo Innovation Center, which designs and manages investment funds for professional investors seeking the high-return diversification opportunities offered by venture capital.
Among the venture capital funds managed by Neva SGR is the SEI Fund (Sviluppo Ecosistemi di Innovazione), launched in 2022 to support investments in vehicles dedicated to the research, selection, acceleration, and professional development of promising Italian startups. With €26 million in assets under management, the SEI Fund has invested in regional innovation ecosystem initiatives and in two National Technology Transfer Hubs.
Through its startup growth support initiatives, Intesa Sanpaolo Innovation Center works closely with Italy's leading venture capital investors, contributing to the development and strengthening of the national innovation ecosystem.
The role of venture capital extends far beyond supporting individual startups. More broadly, it is one of the most effective tools for enhancing a country's competitiveness.
Investing in startups means investing in innovation: new technologies, new services, and new ways of producing and consuming. It also means creating highly skilled jobs, attracting talent, and fostering the emergence of new industries.
For this reason, the development of a strong venture capital market is increasingly regarded as a strategic priority in economic policy. A robust and dynamic investment ecosystem strengthens the connection between research, business, and the market, generating long-term value and sustainable economic growth.
