“Venture capital only works if it lives in the times of startups, not in those of politics”

“Venture capital is a slow market. It requires patience and a long-term horizon. Things that politics and the public sector often lack in this sector.” Salvo Mizzi has been working in the digital industry since the mid-1990s. He has been a key figure in the world of startups, ever since startups began to be talked about in our country. First with Tim Ventures, then with Invitalia Ventures, he created Cdp Venture and Enea Tech, of which he was general manager. Mizzi knows the role of the public in the world of new innovative companies well because he created that role in some way. And next month he will return to lead a venture capital fund of funds, but with a different matrix. It is called Radical Partner. A fund of funds is a venture capital fund that does not invest directly in startups, but in other venture capital funds that in turn invest in startups. A bit like some branches of Cdp Venture, the venture capital fund of Cassa Depositi e Prestiti. Radical Partner wants to do the same, but for the first time in Italy with resources entirely taken from the private sector. Representing in some way a challenge and a stimulus to the risk capital investment market. For Mizzi, the time to do it is now: “Today the conditions are right. Europe is experiencing a 'Churchillian' moment. The US has dominated so far also thanks to European brains. Today it's our turn”.

Mizzi, why Radical Partner?

"The project has not had a short gestation. With my partners (Cristiano Garocchio and Daniele Vecchi, ed.) we reasoned a bit and we convinced ourselves that the Italian venture capital system does not work as it should because it is too based on public resources and money. I know it and I know it well because I helped create it. What is missing in Italy is a private and independent fund of funds capable of rebalancing the focus of venture capital which today is too shifted towards the public".

What's wrong with public venture capital?

“It lives in a horizon too tied to politics. And politics makes decisions, changes top management, managers, not always on merit but often due to the spoils system (assignment of roles based on political proximity, ed.). I worked in that sector, I helped create it. But unlike what happened in France, where the equivalent of Cdp Venture (Bpi France, ed.) has been led by the same people for 15 years, here in Italy the top management changes as the governments change”.

But you – as you said – helped create that public investment system. Convince me that yours is not an attempt at revenge.

“No revenge, it's just a question of the market. Venture capital must be patient capital. It needs a long time. It needs people who know how to wait and hold the helm for a long time. You don't get paid back immediately for the investments you make. You need time and long horizons, which politics in this country has shown it doesn't have. This is why I am convinced that private action can serve as a stimulus”.

Just for stimulation?

“Also as an alternative to the public, which is slower in decisions and processes.”

Who will you invest in?

"We will invest 60-70% in Italian funds and the rest in Europe. In Italy we will try to invest in new venture capital funds, some are also emerging in Italy. They are led by very good young people in their thirties. We want to put them to the test, we want to increase the number of operators in Italy because the entire game that still keeps us away from countries like Germany and France is played out on the small number of VC funds".

What will be the fund's endowment?

“400 million”.

Almost as much as the Cdp Venture fund of funds. Everything seems to describe a picture that sees you as an alternative for the venture market.

“Without taking anything away from the skill of the public operator, Radical presents itself as a fund that is both alternative and complementary to Cdp Venture. In any case, an elective interlocutor. Because according to European rules, every time public capital is used, it will still have to be matched with an independent private entity. The problem for Italy is that today the private capital part is too weak. This slows down the speed of capital allocation”.

Just a question of game timing?

"There is a question of timing and a question of actual dynamics. And then there is the issue of a change in governance that looms over Cdp Venture, which has not yet been resolved. All things that slow things down."

Where will Radical's resources come from?

"The goal is to raise half in Europe and half in the Gulf countries. In fundraising we will only focus on private capital, no carriers or public entities. Only institutional investors and family offices."

Why the Gulf area?

"Because there is a lot of investor pressure on emerging technologies. And we think we could be an ideal subject for this strategy. Institutional investors generally have longer time frames, they are pension funds, and they know how to wait."

Is the fact that money is coming from there somehow an opportunity for Italian startups?

“Daniele Vecchi knows the Gulf very well, he has been working there for years as CFO (chief financial officer, financial director, ed.) of large global funds. There is enormous growth in that area and it represents a potential market for our startups. One of the limits of Italian VC is that we have often supported startups with ambitions limited to the domestic market – but you cannot become a global champion by staying in your own backyard”.

His gaze seems to be more directed towards the East than towards the US shore.

"There are markets there today that can integrate ours. A few months ago at Palazzo Chigi there was a meeting with representatives of the Gulf area with investments for 40 billion with the entire Italian system: it is a clear signal, we must scale and look outside the domestic market alone".

It is a frame that is often heard repeated in Europe, especially in this political moment of love and hate with the USA. What moment is the Old Continent living?

“It is a ‘Churchillian’ moment for Europe (a moment of great difficulty, like the one Europe experienced after the Second World War, but also of potential rebirth and historical responsibility with strong leadership, like that of Winston Churchill, ed.). After the Second World War, the USA dominated thanks also to a brain drain from Europe, they took the best minds from us. Today it is our turn: the classic points of reference have gone, we must look for new markets, base ourselves and bring back talent. Also to support the great European plans such as the return of human capital, of brains”.