Investor gives us insights for Italian startup market
An introduction on fundraising and startups by one of the main experts of the Italian scene
Through the experience of Emanuele Crescini, investor, and entrepreneur, we have some insights into the world of Italian startups and fundraising.
Let’s meet Emanuele Crescini, Senior Partner at Azimut!
Interview with Emanuele Crescini, Senior Partner at Azimut Capital Management SGR SpA, Mentor, Crowdinvestor and Investor with a significant number of investments in startups.
Hi Emanuele, you are an investor and an entrepreneur with a lot of experience: what does it mean for you to be a business angel, what drives you to do it?
Hi Stefania, more than Investor, to be fair, I consider myself as a crowd investor, with about 30 “important” holdings.
A business angel usually invests Euro 10/15/20K in the pre-seed phase and represents a group of small investors, while, first, I represent only myself and, secondly, I am not so “liquid” as to be able to afford holdings in this range times 30. Just to be clear and give the correct magnitude to terms and their meanings.
I decided to invest time and resources in this activity for various reasons. The first one is to give concrete help to teams of young people who deserve an opportunity at “home”, i.e., in our country. The second one is to be part in the Italian modernization, and, thirdly, I was tired of looking at the usual, more or less complex, financial instruments, devoid of “human” perspective.
Among many initiatives in which you are involved, you are a shareholder of CrowdFundMe since 2017, and of Ener2Crowd since 2020. Why did you decide to invest in these crowdfunding platforms? How do they differ, and which one do you want to talk about in more detail?
In 2017 I took advantage of a gamble from Crowdfundme, which opened its cap table with an equity crowdfunding campaign on its platform. This anomaly immediately jumped to my eyes, and I said to myself: why not? Since Consob authorized platforms are the only ones that can provide this financing service for innovative startups (and for innovative SMEs and ordinary SMEs) I right away gave it a try. As it happened, Consob blocked the campaign after a few weeks, and fined the company 30K Euro. On the other hand, in 2019 Crowdfundme went public on the AIM, and, to date, it is the only Italian platform listed in Italy.
On the other side, Ener2Crowd caught my attention because it is a “vertical” platform on the world of green projects, both in lending and in equity, and I am very interested in its relevance for the immediate and near future. It goes without saying that I know the CEOs of those and other platforms, but those were the only ones to raise funds.
Among other interesting investments, you are investor and shareholder of StartupItalia and Start & Partners since 2019, Seed Money from 2021. They are all gorgeous Startup initiatives, can you tell us a little more about them?
Well, there is not much to say about StartupItalia since they communicate their mission professionally on all available channels. They ran a super campaign on Mamacrowd with more than 2,000 investors.
Start and Partners, on the other hand, was introduced to me by acquaintances, and, because it was an incubator and accelerator of startups based in Trentino region, I decided to invest consistently in this company, precisely because of its nature.
I also put a chip on Seedmoney, as Marco Rizzelli, GM at SeedMoney, was keen to set-up a team of potential advisors to be included in the technical table to support the selected startups.
You also collaborate with Startup Geeks, and you are a mentor in STEP Tech Park: how do they differ and how do you help startups in these two programs?
Thanks for this question, Stefania. In fact, we met each other while attending Startup Geeks community, which today is the first online incubator, and it got stronger day after day in these few years, thanks to the enthusiasm of its founders Giulia and Alessio. I donate my time to this community in a truly captivating format – as the members say -, named “Stress Test”, where 4 or 5 Startup founders will discuss with me to have a different and a little rougher/direct perspective.
Instead, Step Tech Park is an incubator and accelerator, especially offline, with the mission of selecting startups dedicated to capturing CO2 from the environment. Here my contribution is linked to mentoring startups that participate in Step Tech Park calls. Today I completed the cycle with UniUD for the Enactus competition with the CO2gnac project to capture CO2 and mix and split it in an electrolysis process, producing ethanol for cosmetics and beverage. It is one of the projects in which I gave my contribution.
Why and whom would you recommend doing an incubation and acceleration program to and how to choose it?
I usually recommend it to all those founders who have no entrepreneurial experience. Unfortunately, when you get graduated, you master all the technical skills, but in the startup world they are relatively valuable. Starting a startup is managing a business outside the traditional paradigms, and you need unique psychophysical qualities. Therefore, it is important to understand, in an incubation phase, if you have these characteristics, even though some incubators only provide notions and do not do psychometric tests. This is an area that could greatly be improved.
How to choose an incubator? There are vertical and generalist incubators. I always suggest you need to have clarity about your value proposition and check whether the incubator already had previous references of startups aiming at the same target market. Then, once this is confirmed, I recommend you hear from the founder who participated in the acceleration program and check the merits and virtues of the program itself. In short, a fact checking is a must. Many wolves are waiting to bite the lamb…
Since 2018 you are also investor and shareholder of DIVE Group, what is it, what is its mission and its success story?
Perfect. I chose DIVE Group for its value proposition towards technologies concerning small / medium / large size photovoltaic parks to solve the problem of soil on the panels, identifying and developing technologies and nanotechnologies to improve their efficiency. One small flaw: they do not communicate much, but as truth is the daughter of time, I leave to their management to work on and fix this issue. Investing in startups also means taking a patient attitude of waiting. Investing for 8-10 years puts us in a condition of conscious waiting.
Among the many startups in which you have put money as investor, in different sectors, we found Graphene-XT, Tickete, CriptoMining, Radoff, Grycle, Campo Digitale and Pro2Be Esports. How did they contact you to propose an investment and which one you want to talk about in particular? Can you give us some background stories?
As you noticed, Stefania, I do not focus on a sector or a market. Diversification is the first golden law of finance. I will bring you a case study on the further potential an equity crowdfunding campaign can offer, which is not just raising funds, but much more for startups. In 2017 I learned through some platforms’ coming soon that a campaign was about to start for a company that produces liquid graphene, owner of a patent with all IP rights. I managed to participate and within a few hours the campaign closed with the achievement of the maximum level of increase. I like the material. Graphene seems to be the material of the future, applicable to any sector, a wonder nanomaterial. I got in touch with the management. They appreciated my way of looking at and approaching the solutions to corporate problems and the communication with shareholders to such an extent that they asked me for my availability to sit on the Board of Directors of the startup itself. And today I’m still on the board. All this by investing a small amount. I always tell founders that crowd investors are not a nuisance, but the first base of supporters you can rely on. I would also like to mention Campo Digitale, a startup I met during hackaton 4 Italy in March 2020. Their team got together and broke down several times until it found its final structure in October 2020. Established in November 2020 as a company, without a penny. Today they put their platform online and financed the bootstrap with a rewarding campaign. They found an institutional lender who gave Euro 10K non-repayable for the launch of the platform, and they are in the process of generate revenues and continue to expand their user and supplier base. Really good, go and see their platform dedicated to the food and beverage of Italian micro-producers. Then finally, allow me Stefania, I’m in the Pro2Be esports team. Last week vice-champions of Europe and Champions of Italy and Serie A Tim PSP. Great team, with a vision and the speed of pivoting from a flawed business model into a virtuous one.
How many startups have you invested into to date? Were they all successful or were there also less fortunate cases and what were the main mistakes they made?
Here it is, Stefania, I first tell you about the write-offs that I have undergone and will undergo, because the real success stories are coming through a club deal, I joined in 2014, but currently I have no perception of great success from my other investments. I made the mistake of falling in love with the project and having wrongly assessed the team’s skills. The first project I joined in 2015 failed miserably due to the founder’s excess zeal in wanting to put a complex and perfect platform online. Wait, wait, wait until the company curled up on itself, despite the award of an approved and never disbursed smart and start loan. Another project that surprised me negatively was that of a device combined with AR (augmented reality): I even went to see the production site and talked to the management. Prototypes were supposed to sell like hotcakes, but they were too expensive and not very functional. Forget this, too. Another one, on the other hand, had staked everything on an important order from a large television network. The application would have created significant engagement with viewers. Unfortunately, the agreement fell through and with that the startup too. These are just a few examples of failed attempts. In term of success stories, I can just tell you the names, and you will get it right away: Tannico, Velasca, Vino.com and so on.
As an investor, when you invest in a startup, what are your criteria for deciding whether to believe in the startup?
The main criterion is and will always be evaluating the team’s abilities. Never again make the mistake of falling in love with projects, I realized this after a few years where I too launched the first green startup. I fell in love with the project that made me blind to the evidence of facts. But, you know, success is the result of many mistakes, at least this is what they say (probably to make all those who are architects of failures feel less guilty).
What shouldn’t the founding team lack of? What are the most important soft or hard skills you look at, as investor?
A team must not lack determination, getting out of its own comfort zone as much as possible, always having a positive attitude, being oriented towards finding solutions and not always finding problems. Without these attitudes you can’t go anywhere. If you don’t have the hard skills, you can buy or rent them, you cannot buy the soft ones. That’s why either you were born a Startup founder, or you were not.
As an investor, what advice would you give to our startup founders to get ready for fundraising? How should they prepare for the investor day?
Before you sell shares in your companies too soon, try to grow first by yourself, without asking for money with your hat in hand. Have at least one MVP, early adopters, some sellable metrics. Only then open the cap table. A super tip: be transparent in your communication, your requests and use of funds. No useless storytelling, no vanity metrics, no comparisons with companies that are light years away from you. The like always compares with its own kind.
If you want to know more about Startup Geeks, please read Incubator online: the Startup Geeks case and Incubator succeeded with a 170,000 euro fundraising
If you are interested in Business Angel Networks, please read more on: Business Angel Networks: the main ones in Italy