Growth Capital, in collaboration with Italian Tech Alliance, is pleased to present the Venture Capital Report for Italy Q4-25 & FY-25. The report highlights significant trends and performance in the Italian venture capital ecosystem, emphasizing key growth sectors, fundraising developments, and exit activity, providing insights into the ongoing evolution of the market.
2025: Strong Performance with a Strong Finish in Q4
In 2025, Italy saw a remarkable €1.735 billion invested across 436 rounds. This marks the second-best year ever for venture capital investment, just behind the exceptional performance of 2022. When excluding mega rounds, 2025 becomes the best year in terms of total capital raised.
Q4-25 stands out as the best quarter ever for amount invested, with €901 million raised, compared to €316 million in the previous quarter. This performance was driven by the return of larger rounds, including 10 rounds over €25M that were absent in the first half of the year. Notably, the number of rounds also rose in Q4, with 122 rounds completed, up from 105 in Q3-25. These developments highlight a strong finish to 2025.
VC Fundraising Trends: A Slower Pace but Strong Dry Powder
Italy’s VC fundraising in 2025 reached €545 million across 9 new funds, marking a slowdown compared to the record €1.447 billion raised in 2024. Despite this decrease, these funds continue to contribute significantly to the current level of dry powder in the ecosystem, supporting ongoing investment activity.
Strong Growth in Key Sectors
Among the sectors driving investment in Italy, Smart City maintained its leadership position, followed by Software, DeepTech, and Life Sciences, with the latter recording a strong year. The FinTech sector also saw consistent investment activity. Notably, Software led in capital raised with €494 million, followed by Life Sciences at €417 million, and DeepTech at €269 million.
Over the last five years, Life Sciences and Software have shown the most significant growth in Italy’s VC market, while FinTech and Smart City experienced annual peaks largely driven by mega rounds.
Exit Activity: Stability Amid Challenges
Exit activity in Italy remained solid in terms of value but showed limited volume, with 31 exits recorded in 2025, a decrease from previous years. M&A continued to dominate as the primary exit route, while the IPO market remained subdued, reflecting the overall complexity of exits in Italy’s VC ecosystem.
International Investment and VC Activity
In 2025, Italy recorded a peak of 354 active investors, with 46% of all rounds involving international participants, up from 24% in 2020. This increase highlights the growing interest from international investors, particularly from the United States and other parts of Europe. Furthermore, all rounds above €20 million in 2025 attracted at least one international investor, reinforcing the link between deal size and international participation.
Looking Ahead: Prospects for 2026 and Beyond
The outlook for 2026 is cautiously optimistic. Despite the slowdown in new fund fundraising, Italy’s VC ecosystem remains resilient, with continued growth expected in key sectors such as Software, Life Sciences, and DeepTech. However, challenges persist, particularly with the late-stage funding gap, which continues to be the primary bottleneck for scaling Italian startups. Furthermore, Italy’s lag in AI investment compared to Europe and the US presents a structural challenge that the ecosystem must address to remain competitive.
Link to the full report here https://docsend.com/view/twdsna7yn9je749s
