Gianluca Dettori is the co-founder and President of dPixel, an Italian venture capital firm that focuses on early stage startups building digital products. He has been working in the high-tech industry for 20 years, initially as an executive with companies such as Olivetti and Lycos. Then, in 1999, he co-founded Vitaminic, a startup for digital music distribution which made a successful exit in 2003. Today, Gianluca is a leading Italian venture capitalist as well as one of the “sharks” in the Italian edition of the popular TV Show “Shark Tank.” These days he tours Italy in an RV scouting good ideas and teaching to startupers how to make the first steps. His story is fascinating because it is at the heart of the evolution of the Italian venture capital sector.
Why did you found dPixel?
“I co-founded dPixel in 2006 with the goal of building a venture capital model that could work in Italy. After the successful exit of Vitaminic, I took a 3-year sabbatical in California while I also started making Angel investments in Italy. It was the beginning of the 2000s, and I was much ahead of my time because the real startup boom in Italy happened between 2009 and 2010 when some initial Venture investments created a new group of startup founders: some were founding a second venture, and others were starting to invest. When I launched dPixel with some friends, venture capital was so unfamiliar, that we were the first investors in our own small fund of 6 million Euros. Today we are creating the new fund, called Primo Miglio, aiming to raise between 50 and 70 million Euros.”
Thinking back to your early years in venture capital, what worried you the most?
“At first I was afraid of not finding interesting startups. The first year we received about 80 business plans, very few, and all from within our network. Over time we realized that, to improve results we needed to go out and mentor university students on entrepreneurship because they were the ones who could generate great ideas but they lacked the basic know-how about entrepreneurship. In a matter of 3 or 4 years, the deal flow had become much more significant.”
What does it mean to be a venture capitalist in Italy?
“It ‘s very difficult because Italy lacks both the ‘startup culture’ and the ‘Investor culture’ that you find in California. Even in France, a country very similar to Italy, venture capitalists invest a half billion Euro per year, while we barely reach 100 million. With such small numbers, Italian investments are obviously almost entirely in Early-stage ventures.”
What is the reason of such slow development in the Italian venture capital sector?
“There is enough money in the economy but venture capital is not an asset class for Italian Institutional stakeholders. We do not have CalPERS investing in startups with 30-year asset class allocation plans. Secondly, venture capitalists with a 10-year experience like my colleagues and I are very rare. Finally, Italy is not in the radar of international investors because it has not yet created any Unicorns (companies valued over $1B) unlike, for instance, Sweden’s Skype, Spotify and Candy Crush.”
What are the strengths of Italian startups?
“Italy is a country with a strong dose of creativity and entrepreneurship in its DNA. Some of our ideas are very original because they are born in an unstructured environment, away from the ‘groupthink’ in Silicon Valley. Another strong point is access to talent: we have 100 universities and 4 million young people unemployed. They are the fuel that can propel the creation of quality startups because even though many have college degrees, they find themselves in a devastating labor market. So, those who have talent but cannot find a good job, either leave the country or found/work for a startup. Increasingly, we find great engineers at a fraction of the cost of their Silicon Valley counterparts.”
How are startup valuations in Italy?
“Italy is a market where you take away a zero from everything. High valuations in initial Californian financing rounds make the Italian startup scene especially attractive: a half a million round in Italy can generate the same results as a $3 million round in Silicon Valley. The 50 – 70 thousand euro Seed investments that we usually make deliver much more in Italy than in the US. Moreover, Italy is a great market to test many technologies because it is the second largest manufacturing country in Europe and is the fifth largest European economy. However, scaleups and exits are still difficult and founders tend to go abroad when it is time to raise series A or B rounds.”
I heard that you scout in a very unique way, can you tell us about it?
“It is an idea that was born out of necessity: we started scouting the ‘American way’ with an office in Milan receiving business plans through our website. Out of 1,000 business plans a year we were rejecting about 800 mostly because they were poorly written, unintelligible. After a while we realized that we were at risk of disregarding good ideas because of poorly written plans. So we decided to change strategy and we bought an RV to travel to universities, incubators, accelerators and events throughout Italy in order to meet the innovators in person. We created a traveling scouting program called Barcamper which lasts 50 days a year in which we do 10-12 meetings a day inside the RV. Thanks to this program, in 20 minutes we can figure out which teams and projects are interesting and we put them in bootcamps where we teach them how to pitch their ideas properly, then we begin our actual investors work.”
Do you have any other project you feel passionate about?
“Yes, it is a fairly recent one: we go to Italian high schools and mentor students about entrepreneurship basics using their ideas. We help them develop a pitch and we put them on the same track as the adult founders. Then we do a Demo Day in Salerno at the Giffoni Film Festival, the largest children’s film festival in Europe, and possibly the world, attracting 5,000 young people aged 6 – 19. In short, this is the perfect setting to introduce our high-school entrepreneurs who are between 16 and 18 years old. This project excites us because it affects the future of many teenagers who, after participating in our program start college with a new mindset, adding to their post-graduation options the possibility of founding a startup. Last year, we trained 5,000 kids. This year, if we get enough sponsors to fund this program, we hope to reach 20,000.”