Start-up ecosystems (v.2015-2016)

Start-up ecosystems
IED, 17 Apr 2016
Lesson 7/2016
Frieda Brioschi / Emma Tracanella
frieda.brioschi@gmail.com / emma.tracanella@gmail.com

7. Start-up ecosystems and law
Course program
1. Start-ups
2. Ideas in context
3. Ideas Management
4. Market, Value and Business Model
5. Business Model Canvas
6. Being net
2

Other tools
• Crunchbase: a global start up directory
• Angelist: platform for start up and angel investors
• Startupgenome: global start up directory with local
community
• StartupItalia!: italian directory and news
• PitchCloud: a community where you can pitch and
receive a feedback
3

Other tools
• Chamber of commerce
• Mixed chamber of commerce
• Other confederations of companies
• Specialized fairs
• alibaba.com (the world’s largest online business-to-
business trading platform for small businesses)
4

Where should
you incorporate?
5
(according to the Compass
Global Start up ecosystem
Ranking)
http://startup-ecosystem.compass.co/ser2015/

Start-up ecosystem
6
A start-up ecosystem is formed by people, start-ups in
their various stages and various types of organizations in
a location (physical or virtual), interacting as a system to
create new start-up companies
https://drive.google.com/ﬁle/d/0B3ImYgVnZqRQc1h5Z2dkRHRMMVE/view

7. Start-up ecosystems and law7

Ecosystem lifecycle
8

7. Start-up ecosystems and law9 http://omba.wsu.edu/resources/infographics/infographic-location-location-location/
(according to a study by the Washington State University)

(in 2014)

The law
15

Decreto Crescita bis
On 4th October 2012, the Italian Government approved a
Law Decree on “Further urgent measures for Italy’s
economic growth”.
Section IX of the Law Decree (articles 25 to 32) provides
for speciﬁc measures which are aimed at promoting the
creation and development of startups.
This is the ﬁrst time the Italian legislation deals with such
companies.
16
http://bit.ly/XAK87g

Decreto Crescita bis
After being approved by the Italian Government, the Law
Decree was signed by the President of the Republic and
published in the Ofﬁcial Journal (Decree Law no. 179,
18th October 2012).
17
http://bit.ly/XAK87g

Start-Up Regulation
On December 13, 2012, the Law Decree no. 179 was
modiﬁed by the Parliament and subsequently converted
into law (the Start-Up Regulation).
18
http://www.lw.com/thoughtLeadership/boosting-innovative-start-ups-italy

Start-Up Regulation
The Start-Up Regulation provides a new set of rules
promoting the creation and development of innovative
startups with a view to encouraging innovation and
strengthening of enterprises’ competitiveness.
It derives from the report by the task force on startups
established by the Minister of Economic Development.
19

Why start-up in Italy
Over time, Italy has demonstrated that it is able to develop by
exploiting some of its great strengths:
• clothing and fashion,
• furniture,
• automation technology and mechanics,
• food and wine industry.
It has created and developed companies that can sell their best
products around the world. In many cases they have even become
global leaders.
20
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

Looking overseas
In the last 10 years, startups have generated 3 million
jobs in the United States.
President Obama launched Startup America which
"moved" the equivalent of 1 billion dollars in business
services.
Why are they doing this? Because they are aware of the
fact that, nowadays, 40% of the wealth in the US is
produced by enterprises that did not even exist 30 years
ago.
21

What’s a startup?
An enterprise that has been established recently
Whose goal is to develop, produce and market certain
goods or services
These products are the results of research, or the
company uses a high rate of innovation in its activity
Startups do not pertain just to the digital world, but are
established across all sectors
22

Deﬁnition of an
innovative startup
23

Innovative startups/1
It is owned directly and for at least a 51% share by
individuals, also in terms of voting rights.
24
http://startup.registroimprese.it/

It must have been established for no longer than 48
months.
25

1. 7. Start-up ecosystems and law
Innovative startups/2bis
For the startups which have not
yet been running for 48 months,
but which already exist, the 48-
month period would start when
the package is adopted.
However, startup support
measures should no longer
apply when a startup enters its
6th year.
26

It must reside or be subject to taxation in Italy.
27

It has no turnover or has a turnover that does not exceed
5 million euros.
28

It does not distribute proﬁts.
29

Its core business consists of innovative goods or
services of high technological value.
30

It shall not result from the merger, division or transfer of
business from a going company.
31

EITHER
15% of its costs are related to R&D
OR
at least 1/3 of the team is made up of people who either hold a
PhD or are PhD candidates at an Italian or foreign university or at
least 2/3 of the team is made up of people holding a Master’s
degree or have conducted research for at least 3 year
OR
it is the owner or the licensee of a patent or a registered software.
32
http://www.mise.gov.it/images/stories/documenti/Executive-Summary-of-Italy's-new-policy-on-start-ups.pdf

Side deﬁnition: social goals
33

Startups with a social goal
• same requirements that apply to ordinary startups
• operates in some speciﬁc domains
• its domain must have a considerable social value
Examples of domains are social inclusion, ﬁght to
marginalization of disabled persons, environmental
protection etc.
34
http://bit.ly/13PFWUI

Why social startups?
Startups with a focus on the social dimension generally
tend to adopt business models that may be less
attractive for investors.
Their reason of being is to answer society’s needs ﬁrst
and foremost, along with market ones.
Thus, they have lower returns on investments and fewer
chances to develop when compared to “ordinary”
startups.
35

Social area
• Welfare
• Healthcare
• Education
• Vocational training
• Protection of the environment
• Cultural heritage
• Sustainable tourism
• Undergraduate and postgraduate education
• Research
• Cultural services
• …
36

1. 7. Start-up ecosystems and law37

Movie Reading
http://www.youtube.com/watch?v=Jbjxuyd_DSA
38

1. 7. Start-up ecosystems and law39

HelpTalk
http://vimeo.com/49388177
40

Beneﬁts for innovative
startups
41

Advantages/1
• No setup costs 
(unlike most companies, startups do not have to pay
anything for their own creation and registration)
• No stamp duties and fees paid for issuing documents
• Notary public services free of charge for under 35s
• No Chamber of Commerce annual fee
42

Advantages/2
• Special financial instruments for debt management
• Extension by 12 months of the so-called “loss carry-
forward period” (rinvio a nuovo delle perdite), to better
absorb the whole initial operation running at loss
• Postponement of the recapitalization obligations to the
following financial year when needed to protect the
share capital
Ask your financial consultant!
43

Advantages/3
• Simpliﬁed procedure for bankruptcy
• Basically an exemption from bakruptcy procedures,
innovative startups are subject only to the so-called
“over-indebtedness procedure”.
This shorten judicial liquidation, reducing consequences
from a bankruptcy procedure on the entrepreneur
reputation.
44

Advantages/4
• Startups can hire personnel through ﬁx-time contracts (6 to
36 months).
• Contracts can be renewed more than once.
• After 36 months, the contract can be further renewed for just
one more time, for no longer than 12 months, i.e. the total
duration of the contract must not exceed 48 months.
After that, the employee can keep on working for the startup
exclusively with an open-ended contract.
45

Advantages/5
Start-ups can remunerate their team members and the
providers of external services, including lawyers and
accountants, with STOCK OPTIONS and WORK FOR
EQUITY respectively.
The tax system applicable to these instruments is
advantageous and is tailored on the most common
needs of a startup.
46

Advantages/6
Tax incentives for corporate and private investments in
startups for the years 2013, 2014, 2015 and 2016, both
for direct investments in startups and in case of indirect
investments (by the means of other companies investing
predominantly in startups).
Tax concessions are greater if the investment concerns
startups with a social goal or those operating in the
energy sector.
47

Advantages/7
Introduction of crowdfunding.
CONSOB has published a “Regulation on the raising of
venture capital by innovative start-ups through on-line
portals”, thanks to which Italy has become the ﬁrst EU
country to have introduced a structured legislation on
equity-based crowdfunding.
(still underway: there’s a missing law)
48

Advantages/8
Credit deriving from tax return: priority access is granted to
facilitations for the employment of highly qualiﬁed personnel in
innovative start-ups and certiﬁed incubators.
49
http://www.mise.gov.it/images/stories/documenti/Executive-Summary-of-Italy's-new-policy-on-start-ups.pdf

Fiscal Incentives
Fiscal incentives in 2013-2016 time frame for investors:
• natural person: 19% tax credit (IRPEF), up to 25% for
innovative startups with a social goal. Max
investment: 500.000 €/year. Every investment must
last at least 2 years.
• company: 20% tax credit (IRES), up to 27% for
innovative startups with a social goal. Max
investment: 1.800.000 €/year. Every investment must
last at least 2 years.
50
http://www.gazzettauﬃciale.it/eli/id/2014/03/20/14A02246/sg

Advantages/8
Fast-track, simpliﬁed and free-of-charge access for
startups to the Fondo Centrale di Garanzia, a
Government Fund that supports access to credit through
guarantees on bank loans.
51

Advantages/9
More targeted and tailored support to the process of
internationalisation of startups provided by the Italian
Trade Promotion Agency (“ICE”). Support includes
assistance in the legal, corporate and ﬁscal activities,
real estate and credit matters.
Support measures include free-of-charge participation to
international fairs and events, as well as to international
activities the aim of which is to favour the matching
between innovative start-ups and potential investors for
the phases of early stage capital and expansion capital.
52

1. 7. Start-up ecosystems and law
And then?
• Found a limited company
• Send notiﬁcation of setting up
of business
• Register at an online directory
created for this purpose at
the Chambers of Commerce
53

Limited companies
• joint stock companies (società per azioni),
• share partnership companies (società in accomandita per azioni)
• limited liability companies (società a responsabilità limitata)
• simpliﬁed limited liability company (società a responsabilità
limitata sempliﬁcata)
• limited liability companies with reduced share capital (società a
responsabiltà limitata a capitale ridotto)
• cooperative companies (società cooperative)
54

Statutory minumum capital
• S.p.A. and S.a.p.A.: €120,000
• S.r.l.: €10,000.
• S.s.r.l. and S.r.l.c.r.: > €1 and < €10,000.
55

S.r.l. group
• company needs to be registered with different
institutions (the tax ofﬁce,the companies registry,
INPS, INAIL)
• registration can be done using ComUnica online
• all this has to be done via notary public
56
http://www.registroimprese.it/comunica#tab=cosa&under-tab=corsi

S.r.l. obligations
• pay an annual tax on company books,
• issue a company valuation report,
• pay tax for lodging the minutes of a meeting every
time proﬁts are distributed;
• pay for a tax advisor;
• pay taxes on the registration of the transfer of shares
from one business partner to another
57

Liquidation
• It is the process by which a company is brought to an
end, and the assets and property of the company
redistributed.
• Liquidation may either be compulsory or voluntary.
58
http://en.wikipedia.org/wiki/Liquidation

Reasons for liquidation
A liquidation or a dissolution may occur for:
• Term elapsed
• The company has reached the business purpose or the object can't be
reached
• Unable to operate
• Statutory minumum capital less than legal minimum
• Assembly resolution
• Other reasons according to the bylaws
There’s no limit to the length of a liquidation
59

Bankruptcy
It is a legal status of a company that cannot repay the
debts it owes to creditors. Often bankruptcy is imposed
by a court order, but can be voluntary too.
Bankruptcy can be a consequence of insolvency. All
assets of the debtor are liquidated under the
administration of a ofﬁcial receiver.
60
http://it.wikipedia.org/wiki/Fallimento_(ordinamento_giuridico_italiano)

Labour agreements
61

Fornero’s labour law
• Apprenticeship
• Co.co.pro (contract work)
• Freelance (VAT number)
• Freelance (Minimum taxpayer regime)
• Occasional work
• Fixed term agreement
62

Apprenticeship agreement
• Job & training
• age: 18-29
• Total employee cost low
63

Co.co.pro
• Deﬁne a detailed project with expected results
• No trial period
• Total employee cost about 150% net salary
64

Freelance
Often in Italy freelances are used as regular employees.
After Fornero’s law a freelance is considered fake if:
• earns <€18,000 gross
• collaboration lasts more than 8 months for at least 2 successive years
• salary > 80% of total income for at least 2 successive years
• freelance has a “ﬁxed” desk in the company
This does not apply to everyone subscribed to a professional register
65

Minimum taxpayer regime
It’s a simpliﬁed VAT number regime.
• no IRAP, no IRPEF. Fixed taxation: 5% for 5 years
• no VAT at all (no compensation)
• earns <€30,000
• no employees neither collaborators
• available just for new business
5 years limit does not apply to <30 years.
66

Occasional work
• earns <€5,000
• no more than €2,000 from each customer
• ﬁxed taxation: 20%
67

Fixed term agreement
• Lasts <= 36 months
• Can be brieﬂy extended (30 dd if it last <6 months, 50
dd otherwise)
• Compulsory break between two contracts (60 dd if it
last <6 months, 90 dd otherwise)
• Total employee cost equal to open ended employee
agreement
68

Intellectual property
69

IP
Intellectual property (IP) is a legal concept which refers
to creations of the mind for which exclusive rights are
recognized.
Common types of intellectual property rights include
copyright, trademarks and patents.
In italian a preferred term is "industrial property".
70
http://en.wikipedia.org/wiki/Intellectual_property_law

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