Where should I incorporate? In a start-up ecosystem!

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

2. 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
7. Start-up ecosystems and law
2

3. 7. Start-up ecosystems and law
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

4. 7. Start-up ecosystems and law
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

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

6. 7. Start-up ecosystems and law
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. 7. Start-up ecosystems and law7

8. 7. Start-up ecosystems and law
Ecosystem lifecycle
8

9. 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)

10. 7. Start-up ecosystems and law10
(in 2014)

11. 7. Start-up ecosystems and law11

12. 7. Start-up ecosystems and law12

13. 7. Start-up ecosystems and law13

14. 7. Start-up ecosystems and law14

15. 7. Start-up ecosystems and law
The law
15

16. 7. Start-up ecosystems and law
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

17. 7. Start-up ecosystems and law
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

18. 7. Start-up ecosystems and law
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

19. 7. Start-up ecosystems and law
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

20. 7. Start-up ecosystems and law
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

21. 7. Start-up ecosystems and law
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
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

22. 7. Start-up ecosystems and law
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
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

23. 7. Start-up ecosystems and law
Definition of an
innovative startup
23

24. 7. Start-up ecosystems and law
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/

25. 7. Start-up ecosystems and law
Innovative startups/2
It must have been established for no longer than 48
months.
25
http://startup.registroimprese.it/

26. 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
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

27. 7. Start-up ecosystems and law
Innovative startups/3
It must reside or be subject to taxation in Italy.
27
http://startup.registroimprese.it/

28. 7. Start-up ecosystems and law
Innovative startups/4
It has no turnover or has a turnover that does not exceed
5 million euros.
28
http://startup.registroimprese.it/

29. 7. Start-up ecosystems and law
Innovative startups/5
It does not distribute profits.
29
http://startup.registroimprese.it/

30. 7. Start-up ecosystems and law
Innovative startups/6
Its core business consists of innovative goods or
services of high technological value.
30
http://startup.registroimprese.it/

31. 7. Start-up ecosystems and law
Innovative startups/7
It shall not result from the merger, division or transfer of
business from a going company.
31
http://startup.registroimprese.it/

32. 7. Start-up ecosystems and law
Innovative startups/8
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

33. 7. Start-up ecosystems and law
Side definition: social goals
33

34. 7. Start-up ecosystems and law
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

35. 7. Start-up ecosystems and law
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
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

36. 7. Start-up ecosystems and law
Social area
• Welfare
• Healthcare
• Education
• Vocational training
• Protection of the environment
• Cultural heritage
• Sustainable tourism
• Undergraduate and postgraduate education
• Research
• Cultural services
• …
36
http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf

37. 1. 7. Start-up ecosystems and law37

38. 7. Start-up ecosystems and law
Movie Reading
http://www.youtube.com/watch?v=Jbjxuyd_DSA
38

39. 1. 7. Start-up ecosystems and law39

40. 7. Start-up ecosystems and law
HelpTalk
http://vimeo.com/49388177
40

41. 7. Start-up ecosystems and law
Benefits for innovative
startups
41

42. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

43. 7. Start-up ecosystems and law
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

44. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

45. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

46. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

47. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

48. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

49. 7. Start-up ecosystems and law
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

50. 7. Start-up ecosystems and law
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

51. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

52. 7. Start-up ecosystems and law
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
http://bit.ly/13PFWUI

53. 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

54. 7. Start-up ecosystems and law
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

55. 7. Start-up ecosystems and law
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

56. 7. Start-up ecosystems and law
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

57. 7. Start-up ecosystems and law
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

58. 7. Start-up ecosystems and law
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

59. 7. Start-up ecosystems and law
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

60. 7. Start-up ecosystems and law
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)

61. 7. Start-up ecosystems and law
Labour agreements
61

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

63. 7. Start-up ecosystems and law
Apprenticeship agreement
• Job & training
• age: 18-29
• Total employee cost low
63

64. 7. Start-up ecosystems and law
Co.co.pro
• Define a detailed project with expected results
• No trial period
• Total employee cost about 150% net salary
64

65. 7. Start-up ecosystems and law
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

66. 7. Start-up ecosystems and law
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

67. 7. Start-up ecosystems and law
Occasional work
• earns <€5,000
• no more than €2,000 from each customer
• fixed taxation: 20%
67

68. 7. Start-up ecosystems and law
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

69. 7. Start-up ecosystems and law
Intellectual property
69

70. 7. Start-up ecosystems and law
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