Innovative startups

Set up a startup in Italy

IED
Lesson 2

Frieda Brioschi
frieda.brioschi@gmail.com

Course program
1. Italian Startups
2. Set up a startup in Italy
3. I've got an idea. And now?
4. Value analysis
5. Business model
6. Communicate, communicate, communicate
7. Being net
8. Find your market
9. Funding: venture capital, business angel and other
ways of financing
10. Pitch

Today's table of content

1. Legislative framework: Decreto Startup, etc.

2. Labour agreements

3. Copyright & Intellectual property

Italian startups: quick recap

During last lesson we analyzed 14 different
companies started from 1995 to 2011: most of them
are “alive and kicking”, few disappeared, a couple
were re-started.

Italian startups: quick recap

What we learnt from those experiences:
• time-to-market <= 2 years
• funds availability doesn’t really make the difference
• Acquiring or be acquired could be a measure of
success
• Passion and team are core values
• Never ever ignore your customers!

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.

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).

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).

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.

General idea
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.

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.

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.


Definition of an innovative startup

Innovative startups/1

It is owned directly and for at least a 51% share by
individuals, also in terms of voting rights.

http://startup.registroimprese.it/


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


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.



It must reside or be subject to taxation in Italy.



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



It does not distribute profits.



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



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


EITHER
30% of its costs are related to R&D
OR
at least one third of the team is made up of people
who either hold a PhD or are PhD candidates at an
Italian or foreign university or have conducted
research for at least three year
OR
it is the owner or the licensee of a patent.


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.

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.


Social area
•Welfare
•Healthcare
•Education
•Vocational training
•Protection of the environment
•Cultural heritage
•Sustainable tourism
•undergraduate and postgraduate education
•research
•cultural services
• ..

HelpTalk

http://vimeo.com/49388177

Benefits for innovative startups

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


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!

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 entreprenoeur reputation .


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.


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.


Advantages/6
Tax incentives for corporate and private investments in
startups for the years 2013, 2014 and 2015, 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.


Advantages/7

Introduction of crowdfunding.

Details regarding the functioning of this system will be
decided with a specific regulation which will be passed
by CONSOB.
(still underway)


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.


And then?

1. Found a limited company
2. Send notification of setting up
of business
3. Register at an online directory
created for this purpose at the
Chambers of Commerce

Limited companies
1. joint stock companies (società per azioni),
2. share partnership companies (società in accomandita per
azioni)
3. limited liability companies (società a responsabilità
limitata)
4. simplified limited liability company (società a
responsabilità limitata semplificata)
5. limited liability companies with reduced share capital
(società a responsabiltà limitata a capitale ridotto)
6. cooperative companies (società cooperative)

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.

S.r.l. group

1. company needs to be registered with different
institutions (the tax office,the companies registry,
INPS, INAIL)
2. registration can be done using ComUnica online
3. all this has to be done via notary public

http://www.registroimprese.it/comunica#tab=cosa&under-tab=corsi

S.r.l. obligations

1. pay an annual tax on company books,
2. issue a company valuation report,
3. pay tax for lodging the minutes of a meeting every
time profits are distributed;
4. pay for a tax advisor;
5. pay taxes on the registration of the transfer of
shares from one business partner to another

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.

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

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.

http://it.wikipedia.org/wiki/Fallimento_(ordinamento_giuridico_italiano)

Fornero’s labour law

1.Apprenticeship
2.Co.co.pro (contract work)
3.Freelance (VAT number)
4.Freelance (Minimum taxpayer regime)
5.Occasional work
6.Fixed term agreement

Apprenticeship agreement

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

Co.co.pro

• Define a detailed project with expected results
• No trial period
• Total employee cost about 150% net salary

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

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.

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

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

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".

http://en.wikipedia.org/wiki/Intellectual_property_law

Author’s rights
In Italy:
• law: 22 aprile 1941 n. 633 "Protezione del diritto
d'autore e di altri diritti connessi al suo esercizio“

Two distinct components:
1. economic rights in the work
2. the moral rights of the author.

http://it.wikipedia.org/wiki/Diritto_d%27autore_italiano

Moral rights
1.Right of attribution
2.the right to have a work published anonymously
or pseudonymously
3.right to the integrity of the work (bars the work from
alteration, distortion, or mutilation)

Anything else that may detract from the artist's
relationship with the work even after it leaves the
artist's possession or ownership may bring these
moral rights into play.

Moral rights are inalienable.
http://en.wikipedia.org/wiki/Moral_rights_(copyright_law)

Economic rights
The economic rights are a property right which is
limited in time (70 years after the author’s death in
Italy) and which may be transferred by the author to
other people.

They are intended to allow the author or their holder to
profit financially from his/her creation, and include the
right to authorize the reproduction of the work in any
form. The authors of dramatic works (plays, etc.) also
have the right to authorize the public performance of
their works.

http://it.wikipedia.org/wiki/Diritto_d%27autore_italiano

Copyleft
copyleft < > copyright

Allows for rights to distribute copies and modified
versions of a work, and requires that the same rights
are preserved in modified versions of the work.

Copyleft is a general method for making a work free (libre),
and requiring all modified and extended versions of the work to
be free as well. This free does not necessarily mean free of
cost, but free as in freely available to be used, distributed or
modified.

http://en.wikipedia.org/wiki/Copyleft

Copyleft
Copyright law is usually used to prohibit others from
reproducing, adapting, or distributing copies of the
author's work.

Under copyleft an author may give every person who
receives a copy of a work permission to reproduce,
adapt or distribute it and require that any resulting
copies or adaptations are also bound by the same
licensing agreement.

Creative Commons are the most known
copyleft licences.
http://en.wikipedia.org/wiki/Copyleft

Trademark
A trademark is a recognizable sign, design or
expression which identifies products or services of a
particular source from those of others.
The trademark owner can be an individual, business
organization, or any legal entity.

http://en.wikipedia.org/wiki/Trademark

Trademark
The law considers a trademark to be a form of
property. Proprietary rights in relation to a trademark
may be established through actual use in the
marketplace, or through registration of the mark with
the trademarks office.

http://en.wikipedia.org/wiki/Trademark

Registered trademark
A registered trademark confers a bundle of exclusive
rights upon the registered owner, including the right
to exclusive use of the mark in relation to the
products or services for which it is registered.

In Italy the national registration process should be
sent to Ufficio Italiano Brevetti e Marchi (UIBM).
Registration lasts 10 years and is renewable.

An european registration can be done at Ufficio per
l'armonizzazione nel mercato interno (UAMI), and an
international registration can be done at WIPO.

Registered trademark
Registrations can in particular cases be
approved for preexisting designs.
Similar trademarks may coexist in different
fields of business (think of Steve Job’s Apple
and Beatles’ Apple Records).

Registrations can be challenged if deemed
unfair, and eventually dropped.

Patent
A patent consists of a set of exclusive rights granted
by a sovereign state to an inventor or their assignee
for a limited period of time, in exchange for the public
disclosure of the invention. An invention is a solution
to a specific technological problem, and may be a
product or a process.

The exclusive right granted to a patentee in most
countries is the right to prevent others from making,
using, selling, or distributing the patented invention
without permission.

http://en.wikipedia.org/wiki/Patent

Types of patents in Italy
Invention patent:
it’s the stronger and higher form of protection, used for technological
innovation in products, processes or solutions (including new vegetables
varieties). 20 years, non renovable

Utility model:
A weaker patent, easier to obtain but harder to defend. Limited to products
and physical objects. It’s used for inventions that improve on existing
products. It protects the form, too, provided that thare is a provable
enanchement in functions. 10 years, non renovable.

(Pro tip: Italian law –art 84 CPI- allows to request both patents for the same
invention, leaving the choice of the most fitting to the patent office)

http://ufficiobrevetti.it/en/patents/

Types of patents in Italy
(not properly a patent)
Model or design registration:
it’s the weaker and most limited patent, providing basic
protection to form, colors and design of a specific model of
product. It’s extremely easy to apply, up to 100 variants of the
same design can be deposited with a single instance.
This is mostly used in fashion, design and styling business,
allows for quick prosecution of fakes.
25 years, taxes could be payed in installments.


Filing a patent
A prototype is not needed
A thorough description with detailed drawings is enough

Requirements:
-Novelty (never patented before, anywhere)
-Originality (non obvious, different from current state of art)
-Industrial Applicability (no arts & crafts, must be reproduced industrially)
-Legality (must not offend morality, break law and impair order)
To maintain validity, a patent MUST BE REALIZES WITHIN 3 YEARS FROM
REGISTRATION (or 4 years from applocation).

Since 1 jan 2006 filing a patent is FREE from fees. Some costs could arise in order
to provide the required documentations, a free cost assessment could be requested
on Ufficio Brevetti’s website.


Next week

I've got an idea. And now?

Innovative startups

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