innovative startups

Set up a startup in Italy

Frieda Brioschi

[email protected]

IEDLesson 2

Course program1. Italian Startups2. Set up a startup in Italy3. I've got an idea. And now? 4. Value analysis5. Business model6. Communicate, communicate, communicate7. Being net 8. Find your market9. 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!

The new law

Decreto Crescita bisOn 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 ideaOver 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 overseasIn 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/2bisFor 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

ORat 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.


Side definition: social goals

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

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 bankruptcyBasically 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/4Startups 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 company2. 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 online3. 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)

Labour agreements

Fornero’s labour law

1.Apprenticeship2.Co.co.pro (contract work)3.Freelance (VAT number)4.Freelance (Minimum taxpayer regime)5.Occasional work6.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

FreelanceOften 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 regimeIt’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

Intellectual property

IPIntellectual 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 rightsIn 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 rights1.Right of attribution2.the right to have a work published anonymously or pseudonymously3.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 rightsThe 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

Copyleftcopyleft < > 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

CopyleftCopyright 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

TrademarkA 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 trademarkA 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.

PatentA 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 ItalyInvention 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 patentA 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?