Start-up ecosystems (v.2015-2016)

Start-up ecosystemsIED, 17 Apr 2016 Lesson 7/2016

Frieda Brioschi / Emma Tracanella [email protected] / [email protected]

mailto:[email protected]

mailto:[email protected]

7. Start-up ecosystems and law

Course program1. Start-ups

2. Ideas in context

3. Ideas Management

4. Market, Value and Business Model

5. Business Model Canvas

6. Being net


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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

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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)

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http://alibaba.com


Where should you incorporate?

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(according to the Compass Global Start up ecosystem Ranking)

http://startup-ecosystem.compass.co/ser2015/


Start-up ecosystem

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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

https://en.wikipedia.org/wiki/Organization

7. Start-up ecosystems and law7


Ecosystem lifecycle

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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)

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






The law

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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.

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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).

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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).

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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.

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Why start-up in ItalyOver 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.

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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.

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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

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Definition of an innovative startup

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Innovative startups/1

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

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http://startup.registroimprese.it/



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

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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.

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It must reside or be subject to taxation in Italy.

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

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It does not distribute profits.

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

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

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Innovative startups/8EITHER

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.

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http://www.mise.gov.it/images/stories/documenti/Executive-Summary-of-Italy's-new-policy-on-start-ups.pdf



Side definition: social goals

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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.

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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.

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Social area• Welfare

• Healthcare

• Education

• Vocational training

• Protection of the environment

• Cultural heritage

• Sustainable tourism

• Undergraduate and postgraduate education

• Research

• Cultural services

• …

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1. 7. Start-up ecosystems and law37


Movie Reading

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

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

1. 7. Start-up ecosystems and law39


HelpTalk

http://vimeo.com/49388177

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http://vimeo.com/49388177


Benefits for innovative startups

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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

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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!

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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.

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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.

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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.

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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.

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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)

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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.

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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.

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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.

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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.

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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

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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)

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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.

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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

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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

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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.

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


Reasons for liquidationA 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

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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.

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


Labour agreements

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Fornero’s labour law

• Apprenticeship

• Co.co.pro (contract work)

• Freelance (VAT number)

• Freelance (Minimum taxpayer regime)

• Occasional work

• Fixed term agreement

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Apprenticeship agreement

• Job & training

• age: 18-29

• Total employee cost low

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Co.co.pro

• Define a detailed project with expected results

• No trial period

• Total employee cost about 150% net salary

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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

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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.

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Occasional work

• earns <€5,000

• no more than €2,000 from each customer

• fixed taxation: 20%

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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

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Intellectual property

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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".

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

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