IT Financing

Small and medium sized enterprises (SME) have recently become the subject of deliberate policymaking by the government. Promozione e Sviluppo Impreditoriale S.p.A. (SPI) is one of the principal agencies dedicated to the promotion of entrepreneurs and development. SPI 's formula for success is to use Business Innovation Centers (BIC) to nurture new businesses in the South particularly in the fields of high technology and manufacturing. These BICs offer managed workspace within their walls to companies, as well as outreach services to those outside. The workspace managers are seasoned professionals able to offer contacts and any needed advise. Centers have been established in Trieste, Genoa, Taranto, Pozzuoli, Marcianise, Massa, Teramo, Gorizia, Campobasso, Catania, Casarano and Terni. Two others are currently under construction in Calabria. This new form of government investment is to take the place of the old practice of merely transplanting jobs to the economically depressed regions through direct investment. One of the goals of these business clusters is to create a climate of exchange in which new companies can help each other and build up networks.

Finance for SMEs has been a problem in Italy because of traditional, conservative attitudes toward risk and lending among its fragmented and tightly constrained banking sector. There is little merchant banking in Italy. With the banks inexperienced in these markets and lacking the knowledge to take risks reasonably safely, most entrepreneurs start their businesses from their own resources, such as their savings or money from relatives and friends. BICs are beginning to take on the role of venture capitalists to fund start-ups. In the high technology and manufacturing sectors, are providing Italy with an alternative to the US "sink or swim" approach for developing high technology companies. Italy and many other countries face problems of undercapitalization, poor cash flow and shortage of working capital during the early stages of life. Thus far in this Italian experiment this alternative method of cash infusion fostering growth in a sheltered environment seems to be working. It seems that these venture capital funds would be a great opportunity for foreign direct investment for countries with experience in these markets. (Source: Business Incubation: International Case Studies, OECD)