Over the past few years, the Italian venture capital (VC) landscape has undergone a quiet revolution. Increasingly dynamic and international, it is now fertile ground for startups and investors alike. As Italy emerges as a credible player on the European VC scene, the need for efficient, internationally recognized legal frameworks has become ever more pressing. Standardized investment documents can provide a solid foundation for growth, without replacing the role of legal advisors when needed it.
A quick overview of the Italian VC market
The Italian VC market has shown remarkable growth, both in the volume and value of investments. Fueled by public funding and the emergence of new players, the sector is attracting increasing attention from foreign investors who were previously hesitant to enter the Italian arena.
A symbolic shift has occurred: while foreign VCs once demanded the creation of foreign holding companies to invest in Italian startups (so-called “flip” transactions), we’re now seeing the opposite. For the first time, a UK-based tech company set up an Italian holding company to accommodate international investors, an unprecedented “reverse flip.”
Italy is increasingly seen as a credible and reliable environment for VC investments. Yet, despite these encouraging signs, challenges remain. Most investments are still concentrated in seed and early-stage rounds, with limited capital available for later-stage (Series B and beyond) growth.
Startups, particularly in fast-paced sectors like AI, need capital quickly and in terms of international expectations. To meet this demand, the market needs not only capital, but also clarity and consistency in deal structuring.
The Italian standardized VC documents
To make the Italian VC ecosystem more navigable and appealing, especially for international players, standardization might be one of the keys. Harmonized investment documents (such as term sheets, investment agreement clauses, and others) can drastically reduce transaction time and complexity, while still leaving room for customization.
Recognizing this need, we have contributed to several initiatives that promote standardization in Italy:
- SAFE Template: inspired by Y Combinator’s widely adopted US version, the Italian SAFE is tailored to local legal nuances, such as mandatory conversion clauses, while retaining international familiarity. More on this here: SAFE Project
- Sample Round A Term Sheet: a sample term sheet for Round A investments, which includes a glossary with an explanation of the main issues and legal clauses relating to investment transactions. More on this here: Round A Termsheet
These tools are not meant to replace legal counsel, but to accelerate dealmaking and improve market literacy, especially for first-time founders and early-stage investors.
Building a Pan-European VC legal framework: The IBA White Paper
While national initiatives like the Italian SAFE model are crucial for local market development, the next leap forward for the European venture ecosystem requires something even more ambitious: legal harmonization across borders.
Hence, our commitment to legal innovation doesn’t stop at national borders. We are proud to be one of the initiators of the IBA Lean Documents Project, a groundbreaking initiative to create Pan-European standard clauses for early-stage equity investments.
The project was born out of a simple but powerful observation: if early-stage VC investments in Europe are to flourish, legal processes need to be faster, clearer, and more predictable, especially for international investors who must navigate fragmented regulatory environments and unfamiliar local practices.
Originally led by a group of 35 experienced VC lawyers, the initiative has now grown into a community of over 180 lawyers from 30 different countries, demonstrating the strong appetite across Europe for greater legal alignment in early-stage transactions.
The working group focused on seven key areas that typically dominate negotiations in early-stage investment rounds:
- Warranties
- Board composition & reserved matters
- Lock-up & pre-emption rights
- Exit terms
- Tag-along and Drag-along rights
- Liquidation preference
- Anti-dilution protections
The model clauses are designed for investment rounds ranging between EUR 0.5m and EUR 5.0m, where early-stage VCs acquire a 10-25% stake, a common scenario in the European deals. Crucially, these clauses are drafted in clear, plain English, with the goal of being robust, culturally neutral, and easily adaptable across jurisdictions. They are intended not only for lawyers but also to be understandable by founders and investors, ensuring alignment among all parties involved in the deal.
We have officially started presenting the project to the Italian VC community, with the first launch event held on May 21st at our Milan office. This marks the beginning of a new chapter for the initiative, which we hope will continue to gain traction and contribute to a more integrated, efficient, and internationally competitive European venture ecosystem. The final paper will be made available by IBA by the end of this year.
Conclusion: tools for the growth of the Italian and European VC market
As the Italian VC market continues to evolve, so must the legal infrastructure that supports it. Standardized documents are not just templates; they are tools for empowerment. They help align expectations, reduce friction, and attract international capital, all while preserving the flexibility needed to address unique deal dynamics.
At Portolano Cavallo, we believe that the future of venture capital in Italy, and Europe, depends on collaboration, cross-cultural integration of various investment approaches, simplicity and clarity. That’s why we are proud to be helping build the legal grounds for future Italian and European VC investments.
