Decreasing Impact Investments Reach 246 Million Figure
In Italy's impact investing market, the average investment ticket is decreasing, despite an increase in the number of investments. This trend is primarily due to a shift towards a greater number of smaller, more selective investments, rather than fewer large deals.
The ongoing economic environment, characterised by high uncertainty and moderate GDP growth forecasts, leads businesses and investors to prefer smaller, less risky commitments. The presence of domestic investors gaining momentum alongside foreign investors could also drive a larger number of smaller deals, as domestic players may participate with smaller investment sizes compared to large international funds.
Structural economic factors in Italy, such as the push for generational turnover in family-owned SMEs and increased private equity activity, encourage opening capital in increments smaller than traditional large-scale mergers or acquisitions, contributing to more numerous but smaller investments.
Operators moving in the 'Impact first' or 'Investing for impact' direction include Oltre Venture, Oltre III, Fondazione Social Venture Giordano Dell'Amore, SocialFare Seed, Sefea Impact Sgr-Gestore EuVeca, a|impact Sicaf EuVeca, Opes Italia Sicaf EuVeca, The20Fund, and Phitrust (the only non-Italian investor).
According to the 2023 Impact Report by Fondazione Social Venture Giordano Dell'Amore, the average investment ticket decreased from €650,000 in 2022 to €300,000 in 2023. This decrease is consistent with cautious investor behavior amid modest economic growth and selective investment strategies in key sectors.
In 2023, there were 68 impact investments, compared to 58 in 2022. Impact investments in 2023 amounted to €20 million. This represents a significant decline from the €37.4 million invested in 2022, marking a 49% decrease in annual real investments in impact initiatives.
Despite the decline, the Italian market of impact investors with the primary intention of generating measurable impact could exceed €300 million by 2025, reaching €325 million in assets under management. This growth potential underscores the transformative potential of the approach for the financial industry.
Fondazione Social Venture Giordano dell'Amore, a key player in the Italian impact investing market, has invested a total of €10.2 million in 48 subjects, with a quarter of these investments dedicated to the birth and strengthening of vehicles active in the field of impact investing. In 2023 alone, the foundation made 17 new investments, including €2.5 million in 4 funds active in the sector.
Many impact investing operators in Italy have adopted a cautious approach due to uncertainties in market growth prospects. However, these are transformative and sometimes additional investments, i.e., in reality, market failures. The report does not provide information on the number of impact initiatives that received investments in 2023 or the reasons for the uncertainties in market growth prospects.
The report surveys the trend of the Italian impact investing market, investments with social and environmental impact. The 'Impact first' or 'Investing for impact' approach aims to achieve measurable and intentional social, environmental, or cultural impact objectives, along with obtaining a financial return. This approach has significant transformative potential for the financial industry.
In the Italian impact investing market, the ongoing economic environment promotes smaller, less risky commitments from businesses and investors, which could lead to a larger number of smaller deals (work, finance). Domestic investors, gaining momentum alongside foreign investors, may contribute to this trend by participating with smaller investment sizes compared to large international funds (investing).
As the Italian impact investing market grows, it is anticipated that assets under management could exceed €300 million by 2025 (finance), demonstrating the transformative potential of this approach for the financial industry.
