The role of venture capital funds in financing innovation in Italy. Constraints and challenges for innovative small firms

In the last few years there have been new concepts about innovation and the introduction of a new concept known as the open innovation model. This model is characterised by a variety of actors and new interactions between them. From this perspective, innovation involves research systems, production systems, and governmental/institutional systems. In the innovation process and in the process of transferring technology to businesses, an important role is realised by both formal and informal investors such as banks, venture capitalists, and angel investors. The aim of this paper is to analyse the role of venture capital in the innovation system, with a specific focus on small and medium enterprises (SMEs) in the Italian market. This research is based on secondary data (AIFI, 2011, 2012; Capizzi et al., 2011; Vacca, 2013). The value of the paper stems from the fact that it defines and increases the understanding of the link between the innovation industry and in particular risk capital investors (VCs). The limitations of the paper are a consequence of its very nature; i.e., the fact that it is a secondary data-based research and largely conceptual. Consequently, the initial focus of further study should be empirical testing of the findings of this research.