How will the startups from the South of Italy recover from the pandemic?

Interview with startuppers, marketers, incubators and stakeholders in the Southern Italian startup scene

Around 9 months since the first mysterious cases of pneumonia were registered in Wuhan, China, different parts of the world have been hit disproportionately by the deadly pandemic known as Coronavirus – COVID19. 

Dramatic differences in the death toll and in the number of infected have been reported across different countries worldwide. These differences can be attributed to many causes: demographics, comorbidities, access to the health system, preventive measures (such as enforcing social distancing and lockdowns), but also weather conditions and pollution levels.

Even between neighbouring countries or within the same country, it is extremely bizarre to note how some areas were hard-hit by the pandemic and how some were hardly touched by it. Italy is one striking example: the North reported the vast majority of casualties and contagions with Lombardia chronicling the highest body count (16,852) whereas Molise and Basilicata registered the lowest at less than 30 victims each. 

However, despite the low death toll and precisely because draconian containment measures were imposed on the entirety of its national territory (Italy was one of the first countries after China to impose a full lockdown of all non-necessary economic activities), the South of Italy did not come out unscathed.

Historically, the South of Italy is the least industrialised area of the boot-shaped peninsula. It has a lower gross domestic product than both central and North of Italy and it has counted on tourism and the food industry to support its economy.

Even before the pandemic the South of Italy was fighting nails and teeth to attract investment for new businesses and the industry. And it was succeeding at it. The investments in the South were spiking, coming from Europe and national institutions; individual and small or medium sized businesses and startups were flourishing (2200 innovative startups in the South at the end of 2019), universities and incubators were taking into their own hands the fate of young entrepreneurs.

As of today, 213 Countries and Territories around the world report a total of 23.3 million confirmed cases and the pandemic keeps raging, at its own, erratic pace. It leaves behind a profound economic damage that will aggravate the generations to come, especially in the South of Italy.

As Italy eases containment measures and the pandemic seems to have receded significantly across the country, it is time to draw (provisional) conclusions of how the South has been affected and how the startuppers, incubators and stakeholders are planning to take back control of their economic activities.

We have interviewed a number of players from the startup scene in the south of Italy, namely from Puglia, Campania, Sicily and Basilicata. We asked them, what are the current struggles for South Italian startups post-lockdown? What are the possibilities? And how are they coping with COVID-19 spillovers?

Struggles and new possibilities for startuppers in the South

Andreina Serena Romano is from Potenza, Basilicata. She is the Founder of POW-WOW fashion tech week, the first event in Italy to explore the nexus between technology and innovation and the fashion industry, and Heroes Maratea, a high-profile event and startup competition in the South of Italy involving investors, startuppers and celeb guests. Romano sat down with us (virtually) to break down all the reasons why the pandemic has aggravated an already critical situation, and possible ways to move forward:

“It has always been very difficult for new businesses to grow in the South. The people who choose to invest and create a startup here face greater risks and difficulties than in other, richer geographical areas. In a post-COVID era, the situation has become even more alarming, perhaps. 

Today, the health emergency doubles down on an already precarious economic system – even what once where the best, most productive sectors in the South are now struggling to survive. The South can still be a prolific ecosystem for startups, I believe, but it desperately needs support from the National institutions.”

Paolo Stufano, Apulian startupper (co-founder of Eggplant) and former Apulia Coordinator for Ashoka – Italy (a community and organization that promote social entrepreneurship worldwide), echoed a similar sentiment and talked about a general climate of fear when it comes to investing and partnering up with emerging companies:

“With the pandemic, suddenly, priorities shifted in the startup ecosystem. Besides cash flows and consumption reduction (which are common problems for startups – and more in general for any business), the COVID crisis brought about difficulties for a startup to engage (or keep engaged) the right and necessary key business partners.”

It wasn’t all bad news for startups though. For some, the pandemic has opened up new, valuable possibilities, as Michelantonio Trizio, from Puglia, told us. Trizio is the CTO of Scotty.Expert, a SaaS that connects first-line workers with remote experts through augmented reality. He shed some light on the positive impacts of COVID:

“The impossibility to move across countries (or even regions), social distancing, and the new hospitality protocols put in place by companies have discouraged meeting customers in person. But not all came to harm.

In this context, it makes little difference whether your company is based in Milan or in a small city in the south of Italy. In a sense, COVID was a great leveller: it nullifies the competitive advantage of being in a region with a bigger concentration of companies and potential customers. For us, this situation has shortened the distances with our customers and leveled the playing field with the competitors.” 

As Scotty.Expert leveraged AR and real-time video communications to facilitate smart work and to lessen the impact of COVID, Ludwig, a tech startup based in Sicily, found other ways to help. Roberta Pellegrino, Ph.D., co-founder & CBDO of the linguistic search engine and smart translator, told us about their newest initiative:

“We decided to put our technology at the service of science and built a search engine specialized in COVID-19 related papers. We called it LIA COVID-19: Ludwig Initiative Against COVID-19. LIA, just like Ludwig, is completely free to use: users can search for anything related to COVID-19 and our algorithm will show them the most relevant results which are also easily accessible from there. We have a scientific background (my co-founders and I) and our entire team believes that science – together with a sense of community and individual responsibility – is the key to overcome these trying times.”

Two other young and successful entrepreneurs from Bari have also worked on specific initiatives.

Domenico Colucci, CEO of Nextome featured on Forbes 2019 Europe 30 UNDER 30: MANUFACTURING & INDUSTRY list, is hopeful that this time of crisis can turn out to be a driver for positive change. He notes that “smaller companies have more easily resisted and better coped with this global challenge”. Colucci also told us that Nextome, leading company in the production of indoor positioning and tracking devices, did not stop for a single day during the pandemic, and has instead worked to develop different solutions that help monitor that social distancing is respected at all times. The technology is minimally invasive and uses sensors already on the market. 

Alessio Lorusso, CEO of Roboze featured on Forbes’ 2018 ON FORBES list of Europe 30 Under 30: Industry, and his team have built an online platform for ordering 3D parts printed on demand. The initiative, Roboze’s “Supply Chain 4.0”, was created precisely to alleviate the impact of COVID-19 on production companies. The scope is to “build a synergistic network of partners with extensive experience in the production of end-use parts with highly technical materials all over the world, able to meet the requirements of a variety of key sectors”. 

Only time will tell how these initiatives will mitigate the impact of Covid in the South and for its businesses. In the meantime, we have asked the experts in the South to make some provisions.

What does the future hold for the South and its economy? The hubs speak

In the past few years, the South of Italy has become a buzzing tech startup hub. But, in a post COVID-world, what does the future hold for the South of Italy and its entrepreneurial scene? South Italian experts from local accelerators programmes and tech hubs give their take on this question.

Digilab is a 6-month programme, organised by the Politecnico of Bari, Puglia, that aims to foster the next generation of entrepreneurs through multi-disciplinary training, resources and networks. One of the programme’s coordinators and instructors, Umberto Panniello, believes that this pandemic will have meaningful impacts on the Southern Italian economy and startups’ business models. Panniello says:

“COVID-19 has forced Italy to rethink our “offline” and “non-digital” approach to different daily activities (from grocery shopping to going to the movies) and has pushed us to become increasingly more digital-oriented and connected. I believe this will be a very important factor in the adoption of the services and products offered by some startups – especially tech startups. The South of Italy, in particular, is characterized by very low levels of digital literacy so it is about time that we enter – and fully start to benefit from – digitalization. This may actually be a good time to start a new business or to adapt existing ones. After all, aren’t all the most important innovations born precisely in times of great crises?”

012factory is a certified incubator of innovative startups located in Caserta, Campania, that helps and financially supports emerging companies with high innovative potential. Salvatore Novaco, project manager at 012factory, cited the latest “Report on Innovative Startups” published by the Italian Ministry of Economic Development, to prove that, despite the latest struggle, startups are the backbone of Italian economy:

“The report shows that the Southern economy has been expanding. Especially in Campania and Puglia innovation poles have been created that concretely support the birth of new businesses and startups.

With COVID-19 emergency, the South is bound to experience a crisis in sectors such as tourism, manufacturing and services, he says. And adds: “In this phase, however, many have understood how necessary it is to reorganize their company using new tech and business models.

The future of the Italian and the Southern economy will depend on how startups will fare, really. They have the potential to provide innovative solutions and to drive innovation in the old companies that have suffered the most from the impact of the crisis. Favoring the favorable exchange between traditional companies and innovative companies is perhaps the only route that Southern companies can take to mitigate the impact of the pandemic.”