Government eases venture capital rules for pension funds

The Italian government is introducing new measures to encourage institutional investors to allocate capital to sectors traditionally seen as high-risk, such as venture capital.

The Ministry of Enterprises and Made in Italy, led by Minister Adolfo Urso (pictured on the left), has made a last-minute amendment to the Decreto Economia to facilitate the participation of professional welfare funds and pension funds in the venture capital market. The change simplifies an obligation introduced in December 2023, with the stated goal of unlocking over €2 billion in retirement savings and channeling it into the real economy and innovation support.

According to a report by The European House – Ambrosetti for Cdp Venture Capital, only 11 out of approximately 20 welfare funds have invested in venture capital funds, while just five of the 78 active pension funds have done so. As of the end of 2023, investments in venture capital represented only 0.29% of total assets for welfare funds and a mere 0.14% for pension funds.

The revised regulation introduces two key changes. First, it allows the inclusion of binding and irrevocable “commitments” to invest in venture capital funds — not just the investments already made — when calculating the minimum required allocation. Second, it expands the range of qualifying instruments to include indirect investments, such as those made through fund-of-funds or corporate vehicles, thereby broadening operational options for obligated entities.

The decree also adjusts the minimum investment thresholds on a more gradual timeline. The minimum share to be allocated to venture capital will be 3% starting January 1, 2025, increasing to 5% in 2026 and reaching 10% in 2027. Previously, the thresholds required a 5% allocation by 2024 and 10% by 2026.

The technically complex objective is to support the growth of the Italian startup ecosystem toward more structured stages, such as scale-ups — companies that have moved beyond the early startup phase and are rapidly growing in terms of revenue, users, staff, or market presence.

Additional technical adjustments have also been introduced. These include aligning the calculation of the investment cap with the value of subscribed commitments, clarifying the timeframe for executing investments in funds, and updating the eligibility criteria for target SMEs to comply with EU standards.