Innovative firms unveiled: economic and financial insights from Italian start-ups

This study analyzes the economic and financial characteristics of innovative firms in Italy from 2010 to 2024, focusing on two key groups: innovative start-ups as defined by the Italian 'Start-up Act' (INN-SUs) and venture capital-backed start-ups (VCB-SUs). Both groups are then compared with a broader group of young, limited liability companies (OTH-SUs). Despite representing a small share of the start-up population (2.2 per cent and 0.2 per cent, respectively), INN-SUs and VCB-SUs are disproportionately active in innovation, particularly in patenting. Their ownership structures are more diversified, with younger, predominantly male investors often located outside the firm's province. While initially smaller in revenues and employment, innovative firms exhibit higher asset intensity and a more robust long-term growth trajectory. Notably, VCB-SUs experience significant post-investment expansion, highlighting the role of venture capital in easing financial constraints and providing strategic support. The findings suggest that regulatory and market-based definitions of innovation capture complementary dimensions of entrepreneurial potential, with policy frameworks enabling broader access and VC investments signalling high-growth prospects.