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Comment by wlecometo | Hacker News Reader

Well the main issue in italy is not lack of funding or lack of talent but rather the amount of taxation companies had to go through and the uncertainty behind a big and complex legal system which makes an average of 8 years for civil processing .

these two things alone and the fact there are better places in europe to make a startup (hint: netherlands, germany, france, czech republic, romania, poland) makes me wonder if they will succeed or is this a way to collect IP rather than helping idea to grow? maybe they saw that this is exactly what most of incubators are doing, in the end lots of startups in Italy were made by university professors making startups out of a research paper from one of their student, so i can see why an incubator could be interested in this.

yes i know, sorry for the negativity i've been there and i experienced this first hand.

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Yes, doing business in Italy is hard, but when your company is doing poorly financially or is having issues it's the government that is going to pay your worker's salaries. Do places with low taxes have this?

And the education of your worker's is paid by the government, so you don't get employees that are desperate to pay their student loans.

And so is healthcare, so you don't have to pay no insurance (you may, but your workers don't depend on it).

Also, new companies can easily get public funding. Or loans with no interests that are covered by the government. Do companies in different countries get that? Can you get millions in loans at 0 interest that if you can't pay the government will in US?

New companies get a very friendly, near 0 taxation for few years, and the more people you employ (especially if young) the more slack on taxes you get. Do companies in countries with lower taxes get that?

Mind you, I still believe doing business in Italy is too expensive and beurocracy too high, but there's also very serious benefits of doing it that you don't get in silicon valley where the first wrong swing kills your business and company.

The sum of these affordances adds up to a market for lemons.

A startup can hire Italians anywhere, certainly anywhere in EU, so the benefit of pair-for education doesn't require Italian jurisdiction.

Everything else sounds really handy if your company is destined for failure, since there are so many ways to get a bailout or take a "loan" with no interest which, hey, you also don't have to pay it back! That's a grant coupled to a later and optional donation, not a loan.

A full-time employer pays for their employee's health care, it doesn't matter if it comes out of taxes or not.

Business in Italy is too expensive, and bureaucracy too high, and you have done a fantastic job of explaining why that is while touting it as benefits!

If I looked into the relationship between nepotism and getting access to all this free money, would I be surprised? Bet I wouldn't be.

> fantastic job of explaining why that is while touting it as benefits

Because, as we all know, all businesses are IT startups that can afford to pay for comprehensive medical care, every employee of every company can afford the dissolution of a company (or just an emergency) etc.

One could argue that IT startups are all that matter.

One wouldn't even have to argue such a thing to limit the discussion in that way for an "Italian Y Combinator" article.

IT companies don't exist in a vacuum.

Also, there's a reason American IT companies frequently list medical insurance, parental leave, vacation tim as benefits. You know, things you don't even think about are listed as benefits.

Why would anyone want this insanity is beyond me.

You kind of missed some of my crucial points: starting a business on low budget in Italy is possible. People with the right ideas and knowledge can start ventures easier than they would elsewhere in the world, especially silicon valley where you're much more dependent on (important) private capital.

In Italy, that's not really the case, between lower salaries, no interest loans and government funding we have had many great businesses growing out of people that would've had no chance of convincing venture capitalists.

And as I said, yes, it's true, Italy is not the best place to start a business, and yes, it's true that there are places where you can find some if not more of the same benefits with less of the drawbacks, but still you're severely underestimating the many benefits and convenience you can get in Italy where you can start businesses you would've never had the chance too in places where there is no public funding and help for aspiring entrepeneurs.

That’s ok for a barebones entrepreneur. That’s not great for people who want to hire talented workers who want real comp.

Everything's a trade off.

Also, many of those barebones entrepeneurs end up making money, differently from billion-dollar ventures that have yet to post a profit after a decade but can boast highly paid engineers behind very questionable quality overbloated software.

> People with the right ideas and knowledge can start ventures easier than they would elsewhere in the world, especially silicon valley

In reality they don't though. So why do you think that is?

> People with the right ideas and knowledge can start ventures easier [in Italy than Silicon Valley]

Would you be so kind as to provide a metric, so I can demonstrate conclusively that this isn't true?

I'm basing this on intuition, which is in turn based on numerous Italian software developers I've met in California. Do they have the wrong ideas and knowledge?

Of course not, they went where they could run a business without interference.

Curiously, other people are always quick to point out how California is a very difficult place to operate a company in when the focus is on companies "fleeing" to low tax states like Texas.

I'd imagine it is easier to start a tech venture in the valley than Italy, but that's just because there's an established ecosystem for it and you're not blazing new ground. The various particularities of government are relatively insignificant in comparison. That's why you can have similarly vibrant startup scenes under political environments as different as the US, China, and Israel.

You can startup an AI automated car driving startup more easily in italy than you can in SV?

In SV you can get 10M+ in capital pretty easily - close relative with one prior startup did just that recently. It's VERY low overhead, you can hire (and fire) folks pretty simply. The due diligence on that $10M didn't even require audited financials or anything.

I don't know anywhere in italy even close to that.

The buying power of 10m in SV is equivalent to what, 2m in Italy?

There's definitely a lot of sweet VC money to collect with a business office in SV, but I have no idea why a large company investing a lot of its own money would choose to throw 4/5ths of it away.

Totally absurd claim without any basis in fact whatsoever!

Startup spend (should be) dominated by payroll, maybe server costs. This isn't 500% as expensive in California vs Italy, you made this up.

Well, in Italy a software dev would earn 1500€/month (anecdotal based on friends), so if you are talking about a software startup, it's not out of the blue. My salary (I'm italian living in Canada) is at least 5x what I would be making in Italy

> adds up to a market for lemons

I have witnessed this first hand in Finland where government grants can generate a lot of inflow for early startups. Because bureocrats cannot judge which companies should stay alive or not, everyone gets money resulting to zombie startups that have not managed to scale even after 10 years.

Isn't the whole point of venture capital that VCs also make poor judges of which companies will be successful? Remember the fact that most VC companies fail, and the unicorns pay for them. How is that different?

VCs stop wasting money when the company is beyond salvation.

> A full-time employer pays for their employee's health care, it doesn't matter if it comes out of taxes or not.

The difference is that in countries with universal healthcare, everyone who works, companies, etc, pay for everyone's healthcare - an unmitigated social good that many in (say) America wish the US would learn from.

Wow, what a ridiculous comment. What you are mention is only a good environment for lifestyle businesses, not startups and growth companies who are usually more innovative and have the possibility to create massive net positives in a country's economy.

If a small conpany is creating enough profits to finance one persons life, well, that's just great.

IMHO the real "life style" businesses are those VC backed start-ups never reaching profiatbility. Because in those cases the founders get to play CxO on other people's money, living this "entrepreneur" life style. One start-up after the other.

Hi from Italy. What the parent is saying is correct/partially correct. Still Italy is a very difficult place to do business for a number of factors: burocracy, cultural attitude (who you know means too much), strict labour legislation, slow justice system just to mention the first few which come to my mind. If you come from abroad the above factors become 100times harder to manage/understand. We have a lot of talents and the same amount of weaknesses. Not easy at all. Still a great place to visit and to spend holidays in. Sorry I don't mean to be harsh.

As a recently recognised Italian citizen, I have to agree--it's not the appropriate place to form a startup.

There's a surprising number of things that involve the legal system, and the legal system moves at a glacial pace--in some cases, taking months between when a ruling becomes final and when it becomes enforceable. Encounter any one of those situations, and it's going to be a huge time & resource drain for the company.

Perhaps it'd make sense to headquarter the startup in a more favourable country (Estonia?) and then have a major branch office in Italy (for climate and talent reasons).

i am from another EU country and getting funding beyond 50k from the government is really hard. vcs and angels are super conservative and take no risks. the government is not paying your employees if you cannot pay them… and you are personally liable for their social security taxes. i doubt that italy can do what you say here as most EU countries handle things similarly. also, if things get harder than you thought they were going to be and can’t pay the government back you will go bankrupt and potentially lose your assets which you might have invested in substantially yourself. i will never take government loans again.

"when your company is doing poorly financially or is having issues it's the government that is going to pay your worker's salaries"

If true, it rather looks to me like a recipe for zombie enterprises than for healthy ones. Don't you want that, if it is to fail, to fail fast?

"New companies get a very friendly, near 0 taxation for few years, and the more people you employ (especially if young) the more slack on taxes you get. Do companies in countries with lower taxes get that?"

Romania is on lower end of all kind of taxes in the E.U., then especially new/small companies (whose turnover is lower than 1 million Euros) there is this tax option of 3% (from income) or even 1% if there is at least one employee.

Education, healthcare, and even government grants (thanks to investment & development policies in overall E.U.) were worth mentioning only in relation to U.S., as Italy does not particularly excel at any of them.

While all of those things sound good, the US seems to have a lot of startup success without any of them.

That said, Israel may have some/all of them and it is successful startup-wise, so those things are not an obstacle either.

> the amount of taxation companies had to go through and the uncertainty behind a big and complex legal system which makes an average of 8 years for civil processing .

It's the big, complex legal system that gets me, and the mentality that keeps it in place. There's some sort of minimum required level (countries with too little don't thrive either) but when I think of Italy or India I think the complexity of simply getting anything done is discouraging.

OTOH I don't really care much about taxes and never have. Most of them are on profits, and if you're making profit, great! There are of course a plethora of bullshit excise taxes like business licenses, but in the main they have never added up to a lot in any business I've run. And of course I depend on things like fire brigade, a legal system (not that I've needed to sue anyone or be sued), clean air, roads, etc etc so paying taxes doesn't seem that bad in principle. Those things need to be paid anyway, and sometimes leaving them out of taxes is far worse (consider America's ridiculous health system)

The problem is that some countries offer vastly better ROI on taxes than others.

Taxes aren’t a problem, shit ROI on taxes is.

I was about to start writing the exact same thing (you wrote it better than how I would have hehe), but I then saw your post => thank you :)

Also missing in Italy are the networking and connections to relevant people and organizations.

I think very few founders look for money at YCombinator, they're primarily interested in the connections.

I don't think you are properly informed.

Italy is better than France, Germany, etc. [0]

Italy has other problems (labor law; IP law; etc), but I don't think that taxes are an issue.

[0]: https://taxfoundation.org/capital-gains-tax-rates-in-europe-...

Don't forget the culture of corruption, esp. in the south of the country.

Why poland?

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