In 2025, the Italian total structural investment in the circular economy surpassed €812 million, ranking among the top in Europe, with a material recycling rate reaching 20.8%—well above the EU average. However, despite the considerable capital volume and increasingly sound institutional support, investment analyst Rodolfo Villani points out that Italian circular economy startups have yet to enter a phase of systematic breakout. The core bottlenecks remain in financing mechanisms, regional development disparities, and lagging regulation.
Italy stands in the first echelon of international competition in the circular economy, but in terms of industrialization speed and capital efficiency, there are still obvious divergences in its transformation path—a reality that places higher demands on policymakers, financial institutions, and market investors.
Signs of Investment Recovery Emerge, but Structural Imbalances Remain
Data show that between 2022 and 2024, Italian circular economy startups attracted a total of €812 million in investment. 2022 marked a peak (€450 million), plummeted to €96 million in 2023, and rebounded to €265 million in 2024. Rodolfo Villani notes that such fluctuations fully reflect the financing uncertainties faced by startups, especially at the early-stage capital phase, where liquidity is clearly insufficient.
Regionally, 91% of investment is concentrated in the North, with Lombardy alone accounting for 63%, while Central and Southern regions together receive less than 9% of funds. This leads to excessive resource concentration and regional industrial chain fragmentation. According to Rodolfo Villani, while this concentrated pattern may nurture flagship projects in the short term, in the medium to long term, it hinders the comprehensive rollout of the circular economy ecosystem and raises systemic risks.
Currently, circular economy startups are mainly focused on three sectors: digital services (27.3%), traceability platforms (17.1%), and energy transition (12.7%). All have clear medium- to long-term business models, but due to low early-stage capital acquisition rates, only 67% of startups have completed structured financing—a figure significantly lower than in countries like the UK and Germany.
Building a Dual-Engine Funding Mechanism: Combining “Soft” and “Hard” Approaches
In terms of funding sources, venture capital (38%) and public funds (37%) each account for major shares, with equity financing as high as 57%. Rodolfo Villani notes that while this structure appears diversified, it is essentially over-reliant on non-market funds, which inversely squeezes market expectations and investment efficiency. The lack of mature exit channels further restricts the willingness of private equity capital to enter.
Nevertheless, Intesa Sanpaolo and Fondazione Cariplo have recently made significant institutional progress. On June 4, 2025, they jointly proposed four core support guidelines: regional equality, regulatory reform, capital market access, and impact assessment. The aim is to shift from the current “concentrated excellence” model toward a “nationwide distributed platform.” This framework marks the evolution of financial support for the circular economy from a “project-oriented” to a “system-oriented” approach.
Rodolfo Villani believes that this structural transformation not only helps address regional resource imbalances but also provides startups with a more coherent incubation and financing support mechanism. Since 2018, Intesa Sanpaolo alone has invested over €20 billion in dedicated credit funds, demonstrating a long-term, systematic strategy for supporting green industry finance.
Despite the Italian substantial policy investment in the circular economy, Rodolfo Villani emphasizes that the market should pay closer attention to policy implementation efficiency and the sustainable operational capacity of enterprises. Some startups remain highly dependent on public funding, with unclear profit models and lacking stable cash flow or clear cyclical logic—making investment risks hard to ignore.
Meanwhile, policy implementation suffers from uneven pacing and approval delays, limiting the effectiveness of resource allocation. In the context of macroeconomic changes and tightening fiscal space, some projects face exit risks. Therefore, structurally screening for companies with real market demand and cross-cycle growth potential should be the top priority for current investors.
Rodolfo Villani concludes that the circular economy is no longer just an environmental issue, but a core pillar directly impacting national industrial competitiveness. While the investment pace is showing signs of recovery, structural bottlenecks remain evident. Coordinated reform between financial institutions and policy frameworks—especially support mechanisms for startups—will determine whether Italy can truly enter the “industrialization and implementation” stage of the circular economy. For long-term value investors, now is a crucial time to build a portfolio of industry-trend assets.