No more excuses. We can no longer put off the need to build Italy’s new industrial ecosystem
An editorial by Massimo Portincaso
*Translated with Deepl – read the original article in Italian here
Italy still possesses some of the world’s strongest technical expertise in the sectors that will prove decisive: advanced manufacturing, industrial biotechnology, materials, design, robotics, and automation. But this historical advantage does not automatically carry over into the new industrial era: it only does so if it is transformed into the ability to learn and produce new technologies.
Massimo Portincaso, an entrepreneur specialising in deep tech, is convinced of this, as he explains in this guest post for StartupItalia
It is often said that Italy stands at a crossroads: whether to modernise its industrial base, or to preserve it as it is by focusing on quality, design, and tradition. This is a false dichotomy. The choice before us is not between two equivalent paths, but between building a new industrial company or watching the existing one gradually dissolve. Those who fail to develop their own Neo-Industrial capabilities are not defending their traditional ones: they are losing them.
What is at stake is the competitiveness, resilience, and strategic autonomy of the country as a whole. Already today, a large majority of global manufacturing output in many advanced sectors — from batteries to industrial biotech and strategic materials — lies outside Europe, and this window is closing. Building a new Neo-Industrial ecosystem in Italy is therefore not just one strategic option among others: it is the prerequisite for remaining a productive nation, and at the same time one of the most significant opportunities our business sector has had in recent decades.
What is a Neo-Industrial company?
The Neo-Industrial company is defined not by what it produces, but by the way it operates, thinks, and learns. It is a company that manufactures physical goods — molecules, materials, devices, systems — but whose operating system is ‘software and data first’. Artificial intelligence is not a peripheral support tool: it is natively integrated into every stage of the Design-Build-Test-Learn cycle, from design to production, right through to the plant’s operation.
There is a conceptual shift that makes it radically different from traditional manufacturing. Classic digital modelling constructs a digital twin, a digital replica of something that already exists physically. The Neo-Industrial company overturns this logic: it first develops the Digital Original, a complete digital representation, validated through AI-driven simulation, in which dozens or hundreds of variants are analysed. Only after this virtual test is the physical system built. The digital does not describe reality: it precedes and determines it.
This gives rise to three operational consequences that transform the nature of the business: a faster learning curve, because every physical iteration is preceded by thousands of virtual iterations; selective vertical integration of the relevant parts of the supply chain. Not for the sake of sovereignty, but for speed; structural adaptability that enables it to continuously generate new technologies, markets and processes. In short: whereas the traditional industrial company is optimised to produce something, the Neo-Industrial company is configured to learn how to produce new things.
Bridging the industrial transfer gap
In recent years, many science-based start-ups have demonstrated a remarkable capacity for innovation. However, a significant proportion have failed in the transition from pilot-scale to industrial-scale production. The so-called ‘valley of death’ for deep-tech start-ups is no longer merely financial: it has become structural. This is what we might call the ‘industrial transfer gap’ – the gap between laboratory innovation and reliable production on a commercial scale. Global competition has shifted to this arena: it is not the one with the best scientific idea who wins, but the one who knows how to industrialise it reliably, quickly and sustainably. Two ecosystems around the world demonstrate what it means, in practice, to build a Neo-Industrial capacity.
Shenzhen (China). More than just a manufacturing hub, it is an integrated system in which manufacturers, suppliers, logistics, capital, and regulators operate at the same pace. The strength of companies like BYD lies not only in their technology, but in their ability to iterate within a matter of days thanks to a short, interconnected, and highly responsive supply chain. China has made an explicit strategic choice: to use artificial intelligence as a lever to transform manufacturing, not as an end in itself. It is a difference that is clearly evident today in electric vehicles, advanced materials, and advanced manufacturing.
El Segundo (USA). Just a few minutes from Los Angeles International Airport, in a tiny town of a few thousand residents—known to its residents as “the Gundo”—the most concentrated hard tech ecosystem in the United States has emerged over the past five years. Anduril, Hadrian, Varda, Mach Industries, Rocket Lab, Relativity Space, and dozens of other companies share suppliers, talent, equipment, capital, and a common narrative: rebuilding American manufacturing capacity. It is the result of an aerospace legacy (Boeing, SpaceX, the defense plants historically concentrated in South Bay) and an entrepreneurial culture that has stopped viewing atoms as secondary to bits. Gundo is America’s response to China’s manufacturing dominance: not through grand federal plans, but through an integrated ecosystem with a rapid learning curve.
Europe, on the other hand, suffers from fragmented supply chains, long lead times, and poor industrial coordination. It possesses extraordinary expertise—this is the Italian paradox in particular—but this expertise is underfunded, isolated, and rarely networked. In advanced manufacturing, precision engineering, industrial design, robotics, industrial biotechnology, and advanced materials, Italy possesses some of the world’s strongest expertise. What is missing is not the expertise itself: it is the operating system that connects it. Building it means working on two pillars: capital and the industrial cluster.
The lack of financial infrastructure
A Neo-Industrial company requires far more complex investments than a traditional software startup: high-level human capital, laboratories, pilot plants, factories, machinery, energy, and supply chains. By its very nature, it is capital-intensive during the critical stages of its growth.
The problem is structural. There is a huge gap between pure venture capital and traditional bank credit. The former is designed to support the initial technological risk; the latter is based on consolidated historical financial statements. But when an innovative company needs to build its first production facility—that is, to scale up from pilot to commercial production—suitable financial instruments are practically nonexistent. Yet, in these cases, there remains a tangible industrial asset: a facility, machinery, and production capacity. In the United States, instruments to finance these exist thanks to a much more liquid debt market; in Europe, this liquidity is lacking.
It is therefore necessary to develop a comprehensive, multi-tiered “capital stack”: venture capital to support the initial technological risk; growth equity to expand teams, the organization, and markets; asset-backed finance to fund facilities, machinery, and production infrastructure using debt instruments secured by the assets themselves; project finance for large-scale commercial industrial projects; and long-term industrial credit for the phase of continuous production scaling.
The Role of Public Finance
However, this private-sector framework is missing a crucial component: public financing. Not as a substitute for private capital, but as a catalyst. It is during the riskiest stages of the industrial journey that public financing makes the difference between a national system that succeeds in building new manufacturing capacity and one that merely discusses it. Two functions in particular are critical.
The first is the financing of the First-Of-A-Kind (FOAK): the first commercial plant for a technology never before built on that scale. It is the breaking point for all ordinary financial mechanisms: for venture capital, the sum is too large; for bank credit, the risk is too high; for the capital markets, there is no track record of operational plants. Yet, this is precisely the stage at which innovation becomes—or fails to become—industry.
The second is the public guarantee on private debt: the tool that allows the banking system to participate in innovative industrial projects by reducing perceived risk to levels compatible with its prudential mandate. It is not an exotic instrument; it is one of the mechanisms that built much of Italy’s postwar manufacturing sector. It must be reactivated, in new forms, for the new manufacturing sector. For Italy, this means coordinating existing actors—such as Cassa Depositi e Prestiti, SACE, and available European funding lines—not for early-stage innovation, where the tools already work, but for the decisive moment of initial industrial scaling.
All of this also requires a new role for the banking system, which can no longer limit itself to reading historical financial statements. It must develop the ability to interpret industrial and technological trends, understand what a Neo-Industrial company does, where it stands on its learning curve, and what the strategic value of its production assets is. It is a cultural shift even before it is a regulatory one. Basel III has reinforced a historically prudent approach, but it is not the root cause of the problem: the root cause is that the European financial system has not yet come to terms with the historical moment in which we find ourselves. For this reason, building this capability represents one of the most significant opportunities of the coming decade, even for the banking system.
The ecosystem as an operating system
The second pillar, beyond capital, is the creation of new industrial clusters. Italy boasts one of the strongest traditions of industrial clusters in the world. Clusters such as the biomedical cluster in Mirandola, the mechatronics cluster in Veneto, or the packaging cluster in Emilia are among the most studied international examples of highly competitive manufacturing hubs. But the Neo-Industrial is something different—it is not merely a modernized cluster.
The difference is structural. The traditional cluster is optimized to produce a specific item more efficiently: a shoe, a pair of glasses, a pump, a machine. The Neo-Industrial cluster is configured to learn how to produce new things. It replicates, at the ecosystem level, what the Neo-Industrial company does internally: the native integration of atoms and bits, the accelerated Design-Build-Test-Learn cycle, and the ability to continuously generate new technologies and processes. It is, in every respect, an industrial operating system rather than a geographical concentration.
In practice, it consists of five elements, held together by a common logic: short value chains, not only in the physical sense but also in the informational sense—suppliers, regulators, and customers connected in real time to the companies’ learning cycle. Shared digital infrastructures for simulation, modeling, and industrial data management, enabling the entire ecosystem to operate according to the logic of the Digital Original even before that of the physical product. Physical testing capabilities such as pilot plants, characterization laboratories, and industrial testbeds, accessible as a system resource rather than merely as assets of individual companies. Continuous circulation of data, models, and insights among startups, SMEs, large businesses, universities, and research centers, transforming every iteration by every actor into shared capital. Patient yet responsive capital, present in the local area and capable of moving at the speed of the company’s learning cycle, not just that of the annual financial statement.
This, ultimately, is what Shenzhen and Gundo—with their profoundly different traditions and cultures—have built: ecosystems where the industry’s Design-Build-Test-Learn cycle runs faster than anywhere else in the world, because atoms and bits, physics and software, capital and production interact within the same cycle. For Italy, it is not a matter of copying them, but of applying the same organizational principle to its own distinctive strengths, such as advanced manufacturing, industrial design, automation, robotics, industrial biotechnology, and advanced materials. In these areas, the country still has it all. What is missing is the operating system—simultaneously physical and digital—that connects them and enables them to learn together.
The window that is closing
Neo-industrial companies are not built on declarations of technological sovereignty or theoretical plans for reindustrialization. They are built in practice, by integrating software and physical components, AI and manufacturing, capital and learning capabilities. And they must be built now, because the competitive advantage in the new industrial era will not belong to those who possess the single best technology, but to those who have first built an ecosystem capable of continuously generating new ones.
Capital and the industrial district are the two pillars that make this possible for Italy. A complete capital stack—private and public—that supports the Neo-Industrial company throughout its growth curve, from the initial technological risk to the first commercial plant. A cluster that does not merely concentrate companies, but replicates at the ecosystem level the “software-and-data-first” logic of the Neo-Industrial company, integrating atoms and bits into a single learning cycle. These are two pillars that stand only together: without capital, the Neo-Industrial cluster remains an aspiration; without the cluster, capital finances individual companies that will struggle to achieve critical mass.
Italy still possesses some of the world’s strongest technical expertise in the sectors that will be decisive: advanced manufacturing, industrial biotechnology, materials, design, robotics, and automation. It has an entrepreneurial and industrial cluster tradition of unique value. But this historical advantage does not automatically carry over into the new industrial era: it does so only if it is rapidly transformed into the ability to learn and produce new technologies simultaneously, at a global pace. It is the difference between remaining a country that has produced, and becoming a country that produces—in a Neo-Industrial sense—the technologies that will define the coming decades. There is no Plan B. There is only one path: to build the Italian Neo-Industrial company and the ecosystem that makes it possible. And that path must be taken now.