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13/09/2016

On Executive.it: 'Innovation made in Italy'

“A modern way of doing business, not only in Italy but also abroad.Competing worldwide is necessary to have sufficient market available,and it is possible. This is the idea that animates the Piedmont-basedcompany New Venture Development and its subsidiaries, engaged innetworking and advanced electronics.”

"A modern way of doing business, not only in Italy but also abroad. Competing worldwide is necessary to have sufficient market available, and it is possible".

This is the idea that animates the Piedmont-based company New Venture Development and its subsidiaries, engaged in networking and advanced electronics." In a few months it will be twenty years since New Venture Development (NVD) was established, originally a venture capital company founded by Mario Ciofalo, a former Olivetti executive, and later converted into an industrial and business development company, with parent company functions. The initial phase actually saw NVD becoming a member of AIFI, the association of companies active in venture capital, but the model chosen turned out to be in part original: "In fact NVD had decided from the outset to be financially independent from any source of external funding. No funding from the market, nor debts with the banking system; in order to pursue its institutional objectives, namely business creation, the capital was and is provided by the five initial shareholders", explains Mario Ciofalo, Chief Executive Officer and Chairman. A bit by vocation and partly as a result of the chosen approach, consistent with the financial resources made available, NVD therefore focused on business creation, that is in the early initial stage and in entrepreneurial replacement, in this first phase making 18 investments.

The key element in the decision to invest in a new start-up was the combination of project potential and objective ability of the often new entrepreneur(s), to whom NVD guaranteed significant consulting support, but always in a context of full operational autonomy. "This phase was concluded in 2008, after 12 years of activity, with very positive results. Despite some inevitable failures, at the time the portfolio included 11 active investments, whose asset value abundantly exceeded the capital invested up to that point" continues Ciofalo, explaining that were three reasons which resulted in the decision to change the strategic objective of NVD. The first linked to the way out difficulties in Italy, due to the crisis of big industry, i.e. the typical buyer of high potential value SMEs. The second to the economic crisis, which had frozen a large part of the development projects of many medium to large enterprises. And last but not least, to the appropriate decision to plan and manage, with due graduality but in good time, the foreseeable generational turnover.

This led to a phase of concentration on the portfolio companies which NVD controlled, in particular those with the best growth outlook, such as Microlys and Tiesse, focused on the printhead and corporate networking markets, respectively, directing on these the financial resources released by the simultaneous divestment of minority interests. Microlys was thus able to put in place an ambitious project to penetrate Asian markets, where dot matrix printheads are still growing strongly, in particular in 'fiscal' applications, and Tiesse to broaden the product range in both the router segment for mission-critical applications as well as that for the Internet of Things (IoT), consolidating its competitive position with respect to the major global American and Chinese manufacturers, and more recently launching an internationalisation project which aims to generate a true quantum leap. "This is certainly a difficult project, but within reach of the company's technical, financial and professional resources. Moreover, when Microlys and Tiesse were acquired by NVD, they had 14 and 11 employees, respectively, 25 in total, all in Italy. Today there are 200, 90% of which permanent staff, and half of which abroad. The two companies are also very well capitalised", adds Mario Ciofalo.

Winning with smart grids

Going into the detail of Tiesse, this is a company that in its 18 years of existence has built an offer in the corporate networking segment designed to be able to excel compared to that of the big industry players, American and Chinese multinationals, as demonstrated in the recent Enel tender concerning the 'Puglia Active Network' project, which was awarded last year to the Ivrea-based company (it is no coincidence that the founders come from Olivetti) beating the competition from the major industry players.

“The core of a Smart Grid is constituted by telecommunications networks that must be appropriately designed to connect substations, generators and loads to the medium voltage network, in parallel also involving upgrading of the central remote control systems, field devices (remote terminal units, fault protection devices and detectors, ed) and medium voltage customer/producer devices”, explains Vincenzo Luciano Lucrezia, Tiesse Technical Director.

An more efficient electricity production and distribution network contributes to energy independence, to the reduction in global warming and at the same time increases network and systems security, not negligible factors for the current state of our country and the planet as a whole. Smart Grid solutions are therefore in the focus of Tiesse's investments. “We invested resources and means for the research and development of Imola Smart Grid, the device which won the ENEL tender. This award positions us even more as manufacturers and suppliers of routers with the necessary requirements for mission-critical network applications, and confirms our vocation in the field of the Internet of Things, with solutions which, in addition to advanced routing functionalities, provide those specific for the Smart Grid application solution. This success also confirms and reinforces our commitment to foreign markets, first and foremost in the USA, Japan and China", adds Fabrizia Montefiori, Chief Executive Officer of Tiesse.

More generally, Tiesse designs and manufactures, entirely in Italy, professional routers and devices for M2M communication with traditional wired (starting from xDSL to the most modern broadband networks) and mobile (from GPRS to the latest LTE developments) connectivity. Its products, before being released on the market, are always tested in the laboratories of the telecom operators, thus enabling customers to have competitive advantages in accessing new technologies.

Developing in two directions

The international activity of the Italian company has for years been managed based on specific opportunities indicated by customers, while since the beginning of 2014, Tiesse has decided to launch a programme for the development of foreign activities in an organic manner, albeit gradual, focusing on two axes: geographic and custom projects. From this year, this more strategic international vision is beginning to bear the first significant fruits. Mario Ciofalo, Tiesse Chairman, explains in this sense that on the geographic development front, thanks to the experience acquired in Latin America, we have launched new exploratory activities in China, Japan and the United States. Larger, more interesting and, of course, more difficult markets, where potentially our products can be successful. The example of Imola Smart Grid demonstrates that our proposal is absolutely competitive with that of the major global leaders.

A product with innovative features, internationally applicable in a sector of great potential in the coming years. As for custom projects, focused in the exploding market of the Internet of Things (IOT), it is instead reasonable to believe that, in general, these will increasingly enjoy significant growth worldwide. Also in this case, therefore, the potential for Tiesse is very interesting: we are in fact able to provide highly complete and innovative technologies, in terms of hardware, protocols and network functionalities, able to guarantee real-time transmission, according to the priorities of critical traffic, together with the specific functionalities of the application involved".

A micro multinational

Acquired in 2004, as part of the entrepreneurial replacement program put in place by NVD in those years, "Microlys was experiencing the effects of relocation to China of much of the worldwide printer production and, with it, loss of the needle printhead customer base of which it was an established OEM supplier", says Chief Executive Officer, Lorenzo Ciofalo. "With revenues in precipitous decline, now reduced to just 14 employees, but nevertheless owners of valuable know-how not easy to replicate, the company immediately initiated a recovery project on Asian markets, through the creation of a joint venture (50/50) with a Chinese company lacking technical expertise on printheads but present, via a parent company, in the banking printer market which was booming in China and in the rest of Asia.

Definitely a very educational experience in understanding the dynamics of the Chinese market, but unfortunately not very successful in terms of sharing strategic objectives and operational management". The potential on Asian markets was at that point considered far more important than that addressed by the joint venture, given that needle printing technology was booming in both the banking sector as well as in that of printing invoices and documents with fiscal validity, while the window of opportunity created by the relocation of printer manufacturers in China risked closing once and for all. Microlys therefore negotiated its exit from the joint venture in 2009 and started a new and 100% autonomous project.

“With the goal of again becoming one of the world's leading suppliers in the printing component niche, the new project was based on the simple, but not easy, task of putting together the best of Italian technologies, which were present and had to remain in Italy, with the opportunities offered by emerging economies in the manufacturing sector, in order to present itself to Asian customers with the best products at prices comparable with Chinese and Korean manufacturers of needle printheads. That is when I took charge of the company", continues Lorenzo Ciofalo. This phase thus saw the start of development in the Italian laboratories of a number of new products to meet market requirements and subsequently the opening in Shenzhen,-China, of Microlys Printing Device Ltd and in Ho Chi Min City of Microlys Vietnam. Both wholly owned by Microlys Italia, the first is engaged in the localisation of production of the basic components, while the second in the assembly and testing of each printhead produced. Finally, a commercial development programme was put in place, aimed at the major printer manufacturers in China, Korea and Japan.

"It was the only way forward to recovery the positions lost, and to success. The first customer acquired was a large Japanese company, which was followed by a number of the largest Chinese printer manufacturers, with at least one Korean manufacturer expected for next year. Today, Microlys has a total of one hundred and thirty employees. In just a few years the number of Italian employees has doubled, while abroad it has increased from zero to one hundred", concludes Lorenzo Ciofalo, highlighting the validity of Italian technical skills and of the great confidence in their own means, not only financial, of entrepreneurs in our country.

What is New Venture Development

New Venture Development (NVD) is an Industrial Development and Management Consulting company operating in the ICT sector, focused on business creation and development as well as entrepreneurial replacement. Among its portfolio companies are Tiesse - which develops, produces and sells, through Telecom Operators and Systems Integrators, network appliances and data collection products, such as wired and mobile professional routers, PDAs, Machine to Machine (M2M) devices and gateways - and Microlys, which designs, manufactures and distributes in the OEM market, mostly abroad, dot matrix printheads, printing modules and drive mechanisms for electromechanical devices in general, needles

Who is Lorenzo Ciofalo

Born in Milan in 1971, he has been part of the NVD (New Venture Development) Group since its foundation. He began working in 1996 in Sema Group and four years later joined Ernst & Young, beginning his international experience as a Business and ICT consultant, continuing in KPMG and then KeyG Consulting as a project manager. In 2004 he founded Ribes Solutions, a service company to SAP business partners, and in 2011 joined Microlys. During the years under his management, he has relaunched the company on international markets, with particular focus on Asia, starting up two new companies in China and Vietnam. Today he is Chief Executive Officer of Microlys, Microlys Vietnam, MPD Shenzhen and is on the Board of Directors of NVD, Microlys and Ribes Solutions.