From Industry to Investing in Innovation: Luca Rancilio’s Story

If you enjoy espresso-based coffee then you partly have the Rancilio family to thank for that. As purveyors of the first espresso machines, the Rancilio company took espresso machines global and cemented their place in our lives today. Luca Rancilio took over his family’s company at the age of 20, just as everything started to go global. After selling up in 2013, he started a new journey in investing that took him to Silicon Valley and beyond. Today, he is helping other Italian families to invest in innovation outside of Italy with Rancilio Cube – a close-ended alternative investment fund. Read on to find out more about his transition from the world of industry to the world of innovation.

Robin: Hello, Luca. It's great to have you with us today. Could you start by telling us about yourself?

Luca Rancilio: Thank you. I am an Italian entrepreneur based in Milan. If you Google "Rancilio," you'll see that my family has been producing espresso machines for a long time — for 90 years, spanning generations. I stayed with Rancilio for 25 years.

My grandfather Roberto was one of the pioneers who revolutionized the market through the invention of the espresso machine in 1927. People often think this invention came from Naples or Sicily, but the machine that makes espresso and cappuccino originated in Milan and the neighboring areas. My grandfather Roberto was among those who brought freshly brewed coffee to bars and restaurants.

At the beginning of the last century, having this new drink was quite innovative. Later, in the 1950s, the concept of espresso developed further. Unfortunately, my father passed away when I was only 20 years old, making me the last of the second generation. Although the company was already substantial in size, for me, it felt like a startup, because everything was new and complex to manage at the beginning. I had to navigate managing a company with hundreds of employees and sales worldwide. The market became much bigger than my dad could have ever imagined.

There's a clear distinction between the pre-Starbucks and post-Starbucks eras, especially in the espresso market. During my generation, espresso went global, reaching markets in Russia, Asia, Japan, Africa, and beyond. Unlike my father's generation, which catered primarily for Italian immigrants in the US, Australia, and Venezuela, we oversaw a broader international expansion.

During my 25 years at Rancilio, the company grew significantly. In 2013 we sold Rancilio espresso machines and my family—my sister, my mother, and I—then started Rancilio Cube to pursue single-family office activities. Transitioning from a mechanical company to dealing with liquid markets was challenging for me.

Investing is a different business entirely. What was that transition like?

Investing directly in companies within the venture capital space was a natural progression. For example, I invested in SumUp in Germany and Deliveroo in the UK. A game-changing investment for me was the one I made in Lyft, the American ride-sharing company that was known as the direct competitor of Uber, in 2015. At 43 years of age, this investment marked a new phase in my professional life.

I wanted to continue investing in innovation with the help of people and institutions who understand tech and other sectors better than I do. This led to the creation of a diverse portfolio, including companies like Airbnb, Coursera, Toast, and N26 in Europe. Working with these investments, I realized it was beneficial to become an LP in funds managed by experts, that’s where I started.

Why did you decide to create your own fund with Rancilio Cube?

My approach was somewhat unconventional. Most people start by investing in funds and only then invest directly; I did the opposite. Recognizing my limitations, I decided to delegate, much like how we did when we used to sell espresso machines globally through local distributors. Now, other funds gathered in our portfolio act as my distributors across various sectors and geographies.

Our investment approach attracted other Italian families. I often reference the movie "Forrest Gump": others saw me running and wanted to join, even though my goal was simply to invest in innovation for my family. This kind of portfolio is uncommon in Italy, where families and institutions are more cautious about venture capital due to cultural and financial literacy barriers.

As our investment strategy became attractive to other Italian families, we now operate as a fund of funds, without carrying fees and sharing the costs of the team. This club deal structure allows sophisticated Italian families to invest collectively in global Venture Capital opportunities.

We’ve essentially created a cooperative investment model, sharing costs and resources while maintaining major shareholder status. It has been a significant challenge but my 35 years in business, including 25 years at Rancilio and 10 years in Venture Capital, have taught me a lot.

What was it like taking over such a large family business at 20?

At that time, I wanted to finish University. The Gulf War in 1991 was a tough moment for the company and for the market itself. I finished University, but the daily activities of a company like ours at Rancilio, in which you have to make personal decisions every day, was very difficult.

In these kinds of situations, it can be very hard because you have to make decisions that you’ve never had to make before. On the other hand, it was also a big opportunity because managing complexity forced me to grow alongside my company.

I always ask myself: Would my business life be different if it wasn't for such unpredictable situations? There were many positive things, but also many negative ones. I've never been a real startup person. If you create something on your own, it's a bit different from stepping into something that already exists.

Why do you say that?

It was hard to step into something that already existed. I mean, imagine how difficult it is culturally, to bring a company through a generational shift. This is probably why I feel like I am in the middle of everything. Also, with what I'm doing in the investment space, I understand the matter of liquidity, but innovation has already saved my life once.

So for me, it's not a choice to invest; it's the only thing I can do – to create every day. Innovation is the frontier of investing. With Rancilio, it was very obvious – investing every day in people, new instruments, new products, and establishing software, for example, was the key to the growth the company experienced during my generation.

Let's say it was a journey inside of myself, but also inside of my family. Even my father, not speaking a single word of English, had a photo of me in his luggage when he started to leave Italy to go to Australia, Chicago, Japan. Innovation is in the DNA of my family. The connection with people far away. We worked with clients, distributors, and coffee roasters all over the world.

How did you end up in Silicon Valley?

As an investor in Lyft, I invested from New York, but the company was based in San Francisco. So I said, "I want to go there." Some people asked, "Why do you want to go there? You've already invested." “I don't know,” I answered.

I felt that going there just to do a tour of the company was for tourists, but if I had the opportunity to go there to meet people trying to change the world of mobility, then that would have opened up the possibility to invest in something big. Even for a person like me who’s from a small city next to Milan, it opens up to ideas and ways to do things differently and more innovatively.

So the journey to Silicon Valley was positive and also satisfying. What's strange is that before, if I think about it, we were selling espresso machines globally to 100 countries in the world, but the most important places were Spain, Portugal, Chicago, and Seattle, and now it's the opposite in my job: Silicon Valley, Berlin, London…

What drove you to look for opportunities outside of Italy in the first place?

I'll tell you something very personal. When I was 11 years old, my father brought me to the United States, to New York. I was only a child but I remember that there were many people from all over the world there. Imagine, in my small town near Milan there were only local people. In New York at 11 years old, I saw people of all nationalities, tall buildings, and big cars.

This made me realize that the world is so big, and that I wanted to experience it. Maybe I'm a strange Italian. I never had a watch. I don't have a car. To me the experience of meeting people, even if my English wasn’t good, was trying to understand them and give my point of view, that is something very important to me.

What is your legacy and the impact you want to have on the world?

This journey of investing outside of Italy, creating a network that is stable and reliable, and getting opportunities by mixing Italian capital from other families, is something I want to carry forward.

I feel like Italian families have a lot to offer, not just to Americans but also to people in Northern Europe. We try to mix parts of our culture with them. I'm not strictly talking about investments; I'm also talking about creating possibilities. Italian families are so good at innovating products and selling them abroad. Maybe it's a question of trust, mentality, culture, or language. Trusting someone in the US and giving him money to receive something ten years later is quite difficult to digest for an Italian family. For me, it has been easy because I trusted distributors with credit lines all over the world, in Japan, and Africa. Inside this legacy built on trust, I saw the possibility to create a new market.

The idea is that Italian investors can have the opportunity to consider investing in Berlin, the UK, or Silicon Valley. Maybe it's not me who will solve this, but I want to have the impact to create the possibility. I'm 54 years old. Unfortunately, I'm quite old, but why shouldn't a new generation in Europe at least have the opportunity to invest wherever they want?

This is something that maybe I won’t solve, but I want to contribute my efforts. Rancilio was an espresso machine company that adopted a philanthropic approach. We supported the local ecosystem, employing over 2000 people, and always being careful to have a low environmental impact. My journey now is investing in innovation, whether in biotech, AI, or agriculture, I think I’m doing something positive.

What drives you? What makes you excited and gets you up in the morning?

I like to always push the limits. I don't want to say a bad word about the financial system, but in a system where selling is what the market wants, if the market wants impact, let's give it impact. If it wants AI, let's give it AI. I feel like I have to take a little risk every day to push the limit.

This includes taking risks geographically, with people, and in different sectors. Innovation is about pushing the boundaries. Sometimes the financial system can feel very old compared to the industrial ecosystem built around innovation. Some venture capitalists bring this to the table. I'm not a Venture Capitalist myself; I'm more a kind of aggregator of other peoples’ experiences. I want to push the limit a little every day and bring more people with me on this journey.

What does the future look like for you?

If I'm succeeding in creating a completely different world, even with common values, that's a good personal result. My sister and 48 families have joined us. We’re really like Forrest Gump running. When I’ll be tired, I'll eventually stop. But for now, I feel like creating something that doesn't exist yet and sharing it with other people in a positive way.

What gives you balance outside of work?

My family owns a place in the forest. Sometimes I have to take my work there but I manage to go there very often. I have a dog there. My family comes to visit and we spend time together there. There are donkeys too. It's very close to Milan. The idea of coming back to my roots is very nice for me. I go running. I do some sports at the seaside but also in the mountains. I love to spend time in nature.

Thank you, Luca.

Thank you, Robin.