The discovery of the New World was driven, in part, by powers who wanted to circumvent the Italian and Ottoman stranglehold on trade with the East. For the Italian states already engaged in this trade, it meant there was little reason to fund voyages and set up colonies, as they (at the time) dominated the existing trade routes, and could much better hold onto their power/wealth by focusing their efforts there.

The Italian city states peaked in the late 1300-1400s and places like Venice and Genoa had colonies throughout the Mediterranean and Black Sea and they enriched themselves as the main thoroughfare of Asian goods into the rest of Europe. Due to a myriad of political and economic reasons ( the Portuguese, Spanish and eventually Dutch and English began to dominate world trade) the city states declined. The city states remained regional powerhouses (preventing a unified Italy for quite a while) but their wealth and power never came close to the larger kingdoms that would go on to dominate Europe and the world.