Luxembourg’s startup ecosystem keeps growing, as do the country’s ambitions in this field. “Supporting startups is a priority for the government,” said Minister of the Economy Lex Delles when opening the annual conference of the Digital Tech Fund, which invests in early-stage startups. “We intend to increase the number of startups in Luxembourg further in order to enhance innovation and build the scaleups of tomorrow.”
Scaleup support programme under development
The Digital Tech Fund is one of the cornerstones of Luxembourg’s strong support system for early-stage startups that has been created over the past years. So far, the fund has invested in 14 companies which, following the seed investment from the fund, have raised €134 million from foreign VCs – a 10-time multiplier effect. Their workforce has also increased three-fold to around 500 employees. “Being able to attract foreign investment testifies to the quality of our startups,” Minister Delles pointed out.
However, there is a lack of support in the country for maturing scaleups that are ready to expand. To remedy this, Luxinnovation has been given the mandate to develop a programme geared at startups that have the potential for scaling. “We need to identify the specific hurdles that these companies face and design a programme that addresses them,” Sasha Baillie, CEO of Luxinnovation, said during a panel discussion on the status of entrepreneurship, technology and innovation in Luxembourg.
Each startup encounters its own set of challenges, and we need to find out how we can best support them individually.
To do this, the agency has reached out to the ecosystem and set up a keystone team including a mix of founders, VCs, incubators and institutional players who each contribute to the programme design with their specific experience. They have also participated in the selection of the three startups participating in the pilot edition of the programme.
“Each startup encounters its own set of challenges, and we need to find out how we can best support them individually. At the same time, we need to evaluate whether the programme is scalable, which is difficult if it is too specific. This is why we have a pilot to test it,” Ms Baillie explained. “We will certainly have to go through several iterations, but I’m sure we can get something going.”
The support from the ecosystem is strong. “Today, the number of scaleups is growing in Luxembourg,” noted Jérôme Wittamer, Founding Partner at Expon Capital that manages the Digital Tech Fund. “Five years ago, we didn’t need this programme, but now we do. I’m very excited about being part of the keystone team and want to see this initiative succeed.”
A real testbed for startups
Another key to success for many startups is having the opportunity to test their solutions with large use-case customers and co-develop their final stages to perfectly fit the market needs. This is a field where Ms Baillie thinks that Luxembourg has a competitive advantage.
“As a country, we have a tremendous potential to be a real testbed for startups,” she said. “I think Luxembourg has a real card to play: our excellent connections with corporates and institutional players that are present in our tight ecosystem. We need to work more on connecting startups with these big players and encourage open innovation.”
We need to work more on connecting startups with these big players and encourage open innovation.
During the Luxembourg Venture Days in October 2023, Luxinnovation joined forces with the Luxembourg Open Innovation Club (LOIC) and the House of Startups and organised a “reverse pitch” where eight corporates looking for innovative solutions presented their needs to a group of startups. “We preselected startups that might have the potential to develop solutions responding to their specific needs, and the experience was really invigorating,” Ms Baillie emphasised.
The reverse pitch event was well received by both startups and corporates. As it was the first of its kind, the format might need to be further refined, but there is a clear willingness to continue with this type of initiatives. “Some of our members would like to work with startups,” confirmed one of the other panellists, Michèle Detaille, who chairs FEDIL – The Voice of Luxembourg’s Industry. “It can be a cultural challenge: big companies function according to processes, structures and so on and can find it a bit difficult to interact with dynamic startups. At the same time, collaboration can give them fresh ideas and a new agility.”