June 23, 2020

Luxembourg’s government joins forces with its startups

Luxembourg is a launchpad for startups to expand internationally.

Connor Bilboe

4 min read

Supported by

LuxInnovation (Startup Luxembourg)
Belval, Esch-sur-Alzette, housing one of Luxembourg’s incubators, Technoport.

For a tiny country with less than 1m inhabitants, Luxembourg punches above its weight when it comes to supporting startups. And during the Covid-19 crisis it has doubled down on measures to keep them afloat. 

Franz Fayot, Luxembourg’s minister of the economy, tells Sifted that the government didn’t only want to protect industry giants during the pandemic. “Many of the governmental support measures set in place were particularly suitable for young innovative companies,” he says. Besides direct grants, they included capital grant advances, flexible bank loans and state-backed bank credits, among others.

The wider ecosystem played its part too: several incubators decided to reduce their rents and some, such as TechnoportLuxembourg-City Incubator and the Lux Future Lab, were free for a limited period.



What’s more, the government confided in its startups to find solutions related to the pandemic.

“We launched a call for projects aimed at supporting ecosystem initiatives to develop innovative solutions to tackle the health and economic crisis we experienced,” says Fayot. 

Entitled 'StartupsvsCovid19', it was launched by Startup Luxembourg, a public initiative supported by the Ministry of the Economy to support the startup ecosystem. The project invited startups to share cutting edge projects to help boost technology innovation, in an effort to overcome the economical, societal and health-related factors linked to the Covid-19 pandemic.

Franz Fayot, Luxembourg's Minister of the Economy
Franz Fayot, Luxembourg’s minister of the economy. Credit: Ministry of the Economy of Luxembourg.

Fayot, who helped to launch the call for projects was impressed by its response: “More than 300 startups have responded to ‘StartupsvsCovid19’.”

He adds that the willingness of startups to quickly offer creative solutions to support the country demonstrates why investing in innovation makes sense. “It is a sign of a mature ecosystem that fulfils its role as a driver of innovation for our economy, but also our society and our healthcare system,” he says.

Sector-wide solutions from startups in Luxembourg were selected for the programme, from edtech to logistics. These include software-as-a-service (SaaS) platform Softbrik’s digital assistant, which allows doctors to maintain frequent contact with their patients in relation to the early symptoms of Covid-19, and VR creation studio Virtual Rangers’ platform, which provides training to health staff to optimise care for Covid-19 patients. Each of the 15 projects selected received up to €150,000 in funding.

Not only Covid

Outside the context of the pandemic, Fayot explains that there are still numerous support measures attracting startups from across Europe to the Grand Duchy. The government’s €150m Luxembourg Future Fund (LLF) aims to stimulate the diversification and sustainable development of the Luxembourgish economy by attracting VC fund managers and early to later stage innovative businesses into Luxembourg. Investments made are expected to bring highly relevant international spillover to Luxembourg.

It also has an accelerator programme, Fit 4 Start, which focuses mainly on IT and data-driven tech. The accelerator offers participants 16 weeks of tailored support, and funding opportunities to top it off.

“Qualifying for the programme also means a grant of €50,000 and free access to incubators,” says Fayot. “The Ministry of the Economy offers an additional grant of €100,000 to startups that have successfully completed the full Fit 4 Start programme and raise additional private capital.”

An international launchpad

Fayot says that initiatives like these are a great way to attract early-stage companies across the globe to come and test their products and services before launching internationally. He also points out that the country has been attracting multinational companies serving international customers for years — and the government does what it can to make it easy for businesses, big and small, to thrive.

For startups, the Grand Duchy can be used as an ideal test market for developing concepts.

“In general, Luxembourg offers easy communication with public authorities and the availability of dedicated support. For startups, the Grand Duchy can be used as an ideal test market for developing concepts and testing new products and services before an international launch,” says Fayot.


He continues saying that in turn, its geographic location — landlocked between France, Belgium and Germany — brings a melting pot of top, diverse talent to its doorstep: “Luxembourg owes a large amount of its economic success to its foreign labour force, consisting of both expats and cross-border commuters. Diversity is an important driver of innovation, and Luxembourg is an expert in embracing all of its facets.”

The long-term impact of Covid-19 on startups and investors will only increase the need for more support in the future, something that Luxembourg’s ecosystem is well stocked with. 

So, who’s up for the Grand Duchy?

Startup Luxembourg is a public initiative supported by the Ministry of the Economy to connect, support and promote the startup ecosystem.