For a small country, Luxembourg's startup ecosystem delivers big results. At present, there are 525 companies and 246 funds in the Western European country. In 2023 alone, €151m was raised by its startups and scaleups through funding rounds — and this is all the more impressive when you consider Luxembourg’s population is just shy of 700k.
“Luxembourg’s growing startup ecosystem has been maturing over the last 15 years and is powered by both foreign and local entrepreneurs,” Jerome Wittamer, managing partner at Luxembourg-based VC firm Expon Capital, tells Sifted.
“Three-quarters of foreign entrepreneurs who have created businesses here were already in Luxembourg from previously working in the country at big or small companies,” he adds. “They appreciate the nature of the ecosystem, which is very different from what you would find in Paris, London or Berlin because it's so much more international.”
Wittamer says Luxembourg’s population is 50% foreign and 50% locals, meaning when you wander into the city, you hear multiple different languages within a few minutes — and this makes for an international approach to business.
He adds that being a small country means founders in Luxembourg must think cross-border from the very start — and although this can be an early pressure, it helps startups foster the international growth mindset needed to scale.
“If you're a German company, for instance, Germany is a big enough market to tap into initially before considering international expansion,” says Wittamer. “Here in Luxembourg, that's not really an option — there is a market, but it's very small.”
Making connections
Spacetech is one of the standout sectors in the country. Wittamer says the country is “punching above its weight” in the sector due to the presence of SES Global, the €2bn satellite telecommunications provider. There’s also Spire, which designs, builds and operates the world's largest multipurpose satellite constellation, along with other rising stars.
Fintech is another industry that’s thriving. Davide Martucci, CEO and founder of AI startup Next Gate Tech, says he is proud to have been part of Luxembourg’s startup ecosystem since the early stages of his company’s journey in 2019.
As the ecosystem grows, there is a noticeable shift toward fostering the development of scaleups.
“As a fintech focused on automating the investment fund industry — an essential sector for Luxembourg — we have benefited greatly from the country's strong support for innovation and growth. Through key initiatives such as the Digital Tech Fund, research and development grants, and the Young Innovative Enterprise programme,” Martucci tells Sifted.
Martucci says Luxembourg is not only focused on supporting startups in their initial phases, but is also increasingly committed to helping companies scale up.
“As the ecosystem grows, there is a noticeable shift toward fostering the development of scaleups, with the country actively creating opportunities and offering the right tools to help startups take the next leap,” he says. “For Next Gate Tech, Luxembourg has been the ideal place to start and grow, and we continue to benefit from the country's appetite for innovation and its efforts to position itself as a key player in supporting both startups and scaleups on a global scale.”
Luxembourg has been the ideal place to start and grow, and we continue to benefit from the country's appetite for innovation.
Events like Luxembourg Venture Days, taking place this year from 16 to 17 October, bring together investors, startups and scaleups for networking, discovery and knowledge exchange, further boosting the ecosystem. Investors can explore new investment opportunities in startups and scaleups selected and curated by Luxembourg's experts and institutions, such as the Vodafone and Technoport innovation centre Tomorrow Street, the American accelerator gener8tor and Le Village by CA, the incubator network of the French banking group Le Crédit Agricole.
“For investors, it’s a chance to identify top-tier investment opportunities while engaging with their peers about emerging trends. As for corporates, they can closely monitor innovations that could transform their sector, a valuable asset to remain competitive,” says Benjamin Tillier, partner at Luxembourg-based VC firm Dedicated.
Attractive investments
So, what makes Luxembourg’s startups so attractive to investors? Martucci says the country offers an innovation-driven environment, where both government and business leaders actively support technological advancements.
He adds that Luxembourg’s small size makes it an ideal testing ground for early-stage companies to engage with potential clients and refine their products and business models, resulting in mature, well-prepared ventures ready to scale.
Luxembourg is a prime anchor point for startups and a highly attractive playing field for investors.
“Startup founders in Luxembourg tend to be professionals from the B2B sector who see these big issues and want to go out and solve them via their own business — and that’s attractive to investors,” adds Wittamer.
Luxembourg is increasingly becoming a fertile ground for startups and investor networks thanks to a strong political will to boost the entrepreneurial ecosystem and attract ambitious projects in promising sectors.
“Seeking to position itself in Europe as an ideal environment for innovation, Luxembourg is a prime anchor point for startups and a highly attractive playing field for investors, who have access to innovative and promising projects supported by a dynamic and growing ecosystem,” says Tillier.
Luxembourg Venture Days - Register here
