Luxembourg Aims to Rival Paris and Brussels in Startup Rankings Within Two Years

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As of November 22, 2023, Luxembourg is on a trajectory to solidify its position among the top 15 European startup capitals, buoyed by a trend of supporting early-stage startups and a rapidly evolving ecosystem. Daniil Kirikov, managing partner at Orbita Venture Studio in Luxembourg, is optimistic about the nation’s future in the startup landscape.

The current startup scenario in Luxembourg showcases 521 tech startups, indicative of the country’s “Activation phase” in its startup ecosystem. Remarkably, with a relatively small population, Luxembourg boasts a Startup Density of 800 points, reflecting a robust inclination toward tech entrepreneurship.

Kirikov attributes this positive trend to Luxembourg’s unique legal and economic landscape. The nation’s initiatives in startup grants, the increasing rate of talent attraction, and sustained funding contribute to its potential to become the European Silicon Valley.

Venture capitalists have taken notice of Luxembourg’s burgeoning startup scene, recognizing the benefits of investing in the country’s thriving startups. According to Kirikov, Luxembourg’s exceptional legal and economic conditions make it an attractive destination for both startup founders and investors. He notes the unusual dynamic where demand exceeds supply, creating favorable conditions for well-operated businesses to succeed.

A study by Startup Genome positions Luxembourg’s startup ecosystem in the “Activation phase,” emphasizing the need for fostering a connected community, increasing early-stage funding, and accelerating startups. Despite challenges faced by founders in opening bank accounts, Kirikov suggests leveraging startup incubators like Luxembourg-City Incubator (LCI) to facilitate communication with the government and banks.

Luxembourg’s government is actively supporting the startup ecosystem, with initiatives backed by the Chamber of Commerce and housed in the House of Startups, a facility spanning nearly 6,000 square meters accommodating up to 200 startups. Accelerators such as Fit 4 Start provide grant programs and networking events. Kirikov highlights co-financing grants covering 55% of costs for new projects and the “Grow” grant offering up to 80% of funding, capped at 800,000 euros.

Despite a general market downturn, the European investment landscape remains resilient, with cumulative capital invested in 2023 standing 35-40% higher than that of 2020. Luxembourg’s entrepreneurial ecosystem mirrors this strength, focusing particularly on early-stage purpose-driven startups. Noteworthy funding rounds include ThePlaceToWish.com securing €1 million, Hydrosat raising $20 million, Next Gate Tech bagging €8 million, and nZero amassing $16 million in a Series A funding round.

The trajectory of supporting early-stage startups in Luxembourg is anticipated to persist as the country’s startup ecosystem advances toward the “Globalization phase,” with approximately 130 startups remaining to reach that milestone. As Luxembourg continues to foster innovation and attract investment, it stands poised to become a prominent hub in the European startup landscape.