Coordinator of Startup Luxembourg Jonas Mercier talks about the opportunities for VCs in Luxembourg.
As an ecosystem promoter, how much contact does Startup Luxembourg have with VCs?
We are really trying to create and strengthen the community around startups. That means incubators, accelerators and public partners are very important but also investors. In that way, we try to be in touch with the VC and business angel community and to involve them in our project.
How essential are VCs for the Luxembourg ecosystem?
VCs are crucial in a way. Startups have this specific growth model where you have a great idea and after that you have to execute it and to expand very quickly to be able to have a scalable model. And for that you need money. You need an investor that will pay for this risk at the beginning, and at the international growth phase. So it’s crucial to have investors, but it’s crucial to find financing solutions. By this I mean that you have to have this financial ecosystem of public subsidies and business angels that come at the beginning of the startup lifecycle. And VCs are there for the second part, from Series A to Series C.
What makes Luxembourg startups attractive for the VC community?
I really think that Luxembourg has a booming ecosystem. And we are starting to see more and more success stories. I really think that interest is growing from the VC community. We are well known in FinTech of course because we have this big financial center. Recently, Satispay, which is present in Luxembourg, announced a major fundraising round that made it a unicorn in terms of valuation. Another specific domain is space. Space companies in Luxembourg are developing very innovative services in Luxembourg, which are starting to become interesting for VCs.
Besides these sectors, we can also mention our success stories in digital solutions, such as Salonkee. The booking platform started 5 years ago and now has more than 100 people, with a presence in five countries.
We are a small, young ecosystem, but we are becoming more mature. And now we are starting to see very interesting startups growing out of Luxembourg.
Luxembourg offers a number of public financial subsidies to startups. How do these schemes attract investors?
Entrepreneurs have awesome opportunities to benefit from financial subsidies, depending on the venture’s maturity stage and real needs. There is Fit 4 Start for MVP stage plus companies, there is R&D schemes to complete and commercialise products, but also an instrument to push growth and allow the company to scale. The financial subsidy model is typically build on matching funds. For instance, the Ministry of the Economy can contribute up €800k to the financial need of high potential, innovative growing startups and scaleups, typically leveraged from Startups, when raising their advanced Seed or Series A rounds. That is interesting for VCs, because if they put in money, the government will follow, supporting entrepreneurs with equity-free funding, so no dilution on the cap table for the investors, but also the founders.
This article was first published in the VC Guide 2022
