Pascal Bouvier, managing partner and co-founder of MiddleGame Ventures and leader of the Venture Capital Club shares his views on the ecosystem, the challenges it faces and the changes he hopes to see in the future.
You’re one of the leaders of the LPEA’s Venture Capital Club. What’s your mission and what is currently at the top of your agenda?
Our mission is severalfold. First, we want to grow the VC fund ecosystem in Luxembourg. This means attracting more VC funds to Luxembourg by showcasing the advantages a GP yields by incorporating a fund in Luxembourg and by establishing their investment team partially or totally. Second, we want to present topical themes and subjects on venture investing and operational issues to our club members. Lastly, we want to help our club members navigate specific regulatory or compliance issues as they arise from time to time.
What are the biggest challenges currently facing Luxembourg’s VCs industry?
Luxembourg is an expensive place to establish a venture fund, especially a small or medium-sized one. Furthermore, it can be difficult to establish a banking relationship with Luxembourg banks.
Although Luxembourg is one of Europe’s leading financial hubs it lacks a very developed VC ecosystem. Why?
Historically, Luxembourg has developed its funds industry around publicly traded funds, large private equity funds and large real estate funds. Venture investing is a drastically different business that requires specialized service providers and does not have the same cost structure as a large PE fund or a publicly traded fund. The more service providers target the VC industry with customized offerings, the more VC GPs will find it attractive to establish themselves in Luxembourg.
Accessing early-stage venture capital proves to be a big challenge for Luxembourgish startups. How can VCs better support them in this endeavour?
Luxembourg is a small market, hence direct to consumer Luxembourg startups will always find it difficult to attract venture capital to their endeavors. A small homemarket is always a constraint. However, b2b startups will not face these same constraints. Everything else being constant, a growing b2b startup ecosystem may attract more VC investors.
Additionally, Luxembourg needs to attract the best innovators and entrepreneurs. With the best entrepreneurs, you get the best ideas, the best startups, the best execution, and this tends to attract VC investors obviously. For this to happen one needs to create a welcoming environment for entrepreneurs, both from a tax perspective as well as an operational perspective.
What changes do you hope to see in Luxembourg’s VC ecosystem over the next few years?
More Luxembourg-based VC GPs, with their investment teams located in Luxembourg.
This article was first published in the VC Guide 2022
