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How Luxembourg Can Be Inspired By New York’s Startup Ecosystem

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Europeans have long admired the New York way of life and the U.S. business-oriented mindset. Numerous cities across Europe are trying to replicate Silicon Valley’s model, infusing it with their own “European” ingredients. Jean-Claude Knebler, Consul General of Luxembourg in New York, talks about the Big Apple’s startup ecosystem and how Luxembourg can be inspired by the city “where everything is possible.” (Image Credit: Flickr/Henning Klokkeråsen)

What are New York’s assets and what ideas from the Big Apple should we implement in Luxembourg?

New York is not necessarily an entrepreneur-friendly city. The cost of doing business is high, as are living costs. What is unique about the city is its energy and optimism. It is open to new ideas, developed by people from all around the world. Old money, corporate executives and startup entrepreneurs rub shoulders and cross-fertilize. New York has an atmosphere that encourages entrepreneurs to go after their business goals or, to use Frank Sinatra’s words: “If I can make it there, I’ll make it anywhere.” This New York feeling is unique and probably impossible to replicate.

As far as the hard facts are concerned, I believe that Luxembourg is actually a better place to be. It is cheaper, regulation is more flexible, tax is lower and the quality of infrastructure and life in general is definitely better, once one looks beyond “fun” and into the more essential issues affecting life, such as education and healthcare. Luxembourg cannot be New York and I’m not at all sure whether it should want to be. To be fair, it’s comparing two very different animals: the entire country has about as many inhabitants as some neighborhoods of Manhattan. We play in different leagues.

We are currently working on a program to provide soft-landing spots for Luxembourg startups that wish to get a first whiff of American air in New York.

How do you support Luxembourgish startups with their expansion into the U.S. market? Do you have concrete examples of startups that have set up their activities in NYC?

With my small team of 2.5, we are certainly limited in what we can do, but we try to guide Luxembourg startups and provide them with information that helps them make the right decisions. This actually starts at home, where many are not aware of the financial help available for companies that want to go international. Once this is covered, we guide them to a network of trusted legal advisors in New York in order to help them figure out the best ways of establishing a local presence and of course how to deal with the highest hurdle of all: immigration of the founders or key members of the team.

One startup we worked with intensively to help set up their presence in New York was Talkwalker. We provided guidance and assisted the Luxembourg management team when they were looking at different solutions. Additionally, we often share key business contacts with them.

How could we further connect New York’s and Luxembourg’s ecosystems for startups?

New York’s ecosystem is much more driven by the private sector than Luxembourg’s, which makes for a difficult connection. We are currently working on a program to provide soft-landing spots for Luxembourg startups that wish to get a first whiff of American air in New York. However, it is not easy because the pipeline of Luxembourg ventures ready to cross the Atlantic is rather thin, which makes it difficult to create a long-term partnership with incubators or accelerators that are very often quite focused on a specific sector or subsector.

On the public side, New York City has launched some partnerships, most recently with Paris. It is hard to understand the economic reasoning behind this idea, if it goes beyond the close personal relationship between the mayors of the two cities.

Connections emerge over time and are very often the fruit of personal labor: we need to be present and visible constantly so that the New York startup and VC community starts thinking more about Luxembourg as a thriving technology ecosystem that is generating an ever increasing number of talented entrepreneurs instead of considering it just a technical domicile for corporate vehicles.

When I get a U.S. entrepreneur to take the step and travel to Luxembourg, we are very often on the winning side because the infrastructure is really first-class.

How do you convince U.S. startups to choose Luxembourg as their base to expand into European markets? What are your main selling points?

I guess there are three major selling points. The first one is the location. Geographically, Luxembourg is ideally positioned to expand into the major European markets.

The second one is regulation. Luxembourg is very forward-thinking when it comes to regulation. This includes taxation (which should not be underestimated in the decision-making process), specific regulation touching technology and new fields such as FinTech, as well as the openness and business-friendly attitude of government decision makers and administrations.

The third selling point is the infrastructure. When I get a U.S. entrepreneur to take the step and travel to Luxembourg, we are very often on the winning side because the infrastructure is really first-class. I am not only speaking about datacenters or connectivity, but rather also about the public buildings, roads and the airport. The difference with the United States, where infrastructure has been badly neglected due to low public spending on it, is glaring.

Do you think Luxembourg can become a major digital hub in Europe—and beyond?

I believe that Luxembourg is already one of the leading digital hubs in Europe. Can it grow even more? I think so, if we keep the regulatory burden reasonable and continue on the government’s side to be proactive, keep investment in infrastructure up and provide a guiding hand where the market is still failing, such as on the supply side of venture capital.

The main challenge will be ensuring availability of qualified human resources at different salary range levels. The government has taken some interesting initiatives, also together with the private sector, in order to prepare more young people for careers in new technological fields.

I think Luxembourg understands that technology is an enabler for the future development not only of our economy, but also society. The government is taking action to prepare Luxembourg as an early technology adopter in order to channel this development in a way that it contributes to the common good of our nation and people. You cannot stand in the way of technology and innovation. Information and discovery cannot be undone, but do need to be directed wisely. Our country, due to its relative affluence and small size, can be more agile in the field of policy-making and position itself as a test market for the technology (digital or not) of the future.

I would like to see Luxembourg’s ecosystem evolve into a less government-driven sphere and have the private sector and investors take more responsibility and risk.

What is your personal point of view about Luxembourg’s startup ecosystem? 

I left Luxembourg in 2012 and remember how few resources there were for budding entrepreneurs. This picture has changed dramatically and I am now tempted to say that one can be overwhelmed by the number of different support/mentoring/networking initiatives that have emerged in the past four years. There has definitely been a change of mindset back home, driven initially by a handful of people. They will recognize themselves and I thank them for their efforts.

On the other hand, I am a bit wary when “entrepreneurship” becomes “fashionable.” Being an entrepreneur is not for everybody; it’s tough and you carry heavy responsibility. It demands careful consideration regarding whether one is suited to launch a new venture. Luxembourg’s corporate law does not yet give a lot of room for failure, recovering from bankruptcy is difficult. I hear that work is being done to make the law more flexible, also keeping in mind that a failed business not only impacts the entrepreneur, but also employees, investors and third parties such as suppliers or clients.

Personally, I would like to see Luxembourg’s ecosystem evolve into a less government-driven sphere and have the private sector and investors take more responsibility and risk. It’s not in our culture yet, but we’ll get there eventually. The road won’t be easy, as many other lucrative asset classes, such as real estate, compete for the investable wealth held by potential business angels. We need to educate more business angels, but also work on the quality of the startup scene to provide a wider palette of viable investment opportunities and then help the ventures scale beyond our borders to make them attractive for seed and venture capital investors.


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