Becoming an angel investor in Luxembourg not only offers the potential for financial gain but also the opportunity to support innovation, mentor entrepreneurs and expand one’s professional network. Romain Hoffmann, Head of Investor Committee at the Luxembourg Business Angel Network shares some insights.
Letz network
Networking plays a pivotal role in the success of angel investors in Luxembourg. Establishing meaningful connections with entrepreneurs, fellow investors, and key industry players is crucial in this journey. A great place to start is to join an already successful key player in the investment ecosystem like LBAN or BeAngels.
With successful start-ups in their portfolio, such as Governance.com, Salonkee, and Doctena, the group has made its mark in the angel investing world.
Since its inception, LBAN has brought in more than €45m in direct investment.”Last year we invested about €8m with around 50-55% invested in Luxembourg startups,” says Hoffmann. Investors can join LBAN with a minimum investment of €5,000, as stated by Hoffmann. The group currently has more than 100 angel investors in their network.
BeAngels prides itself as the connecting tissue between brilliant founders and passionate investors, with 55 fundraising events in 2023. Being a part of BeAngels, investors, and startups benefit from unique advantages and perks, such as up to $100k in AWS Cloud credit, data compiling tools free of charge, and valuable membership discounts to several platforms, up to 50%.
In larger ecosystems, investors might have a broader pool of contacts, but in Luxembourg, cultivating deep relationships is crucial.
“When you are starting as an angel investor, you should aim to be a part of a community. You want to do everything you can to join the community,”
Romain Hoffmann, Head of Investor Committee at the Luxembourg Business Angel Network (LBAN).
Regulations rule
“When you start investing, it is always recommended you start with a professional to avoid making legal mistakes. Later on you become familiar with the legalities of our region on your own,” said Hoffmann.
Luxembourg’s legal and regulatory environment is influenced by its status as a financial hub and its commitment to promoting innovation. However, varying rules and procedures for different industries can pose challenges for angel investors. For instance, tax implications, disclosure requirements, and compliance standards may differ between sectors and industries.
To overcome these challenges, prospective angel investors should seek legal counsel with expertise in startup investments. There are many benefits that attract angel investors to Luxembourg that one should be aware of. According to Romain Hoffmann, in Luxembourg, “as long as you have more than 10% ownership of a company, value-added gains are for free.”
Exploring the ecosystem
With Luxembourg being a major financial center, fintech startups focusing on innovative solutions for banking, payments, wealth management, regulatory technology (RegTech), attract significant investments. Since 2013, Luxembourg has seen an exponential increase in startup funding estimated around 570,000,000 Euros.
Luxembourg has also emerged as a promising hub for space technology, with initiatives like Space Resources, driving ambitions towards space resource utilisation. Leveraging its reputation as a startup nation, joining The European Startup Nation Alliance, Luxembourg offers a supportive environment, funding opportunities, and strategic partnerships, making it even more attractive to investors.
Events, trainings, and accelerators
Local events provide valuable insights into the local startup scene and offer opportunities to identify potential investment targets. These include events such as LBAN Membership events, Silicon Luxembourg’s Startup Apéro, the Luxembourg House of Financial Technology’s events, to just name a few.
“So it’s important that you are in a community with experienced investors. And for that, LBAN offers The Angel Academy,” said Hoffmann. “During our pitching events, we invite ecosystem key players. So we are going to an incubator or accelerator, and startups are then pitching. We are helping them on their pitch deck. We give advice, comments and feedback. Our investors have access to that,” highlights Hoffmann.
BeAngels also offers an Academy dedicated training to potential angel investors. This is also open to people who would like to know more about investing.
Amongst the most well-known incubator programs are the Luxembourg-City Incubator, Technoport, House of Startups, Fit 4 Start, and ESRIC.
Becoming an angel investor in Luxembourg requires a combination of strategic planning, proactive networking, and a deep understanding of the local business environment. By actively participating in the startup community, building strong relationships, and staying informed about regulatory nuances, not only will you navigate the challenges but also contribute significantly to the growth and success of Luxembourg’s emerging entrepreneurial landscape.
Editor’s note: This article first appeared in Forbes Luxembourg here.
