Startup Nation Luxembourg: What Strategy For 2023-2028?

Lex Delles, minister of economy and SMEs (© DP)

Minister of the economy and SMEs since 17 November, among others, Lex Delles (DP) details the government’s new vision for the promotion and support of startups and innovation for the next five years.

Coalition Agreement: “Start-up Strategy: The Government will strengthen the promotion of Luxembourg as a Start-up Nation.”

What is your definition of the “Start-up Nation”? How do you think Luxembourg stands internationally in this area? 

To make Luxembourg a Start-up Nation, we have set out to create an environment conducive to the creation of startups, attracting both national and international entrepreneurs. 

Several tools have been put in place over the last decade, such as the Luxembourg Future Fund or the platform, with the main objective of presenting the Luxembourg start-up ecosystem and all its players, through a strong national brand. 

At the international level, Startup Luxembourg highlights all the advantages that the country can offer to innovative start-ups that want to serve customers throughout Europe.  

In 2022, a comparative study of the start-up ecosystem confirmed that the framework and measures put in place to stimulate the creation of innovative start-ups were conclusive. That’s why we are making sure to maintain them while now also focusing on their growth. 

Internationalization is a must for start-ups wishing to grow, conquer new markets, and continue to develop their products and services. It’s as perilous and complex a step as creating a start-up. 

Our ambition is therefore also to support startups in the “scaling-up”, i.e. to help them become high-growth scale-ups. 

Lex Delles, minister of economy and SMEs

In this context, a roadmap, entitled “From Seed to Scale“, was established and publicly presented in June 2023. 

It details a series of concrete measures to support the development of scale-ups and bring our start-up ecosystem to the next level of maturity. The new Government confirmed the implementation of this roadmap in the 2023-2028 coalition agreement. 

Among the concrete measures, I was able to announce in January 2024 the official launch of “Scale up”, the new support program, managed by Luxinnovation, specifically dedicated to scale-ups. Three innovative companies have been selected to participate in this pilot version and further measures will follow.

Coalition Agreement: “To help start-ups operating in the field of artificial intelligence to offer new products and services, any regulatory blockages will be untied…”

What are these regulatory blockages? And how do you plan to unlock them?

Artificial intelligence is a promising technology in many areas, although its implementation presents a series of challenges. Its effectiveness must be guaranteed, especially to meet the trust of users. To do this, artificial intelligence needs a large volume of high-quality data for AI training. 

In addition, this data must be put in the context of their specific business to be relevant (e.g. health, weather, cybersecurity), which induces specific regulatory requirements that can be perceived as blockages. 

To unravel this complex regulatory context, the AI Act was put in place, at the European level, to oblige designers of AI products and services to create risk profiles and impose certain obligations, particularly in terms of security and reliability, on the one hand. 

On the other hand, the Luxembourg government has included in the coalition agreement the desire to publish sectoral guides for artificial intelligence. 

Lex Delles, minister of economy and SMEs

These guides will help businesses, large and small, identify the specific legal requirements that apply in the context of their business. As a minister, I naturally support this approach, which will make it possible to significantly reduce the individual effort to be made by each company and will also, in the short term, make it possible to substantially improve the quality, reliability and security of Luxembourg’s AI applications and services. 

Luxembourg has already invested heavily to make the data economy accessible to companies, by setting up trusted infrastructures such as the MeluXina HPC (essential for training large AI models), the national data exchange platform (Luxembourg National Data Services) and the GAIA-X initiative (data interoperability, an essential condition for data exchange) and the challenge now is to support the best possible data exchanges. companies, including startups, that want to implement AI solutions.

Coalition Agreement: “The Government will continue to invest in different venture capital initiatives such as the Digital Tech Fund and the Luxembourg Future Fund to improve the financing of start-ups and scale-ups in Luxembourg”

What shape will these investments take? What are the targeted amounts?

Instruments such as the Digital Tech Fund (DTF) and the Luxembourg Future Fund (LFF) are crucial for the financing of startups and scale-ups as they allow these companies, which are at an early stage of development and often do not have access to traditional sources of financing, such as bank loans for example,  access to capital.

Stimulating the creation of startups, increasing their number and supporting the most promising of them so that they become internationally active scale-ups is one of the government’s priorities.  For this reason, the State has chosen to invest, alongside private investors and on the same terms as the latter, in funds such as DTF and LFF and will continue to do so in the future. 

The Digital Tech Fund, in particular, is the first venture capital fund launched by the Luxembourg State, with a group of private investors, in 2016 that targets in particular innovative start-ups in the ICT sector. It has invested a total of €20.33 million in 13 start-ups. 

In 2023, a second sub-fund was created to ensure the continuity of the DTF in which the State, alongside private investors, has once again invested. The total amount targeted by this second sub-fund is €20 million, which will also be invested in the most promising start-ups in the ecosystem over the next three years. 

The contribution of private capital in these initiatives is essential and I congratulate the Expon Capital team, which manages the Digital Tech Fund, for having already managed to raise so much private capital for this second sub-fund, successor to the DTF and I am appealing to investors who would still be interested in joining as it is still possible.

Lex Delles, minister of economy and SMEs

The Luxembourg Future Fund 1, on the other hand, is a holding fund with a total of €150 million, including a €120 million commitment from the National Credit and Investment Company (SNCI) and a €30 million contribution from the European Investment Fund (EIF), which was launched in 2015. 

The active investment period of LFF 1 came to an end in the fourth quarter of 2022 This is why, in March 2023, SNCI and EIF launched LFF 2, this time with €200 million, including a €160 million commitment from SNCI and a €40 million contribution from the EIF. 

The objective of the LFF 1 and LFF 2 funds is to stimulate the diversification and sustainable development of the Luxembourg economy through financing activities in innovative technologies, which will have a sustainable and positive impact in key sectors such as fintech, space technologies, health technologies, and cybersecurity.

Coalition Agreement: “Health Hub”: The Government will continue to develop the current “Luxembourg HealthTech Cluster” and make Luxembourg a real “Health Hub”. In collaboration with the Greater Region and the European Union, scientific and economic expertise will be further networked. In particular, the Government will explore new opportunities to raise venture capital for start-ups.”

How does the ministry of the economy foresee the development of this cluster? 

The government’s ambition is to position Luxembourg as a leading European hub for the development, evaluation, and adoption of digital health technologies on the European market.

To do this, coordination between all actors in the value chain is essential, ranging from researchers to entrepreneurs, to health professionals, and it is necessary to address the specific problems faced by companies in this sector in order to help them find solutions.

The main national public and private actors in the sector are brought together in the cluster. By joining, companies have access to a range of free services such as, among other things, putting them in touch with other companies in the sector, as well as with researchers, doctors, and other health professionals, or individual support to apply for national and European funding sources (state aid or European projects). 

The “Luxembourg Healthtech Cluster” also contributes to promoting Luxembourg’s HealthTech ecosystem beyond borders, not only in the Greater Region but also in Europe, through participation in fairs, for example, or the organization of dedicated events.

What about the HE:AL Campus?

The implementation of the Health Technology Campus project, called “Health And Lifescience Innovation (HE:AL) Campus” is also crucial to make Luxembourg a true international health hub, and I therefore intend to continue it. 

Indeed, this large-scale infrastructure project aims to attract companies active in the field of medical devices and in vitro diagnostics, as well as digital health tools and services. 

R&D, innovation, production, as well as consulting and services in the field of health technologies are also targeted. By meeting the structural and infrastructure needs of companies in these sectors wishing to establish themselves in Luxembourg, the site will contribute to the development of essential technological pillars for the implementation of personalized medicine, centered on the use of health data, thanks to artificial intelligence. 

Work is due to start in 2024 for this campus, which will eventually occupy an area of nearly 2.4 hectares, located between the House of BioHealth (HoBH), the future Südspidol of the Emile Mayrisch Hospital Center (CHEM) and the Cité des sciences de Belval, thus allowing a geographical rapprochement between research, innovation and the medical world, key partners of innovation in the health technology ecosystem.

What are some of the issues faced by healthtech companies?

A unique issue for healthcare companies that want to commercialize a new product is the fact that bringing it to market usually requires clinical studies, involving both patients and physicians, to obtain regulatory validation. 

To meet this need, the Ministry of the Economy, in collaboration with the National Research Fund and with the support of Luxinnovation, has launched joint calls for projects focused on digital health technologies, to stimulate collaborative research and development projects, through public-private partnerships (PPPs). 

In concrete terms, several projects involving companies in the health sector with Luxembourg hospitals and/or research institutes have been selected for public co-financing, which has enabled them to carry out the necessary clinical trials and to validate, in the long term, whether or not their products have been placed on the market.

The implementation of these calls for projects has proved conclusive and I therefore also intend to continue on this path, which contributes to the development of a real “health hub” in Luxembourg.

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