The ‘Let’s make it happen’ effect: Luxembourg startup ecosystem journey
Today, we're talking about the success story of Luxembourg's booming startup ecosystem. Domagoj Ivanusa will be joining us, he is an international partner closely following the work of Digital Dalmatia. We're also interested in hearing about experiences from other startup ecosystems to draw comparisons and apply positive insights here. Join the conversation!
Domagoj currently works as a Marketing Manager at Amazon, and he is also a Startup Committee Member at Creative Young Entrepreneur Luxembourg (CYEL) startup competition. He's here to unravel the unique journey of this small yet dynamic country.
Let’s start by pointing out some numbers. Luxembourg boasts one of the highest GDPs per capita globally, with over 500 startups and €152 million invested through 20 VC deals in 2023. Dynamic startup ecosystem with 15 incubators and accelerators, and a high startup density of 800 startups per 1 million people - all while covering a land area roughly half the size of entire Split-Dalmatia County. Can you tell us the secret behind this success?
Domagoj: Well, it's no accident. Luxembourg's success stems from decades of planned development, strategic execution, and forward-looking thinking. Transforming from an iron and steel hub to the world's second-largest investment fund center, Luxembourg leveraged its agile public sector to create an environment where both institutions and the private sector thrive. Such environment has been a fertile ground to kick off startup ecosystem development a bit more than a decade ago.
Digital Dalmatia: How has the national startup association, Startup Luxembourg, contributed to this success?
Domagoj: Startup Luxembourg summarizes the Luxembourgish policymakers' approach with the powerful mantra, 'Your success is our success.' This mindset has fostered an environment offering founders comprehensive institutional support. From centralized assistance at the House of Entrepreneurship to free business consulting via nyuko, and guidance from Luxinnovation, founders find support every step of the way. The House of Startups, an initiative by the Chamber of Commerce, further accommodates four innovation hubs.
Digital Dalmatia: The ecosystem seems rich with support. Can you say more about other support mechanisms?
Domagoj: Absolutely. Beyond the core support, various players like Technoport, University of Luxembourg incubator, Luxembourg House of Financial Technology, and others offer specialized assistance. From empowering high-tech companies to supporting social entrepreneurs, the ecosystem is well-rounded, catering to diverse startup needs.
Digital Dalmatia: It's great to see such a diverse support system. Moving on to programs, which initiatives stand out for founders seeking traction?
Domagoj: Luxembourg's leading accelerator, Fit4Start, provides 6 months of coaching, up to €150K equity-free funding, and access to co-working space. Founder Institute, the world's largest pre-seed startup accelerator, and programs like Creative Young Entrepreneurship offer unique opportunities. These programs not only provide support but also contribute to visibility and international exposure for founders.
Digital Dalmatia: The funding landscape is crucial. How does Luxembourg fare in terms of investments?
Domagoj: Luxembourg startups secure substantial seed investments, with a median of €523K. Business angels, public initiatives, and public-private partnerships actively contribute. The Luxembourgish Business Angel Network reports significant investments, and initiatives like the Young Innovative Enterprise and Digital Tech Fund further bolster the funding landscape.
Digital Dalmatia: Matias Mäenpää, Co-Founder of Videobot who recently secured 2 million, views Luxembourg as a great place to raise funding. How do founders perceive the ecosystem?
Domagoj: Matias highlights the variety of investors and the multicultural nature of the ecosystem. He appreciates the government's support, emphasizing the favorable development pace within the Luxembourgish startup scene. Also, he was the winner of CYEL 2023 and emphasized how impactful such spotlight can be on a startup’s journey.
Digital Dalmatia: Despite the successes, what challenges does Luxembourg's startup ecosystem face?
Domagoj: Startup Genome classifies Luxembourg in the "Activation" phase, citing challenges like a fragmented community, lower connectedness, and difficulties in securing late-stage funding. Local connectedness is crucial for growth, and it's an area the ecosystem aims to strengthen. Recently, I had a conversation with Cecile Sevrain, ex-Director of Luxembourg Business Angel Network and she pointed out the ecosystem has room to grow in the domain of social innovation and entrepreneurship, as it’s still under-represented area.
Digital Dalmatia: And how does Luxembourg position itself globally in the startup landscape?
Domagoj: Luxembourg ranks 34th in the 2023 Global Startup Ecosystem Index, emphasizing its ambition to lead even in deep tech industries like space innovation. Challenges include high salaries and costs of living, but Luxembourgish startups compensate with a high proportion of foreign customers.
Digital Dalmatia: Lastly, how do you see the future of Luxembourg's startup ecosystem?
Domagoj: While the ecosystem is in the "Activation" phase, positive developments like high startup density and a multinational talent pool bode well. Challenges exist, but Luxembourg's national slogan, 'Let’s make it happen,' reflects a mindset that provides inspiration and a blueprint for emerging ecosystems.
