Luxembourg to Create New Digital Tech Fund Compartment to Support Startups

On Thursday 15 June 2023, the Luxemborg Minister of the Economy, Franz Fayot, announced during a press conference that the Grand Duchy is participating financially, alongside a group of investors, in the creation of a new compartment of the "Digital Tech Fund", to continue to meet the need for financing innovative companies in the start-up phase and thus to consolidate the development of the start-up ecosystem in Luxembourg.

Launched in 2016 on the initiative of the Ministry of the Economy with a group of private investors, the "Digital Tech Fund" invests in innovative companies created less than seven years ago and which develop products or services that preferably already exist as a working prototype. Endowed with a financial envelope of €20.33 million in total in two instalments of €10.16 million for 2016-2019 and 2020-2022, the seed fund ('pre-seed' and 'seed') is managed by Expon Capital. With equity investments in thirteen technology start-ups, the “Digital Tech Fund” has almost completed the deployment of its initial investment capital in this portfolio. The intervention of the fund enabled the thirteen companies concerned to attract financing of €120 million in capital, in particular by foreign funds.

To ensure the continuity of the "Digital Tech Fund" over the next few years, according to the ministry, the Luxembourg State is participating, with a group of investors, in the creation of a new compartment of the fund. With €14 million at its first closing, this new compartment was financed by the contribution of current shareholders of the "Digital Tech Fund" (BIL, Post Capital, Proximus, SES and SNCI) and by new investors such as the Chamber of Commerce, Cargolux as well as several private individuals. The State's participation in the launch of the new compartment amounts to €3 million through the budget of the Ministry of the Economy, to which is added €1.5 million from the national credit and investment company (Société Nationale de Crédit et d’Investissement - SNCI).

During the press conference, Minister Fayot said: "The 'Digital Tech Fund' is part of the existing financing instruments and public support measures such as the Fit 4 Start programme or the various of aid from the Ministry of the Economy which contributes to making Luxembourg a land of welcome for start-ups and to attracting new innovative activities. In addition, the fund plays an important role in identifying and supporting the most promising start-ups in their international growth.”

Yuriko Backes, Luxembourg Minister of Finance, commented: “The second phase of the Digital Tech Fund promises to consolidate the advances made over the past few years in the development of the landscape of start-ups and FinTech companies in Luxembourg. I am pleased to see that particular attention is paid to the impact of investments aimed at promoting sustainable characteristics. This new chapter will undoubtedly intensify innovation in Luxembourg, support the growth of future innovative leaders and contribute to the creation of quality jobs.”

Alain Rodermann, managing partner of Expon Capital, added: “The Expon Capital team is very proud of the work accomplished since 2016 with the investor partners of the Digital Tech Fund, and in particular of its contribution to the constitution of an efficient ecosystem for start-ups in Luxembourg.”

Philippe Linster, CEO of the Chamber of Commerce's House of Startups, added: "The start-up and innovation ecosystem is a priority for the Chamber of Commerce, which we already support with numerous initiatives, including the House of Startups. Our participation in the Digital Tech Fund is therefore completely complementary to the existing offer. This fund perfectly illustrates the good collaboration that exists between the public world, the institutional world and the private sector.”