€200m Luxembourg Future Fund 2 Launches to Further Support Innovation

On Friday 17 March 2023, Luxembourg's Ministry of Finance, the Ministry of the Economy, the Société Nationale de Crédit et d'Investissement (SNCI) and the European Investment Fund (EIF) officially launched the Luxembourg Future Fund 2 (LFF 2).

LFF 2 is the successor initiative to the existing Luxembourg Future Fund (LFF 1), which has reached the end of its active investment period.

The initiatives aim to stimulate the diversification and sustainable development of the Luxembourg economy via funding activities. With €200 million in total financing commitments between SNCI (up to €160 million) and EIF (up to €40 million), LFF 2 provides additional firepower in support of innovative projects in Luxembourg.

During Friday's press conference, Luxembourg's Minister of Finance, Yuriko Backes, highlighted: "With the launch of the LFF 2, we will pursue a unique partnership that is built on the EIF's deep expertise of managing public policy focused investment initiatives and the SNCI's as well as the knowledge of the Luxembourg economy of both the Ministry of Finance and the Ministry of the Economy. This complementarity helps focus investments in innovative technologies that will generate a sustainable and positive impact in key sectors like finance and climate technologies, thus contributing to the further diversification of our economy."

Like LFF 1, LFF 2 will target risk-adjusted financial returns whilst simultaneously stimulating the diversification and sustainable development of the Luxembourg economy with investments across a range of sectors including climate technologies, fintech, cybersecurity, energy resilience, life science and medical technologies, as well as new space technologies.

Luxembourg's Minister of the Economy, Franz Fayot, said: "From a public policy perspective, LFF 2 will provide an important tool in driving forward the diversification of the Luxembourg economy and the development of its strategic sectors by cooperating with the private sector in pursuit of sustainable innovation here in Luxembourg."

In line with the existing LFF 1 initiative, investments under LFF 2 will continue to take place in the form of fund commitments and/or co-investments. However, compared to LFF 1 the investment scope has been broadened and will now include investment funds and businesses already established in Luxembourg, thereby allowing these entities to expand local operations further. It will also target more mature innovative businesses by providing hybrid debt-equity investments. As such, investments will also be considered for more mature companies, facing a complex and uncertain market environments, including businesses currently exposed to changes in digitalisation, supply chain disruptions or companies transitioning to a low-carbon business model.

SNCI President Vincent Thurmes stated: "By further valorising the 'ecosystem dynamics' initiated by LFF 1, LFF 2 will continue to develop together with all the stakeholders Luxembourg's sustainable and resilient economy of tomorrow."

"We're pleased to partner again with the SNCI and leverage on the EIF's experience for the second generation of the LFF initiative," said EIF Chief Executive Marjut Falkstedt. "Broadening the scope to include hybrid debt equity investments in addition to venture capital will help address the financing needs of innovative companies that can bring value to Luxembourg and strategic sectors of the European economy."

LFF 1 was a €150 million fund launched in 2015 by SNCI (€120 million contribution) and EIF (€30 million); its active investment period ended in the fourth quarter of 2022.