Best investment funds in Luxembourg and raising money for a business project

Why choose Luxembourg as the fund domicile?

The heart of Europe, the Grand Duchy has a lot going for it, especially when it comes to business. It's no secret that all the big companies have their headquarters here. You'll find Amazon, Google, insurance companies, giant banks, and the most secure accounts of billionaires. The secret is simple —financial stability and a great tax system for super profits.

But this isn't the only thing that attracts business creators to the country, especially at the very beginning of the entrepreneurial journey.

Solid political and social environment

Luxembourg is a politically stable country with a strong AAA rated economy. The national government has a solid and competent focus on the world of investments. 

Global distribution

The Grand Duchy is a leading global distribution platform. Its funds are offered in 77 countries.

Policies

The implemented and well working policies of institutional investors from the EU, regulated by the competent relevant authorities, make sure that the investors only invest in funds located in the EU. Due to the stable and strong focus of Luxembourg on international financial services, it has a well-earned and trusted reputation among investors.

Procedure to passport

When the appropriate procedure is followed, Luxembourg funds, both UCITS (Undertaking of Collective Investments in Transferable Securities) and AIF (Alternative Investments Funds) funds can be provided with a product passport making it possible to distribute them to investors in the EU and/or the EEA (Economic European Area).

Tax environment

The current international tax rules, set up by the global tax authorities, are designed to make it harder for people or businesses to avoid paying taxes by setting up financial structures or arrangements that are specifically designed to do so. Luxembourg has made it easy for financial funds to be held and managed in a way that makes business sense.

Network of treaties

Le Grand Duchy has a big network of treaties, and the local tax system is really straightforward and in line with the EU rules. One of the perks of the Luxembourg fund platform is that investors get the same tax treatment, but there's less chance of tax avoidance.

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How to prepare to attract investors in Luxembourg

The path to find investors can be quite long. But it always becomes easier when you divide the task into subtasks. Let’s have a look at 3 main steps on this way.

Step 1. Searching for potential investors

Step 2. Preparing documents for presentation

Step 3. Pitching and dealing

Top VC funds for startups in Luxembourg

Venture capital is private funding money given to start-up companies and small businesses with long-term growth potential. It's becoming more and more clear that the VC community is interested in the Luxembourg startup ecosystem. Right now, the most attractive areas for VCs are fintech, space, and digital solutions.

Local VCs are also really involved in sharing knowledge with founders. They bring a lot of education to the startup community, showing how to prepare projects, how to pitch, and how to raise money from institutional investors.

The number of venture capital firms operating from Luxembourg has dramatically increased over the recent years…

Luis Galveias, COO of Luxembourg Private Equity Association (LPEA)

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Who to address with a startup project for investments?

The venture capital (VC) sector is a big part of the investment system in the Grand Duchy. It usually acts as a kind of bridge between the finance industry and the "new" economy, which are often quite distant from each other.

Luxinnovation for local startups

The government in Luxembourg also offers a number of financial subsidies to startups. These programs are attractive to VCs because if they invest, the government will also support startups with equity-free funding. This means no dilution on the cap table for investors and founders.

The national agency Luxinnovation works closely with the government, which offers a number of public incentives to encourage research, development, and innovation activities. The good news is that support is available to companies from any business sector, at any stage of development, from start-ups to mature enterprises.

With Luxinnovation, companies can figure out which financing options are right for them, put together an application, and find investors.

International and local funds

Flossbach von Storch (Finance and Real Estate)

A globally diversified bond fund with an active investment approach that focuses on corporate bonds (41,12%), government bonds (36,07%) and covered bonds (19,4%). The fund primarily invests in investment grade bonds: AAA (35.8%), AA (24.56%), and BBB (21.01%). It is one of the leading real estate investment funds in Luxembourg. The other sectors also include consumer discretionary, utilities, industrials, communication services, and materials. The fund is actively managed in accordance with its own policies and strategies and is not dependent on stock indices. In 2023, the annual performance was 7.5%, the accumulated performance since the launch was 73.35%

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Schroder ISF Asian Section (Technology and Finance)

The fund specializes in investments in companies in the Asia-Pacific region excluding Japan. Particular attention is given to the technology sector, since the fund believes that the potential of Asian companies will remain quite high for a long time. However, they are cautious about the prospects for Indian and Chinese stocks. The fund's diversified portfolio consists of 40-70 companies whose shares are highly quoted on the stock markets of the region or on other exchanges, but which are controlled from the region or have significant influence on it. The fund's market capitalization as of April of this year was £421.02 million.

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Schroder International Fund European (Industry and Finance)

The main goal of the fund is to ensure capital growth through investing in securities of companies in Eastern and Central Europe, including the countries of the former USSR. The fund is actively managed and invests at least 2/3 of all assets. The fund holds about 30-50 companies in its portfolio. Top sectors are: Financial Services (49.02%), Industrials (13.19%), Energy (9.07%), Consumer Cyclical (6.67%), Consumer Defensive (6.22%), and Other (14.88%)

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Robeco Global (Consumer)

The fund invests in consumer exposed companies that specialize in the areas of digital payments, e-commerce, artificial intelligence, digital platforms, and Healthcare. Due to the active management involved, they are achieving higher returns than the average index. The fund's special feature is that it invests in a number of structural growing trends in consumer spending. The first is the "digital transformation of consumption". The second trend is that of the “rise of the middle class”. The third trend focuses on the increasing importance of "health & wellbeing". At 31 March 2024 the value of the fund was at £3.69 billion.

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Redline Capital Management (Data and Analytics, Fintech)

This Venture investment firm in Luxembourg invests in fast-growing companies with differentiated technologies in Europe, North America and Israel. Redline supports companies at all Investment Stages: Series A, B, C, and D. In addition to Data and Analytics and Fintech, Redline’s areas of interest include Life Science Technologies, AI and Robotics, and Enterprise Software.

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Mangrove Capital Partners (Mobile, AI, Health Tech)

The venture company provides advice and financing for companies in 20 areas at different Investment Stages – Pre Seed, Seed, Series A, B, and C. The main focus is at the early stage of investments and Mangrove regularly partners with entrepreneurs prior to the product launch. Mangrove has five unicorn companies in its portfolio: Skype, Wix, Walkme, K Health and TBOL. Mangrove regularly hosts a series of #EasyVC meetings for aspiring entrepreneurs, which brings together the best venture capital firms in Europe, CEOs of companies, startup specialists, and potential investors.

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Runa Capital (Deeptech, Enterprise Software and Fintech)

It is one of the best investment funds in Luxembourg which finances startups in more than 15 countries in Europe and North America. To date, Runa has already invested in 100+ companies at different stages of development, from Series A stage to completed Seed and Series B investments. The Initial investment typically ranges from $1M to $5M, and Runa keeps investing in portfolio companies as they grow. Runa offers flexible investment structures, many times taking the lead and sometimes co-operating with trusted partners. The fund supports startups in the field of Deep Tech (AI/ML, open source and future of computing), Enterprise Software and Fintech Infrastructure.

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Expon Capital (Cybersecurity, FinTech and RegTech)

Expon Capital's Digital Tech Fund invests in early-stage technology startups. In order to receive the investment, a startup must meet clear criteria: initial customer interest and a clear value proposition, validating a viable market. Pilot clients or signed contracts are preferred, although there is no minimum income requirement. The sectors and business models invested in, can be any kind, but preference is given to Cybersecurity, FinTech, RegTech, Big Data, Digital Health, Digital Learning, Digital Platforms, Internet of Things, and New Space. Potential participants can expect an initial investment of between 200 thousand and 1 million euros and additional investments of up to 4 million per company, as well as the support of coaches, like-minded people and partners.

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Self-employed

Independent worker

Read more about launching a business in Luxembourg in our special guide