How to Start and Fund a Startup in Luxembourg: A 2026 Founder's Guide

Luxembourg is small, but its startup ecosystem is dense and unusually well-funded for its size. By the end of 2025 the country counted more than 810 startups and scale-ups, around 690 of them (about 84%) headquartered in the Grand Duchy, according to Luxinnovation's Dealroom-powered data. Those companies raised €407 million in 2025, a 52% jump on 2024 — even as the number of rounds fell, a sign of fewer but larger deals, with the average ticket more than doubling to €5.4 million.

For founders, the appeal is structural. Luxembourg sits at the centre of the European Union, hosts both the European Investment Bank and the European Investment Fund, and runs one of Europe's most generous public-support stacks. Around 86% of the country's startups are founded by non-Luxembourgers, and the state actively co-invests through accelerators, grants and funds. This guide maps the ecosystem and, step by step, how a founder actually gets funded.

Why build a startup in Luxembourg

The strengths are concrete: a multilingual, international talent pool; direct proximity to Europe's risk-capital institutions (the European Investment Fund, which anchors much of the continent's venture funding, is headquartered in Kirchberg); a stable legal and financial framework; and a deep public-funding system. Clusters have formed around the financial centre — fintech, served by the Luxembourg House of Financial Technology — and space, after Luxembourg passed Europe's first law on the use of space resources in 2017 and created the Luxembourg Space Agency in 2018. Cybersecurity, healthtech, cleantech and a fast-growing AI cohort round out the map.

The weaknesses are just as real and worth planning around: a tiny domestic market that forces early internationalisation; a high cost of living and scarce local talent; and a well-documented scale-up capital gap, where early-stage money is plentiful but Series B and later rounds are harder to close locally.

Step 1 — Set up the company

Most founders start with the SARL-S (société à responsabilité limitée simplifiée), the "simplified" limited company built for entrepreneurs. Its share capital can be as low as €1 and up to €12,000, it can be incorporated by private deed without a notary, and it is reserved to natural persons (you may only hold shares in one SARL-S at a time). Above that ceiling sit the ordinary SARL (minimum capital €12,000) and the SA, or public limited company (€30,000, at least 25% paid up), both of which require a notary. That €1, though, is only the minimum share capital: in practice, registering a SARL-S still involves additional costs — chiefly the €50 business-permit stamp duty plus filing and publication fees with the Luxembourg Business Registers (RCS) — so the true cost of setting up is higher than the headline figure.

Whatever the form, you need a business permit (autorisation d'établissement) from the Ministry of the Economy before trading. It carries a €50 stamp duty, is requested through MyGuichet.lu, and must be issued within three months — approval is tacit if the ministry does not reply. The House of Entrepreneurship, run by the Chamber of Commerce, is the official one-stop shop and offers free guidance on permits, incorporation, tax and financing.

Non-EU founders: Luxembourg has no dedicated "startup visa." Third-country nationals instead use the self-employed authorisation — a temporary authorisation to stay valid for 90 days, then a residence permit valid up to three years and renewable — which requires a business plan, the relevant qualifications, and proof that the venture serves the country's economic interest. Separate investor-residence routes begin at a €500,000 investment.

Step 2 — Plug into the support ecosystem

Luxinnovation, the national innovation agency, is the front door: it runs the flagship accelerator and the national startup directory. Founders then typically join an incubator:

• Luxembourg-City Incubator (LCI) — the Chamber of Commerce incubator inside the House of Startups, open across sectors, with dedicated support for women-led and social-impact ventures.
• LHoFT (Luxembourg House of Financial Technology) — the national fintech hub, which says it has supported 211 fintechs and accelerated 190 startups, and which connects founders to banks, investors and regulators.
• Technoport — the national technology incubator in Belval, with prototyping facilities and early-stage programmes; it is also the Luxembourg partner behind the Vodafone scale-up centre Tomorrow Street.

Step 3 — Stack the equity-free grants

This is where Luxembourg stands out: founders can raise substantial non-dilutive money before giving up any equity.

• Fit 4 Start, run by Luxinnovation and funded by the Ministry of the Economy, is the flagship. Selected startups receive up to €150,000 in equity-free funding — paid in three tranches of €50,000, €80,000 and €20,000 — plus six months of intensive coaching and free co-working. Each edition takes about 20 startups across digital, health and space tracks; the latest cohort drew 495 applications from 61 countries. Eligibility: a company no older than five years with a team of at least two.
• Young Innovative Enterprise aid (Ministry of the Economy, certified by Luxinnovation) co-finances up to 70% of an innovative young company's financing needs, capped at €1 million, for businesses under five years old that spend at least 15% of their costs on R&D.
• R&D and innovation aid covers a share of research projects — industrial-research aid reaches 60% of eligible costs for small companies, experimental-development aid 40%.
• microlux provides business microloans of up to €50,000, plus free coaching, for founders without access to ordinary bank credit.

Step 4 — Raise private capital

With traction, founders move to angels and venture capital:

• Business angels. The Luxembourg Business Angel Network (LBAN) gathers 150-plus investors who deploy roughly €6–8 million a year. Founders submit through its deal-flow platform, and selected teams pitch at a monthly event (seven minutes plus questions); typical syndicated tickets run €150,000–€350,000.
• Seed venture capital. Luxembourg-anchored funds include Expon Capital, which manages the Digital Tech Fund (its second generation closed at €19.4 million and backs companies under seven years old); MiddleGame Ventures, a fintech specialist; and Mangrove Capital Partners, an early backer of Skype and Wix.
• Banks and the promotional bank. Spuerkeess offers InvestEU-guaranteed loans of €25,000 to €7.5 million covering up to 80% of financing; BGL BNP Paribas runs an Innovation Division and the Lux Future Lab incubator; and the state-owned SNCI co-finances start-up and innovation loans alongside commercial banks.

Step 5 — Scale up

For later rounds, public capital pairs with private money. The Luxembourg Future Fund, a joint vehicle of the SNCI and the European Investment Fund, deployed €150 million in its first generation and €200 million in its second (LFF 2, launched in March 2023), investing in venture funds and co-investing in companies across climate tech, AI, cybersecurity, life sciences and space. The European Investment Fund itself — headquartered in Luxembourg — is the backbone that capitalises many of the VC funds founders raise from. Tomorrow Street, the Vodafone–Technoport joint venture, helps proven scale-ups win enterprise customers rather than writing cheques.

Tapping EU money from Luxembourg

Luxembourg startups qualify for European instruments directly:

• The EIC Accelerator (European Innovation Council) offers a grant of up to €2.5 million plus an equity investment of roughly €1–10 million through the EIC Fund, and is open to single companies rather than only consortia.
• Horizon Europe funds research and innovation projects; Luxinnovation is the national contact point that helps founders find calls and partners.
• InvestEU reaches founders indirectly, through guaranteed bank loans such as those offered by Spuerkeess.

What's new: the 2025 'Seed to Scale' strategy

In March 2025 the economy and finance ministers unveiled a "From Seed to Scale" roadmap and 10-point plan, with the SNCI committing an extra €300 million over five years to cybersecurity, deeptech, sustainability, healthtech, space and fintech. The plan adds a tax credit for individuals investing in young innovative companies, €200,000 spin-off grants, stock-option tax advantages for startup employees, and a national "talent desk" — all aimed squarely at the scale-up gap.

Tax, briefly

Luxembourg cut its top corporate income tax rate to 16% from the 2025 tax year, for a combined effective rate of about 23.9% in Luxembourg City. An 80% exemption on qualifying intellectual-property income (an effective rate near 4.8%), plus investment tax credits of 12% — and 18% for digital and ecological transition — round out the incentives.

The founder's checklist

1. Validate the idea and get free one-to-one advice from the House of Entrepreneurship.
2. Apply for the business permit, then incorporate — usually as a SARL-S.
3. Join an incubator (LCI, LHoFT or Technoport).
4. Apply to Fit 4 Start and stack the equity-free grants.
5. Raise an angel or seed round (LBAN, the Digital Tech Fund, seed VCs).
6. Scale with venture capital, the Luxembourg Future Fund and EU money.

The through-line is simple: in Luxembourg, public money de-risks the earliest and hardest stage, and private capital builds on top. Founders who use the grants and accelerators before raising equity keep more of their company — and arrive at their first investor pitch in far better shape.