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Luxembourg is at the centre of a continent with ambitious plans to develop a thriving tech industry, but what makes it different?

This article can also be found in the Premium Editorial Download: CW Benelux: CW Benelux: Dutch academic hunts the personality behind the hacker

There aren’t too many company founders who can claim to have a direct line to a prime minister, but they do things slightly differently in Luxembourg.

Alex Short, co-founder of cloud-based collaboration platform provider Vizibl, has met Luxembourg’s prime minister, Xavier Bettel, twice since the company has been operating in the country.

“I suppose that this, more than anything, demonstrates just how hands on the Luxembourg government is when it comes to dealing with those companies operating within its borders and how keen its is for the country to become a European tech hub like no other,” said Short.

Vizibl was in at the start of a ground-breaking drive to establish Luxembourg as the location of choice for tech startups across Europe. It’s currently part of the Tomorrow Street programme pioneered by Vodafone – just one of a number of different partnerships between major corporates and a government that isn’t simply paying lip service to innovation, but putting its money where its mouth is.

At the heart of this is a desire to provide an environment where tech startfups can grow at a rate that wouldn’t have been possible outside Luxembourg, with programmes such as Tomorrow Street effectively acting as a fast-tracking incubator.

These programmes provide companies such as Vizibl and software development company Razrcorp the perfect platform to expand their operations. Luxembourg City is rivalling more traditional technology centres such as Dublin.

“There’s a limit to how many companies can operate in Ireland,” said Darragh Toolan, Vizibl’s head of global solutions. “That’s purely because there are only so many people that live in Dublin, and rents in the city are going sky high because so many tech companies have moved their operations there.

“Luxembourg has basically set itself up perfectly not just to get the overflow, but establish itself as a tech hub that can one day rival somewhere like Dublin.”

Committed to technology

The attractions of the country – beyond a highly favourable tax regime – are clear to see. The population are highly educated, English is widely spoken and its proximity to countries such as France and Germany make it as easily accessible as any on the continent.

At a time of widespread uncertainty across Europe, and particularly in the UK, it also offers another priceless plus. “It’s one of the most stable places you can do business,” said Anshul Gupta, co-founder and director of RazrCorp, a company specialising in artificial intelligence (AI), robotic process automation and the internet of things (IoT).

“We know that even if the government changes, the country’s commitment to technology startups like ourselves will still be there. This is a country that is prepared to invest and invest in a way that benefits not just the likes of us, but the country as a whole.”

That vested interest is one of the key reasons why Luxembourg’s door remains very much open to whatever companies choose to walk through it.  

The country currently boasts 25% of European tier 4 datacentres, as well as some of the highest speed internet connectivity rates on the continent. The installation of new fibre networks is ongoing, providing an enviable infrastructure for a digital age that is manifested more readily in Luxembourg than in almost any other country on Earth.

For the likes of Vizibl, it’s providing the perfect backdrop to achieve ambitions. 

“The Luxembourg market contains an unbelievable number of large corporates,” said Short. “The exposure we’ve been getting from the Luxembourg government, and through the Tomorrow Street programme and the constant stream of events that are going on here, means we get direct access to these guys.

“We’ve got the prime minister really pushing the next stage of growth. Having access to big companies and having the sign of approval from the prime minister and the Luxembourg government provides an incredible environment for businesses like ourselves.”

Building towards innovation

Luxembourg's position at the heart of the EU is also a boon. It is, for example, the home to bodies such as the European Investment Fund, which provides small and medium-sized enterprises (SMEs) with risk finance that might not otherwise have been available. According to the EIF website, it has provided as much as €315m of funding to SMEs in Luxembourg.

It is projects such as Tomorrow Street – a collaboration between Vodafone and the Luxembourg government – which are making a major difference to the way that companies interact with their supply chain in the tech space.  

“Having an office in Luxembourg means we have a shared environment and can sit down with the Vodafone team and the Tomorrow Street team, really connect together and work within a Vodafone environment,” said Short. “It provides us with a platform to get our heads together and make sure that our plans really work.”

Of course, companies such as Vodafone aren’t doing this for purely altruistic purposes, they’re also using the expertise that companies such as Vizibl and RazrCorp possess as a means of ensuring that innovation is built into everything they do, both now and in the future.

Events such as Vodafone’s Luxembourg-hosted Arch summit provide a platform for startups to directly engage with other key stakeholders, opening up fresh opportunities for suppliers to do business with other suppliers, big or small.

Luxembourg’s reputation as a technology hub is spreading well beyond European borders too. In May, delegates from Chinese city Nanjing signed a memorandum of understanding (MoU) which will see Luxembourg and China collaborate more closely on innovation.

The US commerce secretary has also visited the country in recent months in recognition of Luxembourg’s burgeoning reputation in the space industry. In 2017, Luxembourg’s deputy prime minister, Etienne Schneider, said the space industry was now worth 2% of the country’s GDP, which once again demonstrates its commitment to technology and innovation.

So are tech firms witnessing any downside to operating in the Grand Duchy?

“Talent can be a problem, purely because of the size of the population,” said Gupta. “There are only so many people from within Luxembourg that you can attract, which means you’re often looking for people outside of the country.”

Fortunately, as Luxembourg’s reputation spreads, then the ease at which workers from elsewhere are attracted to it increases too. In short, in an ever-shifting technology landscape, Luxembourg is emerging as a key location – and is belying its size to pack a real punch.

Read about tech hubs in other Benelux countries

  • Belgian capital is calling on startups as it eyes up the huge opportunities in the insurance technology sector.
  • An appealing lifestyle and the largest internet exchange in the world combine to make Amsterdam a great place to set up an IT company.

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