Why hasn’t the Tech ecosystem worked in Luxembourg?

Peadar Coyle
6 min readJun 21, 2020

The screenshot above is specifically about Luxembourg, however I think this will be of interest to other ‘startup hubs’ and policy folks, entrepreneurs and those who are interested in the question of how to foster an innovative ecosystem.

I’m an Irish entrepreneur — with a company that has offices in London and Barcelona, I did my masters in Luxembourg, and spent a few years working in its ‘tech sector’. I strongly felt the tech sector was nascent about 5 years ago, and while I regularly visit it and talk to people in its ecosystem, I haven’t seen ‘growth’ or success stories. I think this question is very interesting and while I’m not a policy expert I’ll present some of my own suggestions for improvement.

When I first encountered tech in Luxembourg, I was told that ‘in 5 years this country will be a meaningful tech ecosystem’ — it’s been more than 5 years. It’s worth evaluating what’s worked and what hasn’t.

Firstly, we should always start with the positive.

Luxembourg has a number of government-backed programs. Most notably — fit4start. This has supported a number of startups and seems to attract startups from all over the world. It has supported over 70 companies, so this is a good contribution to the European ecosystem. I participated in it last year and one of my confusions was that it wasn’t clear whether it was aimed at pre-seed or at later stage companies. It’s an unfair comparison, in my opinion, to compare revenue-generative later stage companies with higher risk early-stage companies.

Luxembourg has some tech startups — Talkwalker, JobToday and more established companies like Amazon have at least some product managers and software engineers. I ran the ‘data science Luxembourg’ event for a number of years, such moves are great, they support the ecosystem. And there have been various organisations that have been supportive. However, compared to other ecosystems that I’ve been in, it’s not been as fast-growing.

Financial awareness: Luxembourg is one of the leading financial centers in the world. While such knowledge is great, it doesn’t necessarily transfer to startups. Startups are very different organisations to mutual funds or family offices. Nevertheless, having financial analysts in the city can be helpful for understanding how to run a company well.

There’s a lot of coworking spaces and incubators. While some of these are bureaucratic, offering a community and access to mentors can be helpful.

What room for improvement is there?

A ready supply of VC/angels.

While there are a few funds active in Luxembourg and the surrounding region not to mention the famous Mangrove (which is largely a pan-european and Israeli focused fund from looking at its investments). And there is the Luxembourg Business Angels Network however, compared to other ecosystems like London, Dublin, Berlin, or Barcelona there’s a lot of room for improvement.

Luxembourg hasn’t had many ‘exits’ as far as I’m aware, so without that, it’s hard to bootstrap an angel network. Mentors are great but cash helps a lot.

Suggestion — tax incentives such as the SEIS scheme in the UK, can work well for de-risking startup investment. My own company raised capital from such a scheme and I know from talking to investors that the tax incentives were helpful.

Experienced scale-up professionals

While the situation is improving, here’s a question: who do you hire if you’ve hit over 1 million ARR (annual recurring revenue)? where are the local scale-up professionals? The answer is that you have to import people from overseas. Whereas in London or Barcelona you can often find people locally due to the number of exits or large offices. Success breeds success. Without a steady stream of companies launching, winning, exiting and booming, there is no healthy pipeline of talent or available capital to build the next generation of breakout companies.

Suggestion — this is a hard one. I’m actually not sure what can be done policy-wise to fix this.

A community of established success stories

I did some research and I could only find one Unicorn (a billion dollar plus valuation company) — https://www.eu-startups.com/2019/07/luxembourg-based-ocsial-a-manufacturer-of-graphene-nanotubes-has-joined-europes-growing-list-of-unicorns/ I struggled to find other success stories, with the exception of Talkwalker — which seems to have had a partial exit. This is sobering for any venture capitalists in the area, and sobering for those looking to set up companies here. For full disclosure, it’s worth noting where I set up my own company.

Entrepreneurial mindset

Someone remarked to me once over a coffee that ‘Luxembourg is a conservative country even its motto — Mir wëlle bleiwe wat mir sinn is conservative’ — It translates roughly as We want to stay what we are. Hilarious anecdote aside, it’s worth remarking that when you speak to the Luxembourgish and those who’ve been here for a while — putting this delicately — they aren’t the most entrepreneurial or risk-taking people. Their concerns are more about affording their next BMW and why would one work for a high-risk startup when one could work for the state.

Cultural stuff like this is very hard to change. So I’m not sure what to suggest either.

What does it mean for the next decade in Luxembourg?

I wish I had an optimistic message. My message to founders/entrepreneurs here is to get on a plane and go elsewhere — London, Berlin, Barcelona. If you want to set up a company here, I’m afraid the ecosystem is actively working against you. It IS possible to create a unicorn in Luxembourg, but it’s much harder.

Is this a fair comparison?

Some friends noted that comparing a country of 600k people to bigger countries is not an apples to apples comparison. There’s a lot of talk of a ‘grand region’ in Luxembourg which is the surrounding areas of Belgium, France and Germany — however such notions are kind of a ‘fairytale’. Let’s make some comparisons then to ‘smaller and lower tier’ tech cities in Europe.

Krakow, Poland and Talinn, Estonia. Both cities have a population of around the population of the country of Luxembourg.

Talinn, Estonia

Estonia has been a very tech-focused country for a number of years, this is partly a function of it’s geography, partly a function of the technical education of former Communist Eastern Europe and of course Skype was founded there in 2003, leaving a lasting legacy.

There are estimated to be 400 startups in Estonia, and about 70% are estimated to have some sort of connection to Skype. In fact Transferwise (an ‘Estonian’ success story located in London has ex-Skype founders).

Estonia has it’s problems though, while it has some great local technical talent. There’s a scarcity of early-stage capital (like in Luxembourg), and a scarcity of marketing talent and business-focused skills on the ground and so companies often need to set up satellite offices for this.

The e-residency program and the startup visa from Estonia are some things that are worth looking at for policy advisors.

Startups to watch from Estonia include — Pipedrive and Bolt.

Krakow, Poland

Poland, in general, has some great technical universities and it is home to development hubs for major international firms such as IBM, UBS, Epam Systems, and the French outsourcing firm Capgemini, Kraków is awash in tech talent, and entrepreneurs enjoy relationships with these more established companies.

One of the advantages is that labor costs are lower in Krakow, which like cities like Lisbon attracts companies.

Poland has some government support as well to support startups. It’s got some early success stories — the largest that I saw was Brainly which is a ‘quora for students’. It also has the ecosystem — https://www.omgkrk.com/

Luxembourg should look at cities like Krakow and Talinn to see what they can learn.


My message to the government — evaluate your tax incentives. Make it easier for companies to fundraise.

My message to investors — don’t just drip feed capital to companies here. Accept that if you want upside, you’ll need to put in sufficient capital.

If you’re a founder in Luxembourg and you want some advice/ introductions ping me I’m peadarcoyle[at]gmail.com always happy to talk to members of the founders club.



Peadar Coyle

Cofounder of www.Aflorithmic.ai building www.api.audio a simple developer tools for adding audio to your applications