Franc Smidt,
Editor-in-Chief, Startup Sector Columnist
Germany, 24.03.2025
Luxembourg — one of the most stable and ambitious countries in the heart of Europe — has long established itself as one of the world’s leading financial and investment hubs. However, its ambitions go far beyond the traditional banking sector. Today, Luxembourg is actively investing in innovation and startups, creating a favorable ecosystem for entrepreneurs from around the world.
A Financial Giant in Miniature
Luxembourg is home to more than 120 banks, including major international institutions. The financial sector accounts for around 25% of the country’s GDP and remains a key driver of the economy. According to the Banque centrale du Luxembourg, the assets of the financial sector exceeded €1.5 trillion in 2024. Thanks to political stability, clear legal regulation, and an open approach to innovation, Luxembourg continues to be an attractive destination for global investors.
A Globally Recognized Investment Fund Hub
Luxembourg also ranks as a leading European and global hub for investment funds. According to ALFI (Association of the Luxembourg Fund Industry), as of early 2025, more than 14,000 investment funds were registered in Luxembourg, with total assets under management exceeding €5.3 trillion. This makes the country the second-largest investment fund center in the world, after the United States.
Luxembourg’s success in this area is based on a unique combination of transparent regulation, a clear legislative framework, flexible legal structures, and favorable tax conditions. Regulation is carried out by the Commission de Surveillance du Secteur Financier (CSSF) in accordance with EU directives and ESMA standards, which ensures reliability and trust from institutional and private investors.
Funds in Luxembourg can use legal structures such as SICAV, SIF, SICAR, and RAIF, providing asset managers and international investors with a wide range of options tailored to different objectives. Moreover, since 2016, RAIF structures allow activities to begin almost immediately, with subsequent notification to the CSSF, saving both time and resources.
Foreign investors value Luxembourg for its political and economic stability, the predictability of its regulatory environment, and the high level of property rights protection, as well as for its expertise in cross-border fund management.
Additional Investment in Innovation: €300 Million for Startups
In March 2025, the Luxembourg government announced an additional €300 million in funding for startups and innovation projects. These funds, distributed through the National Credit and Investment Company (SNCI), are aimed at supporting young enterprises in strategic sectors such as cybersecurity, deep tech, sustainable development, fintech, healthcare, and space technologies. The goal of the initiative is not only to attract new startups but also to retain existing ones by providing the necessary resources for growth and development.
Startup Infrastructure: Incubators and Tech Parks
Luxembourg is actively developing its infrastructure to support innovative companies. The country is home to numerous business incubators and tech parks that provide startups with access to office space, laboratories, consulting services, and networking opportunities.
Key players include the Luxembourg House of Financial Technology (LHoFT) — a flagship fintech hub connecting startups, regulators, and banks; Technoport — an accelerator and tech park supporting technology companies at all stages; and Luxinnovation — the national innovation agency offering support to startups and investors.
Also, an incubator opened in December 2024 on the grounds of the AutoMobility Campus offers 8 hectares of space for companies working on automotive technologies. The incubator itself occupies a 2,100 m² building with offices, conference rooms, and research and development laboratories.
Attractiveness for Entrepreneurs
Thanks to its developed infrastructure — including financial institutions, business incubators, and tech parks — Luxembourg creates favorable conditions for business growth and investment attraction. Business immigration programs such as the Startup Visa provide international entrepreneurs with opportunities to grow their businesses in a stable and forward-thinking environment.
It can be concluded that Luxembourg is not only a leader in international finance — it is actively transforming into a European center of innovation and technology, where investment reliability meets digital ambition. Thanks to significant investments, thoughtful policy, and openness to new ideas, the country remains a magnet for entrepreneurs, startups, and investors from all over the world.
Innovation and Startup Infrastructure:
