Venture Capital in Luxembourg

Venture Capital in Luxembourg

Updated on Thursday 08th April 2021

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Venture-Capital-in-Luxembourg.pngVenture capital in Luxembourg designates a type of fundraising system, through which investors can raise capital for their investment projects. In order to enter a venture capital project, investors have to select a specific type of investment vehicle. In Luxembourg, there are several legal options that can be used in this sense and investors who want to open a Luxembourg fund can request legal advice, as well as tax assistance on any of the financial implications of a venture capital, from our team of financial advisors.  

What investment vehicles are suitable for venture capital in Luxembourg?

In order to open an investment fund in Luxembourg, regardless of its purpose, investors will first have to select one of the fund structures that are prescribed under the national law. Luxembourg stands as one of the leading jurisdictions on this matter has one of the most complex legislations, being the first country where an investment fund was first set up. This is why investors can choose from a wide range of vehicles or investment companies. 
For a venture capital in Luxembourg, investors have four main options. They can open a Luxembourg fund as an unregulated special limited partnership, a structure designed for a high level of contractual freedom for the parties involved, as well as for a high level of flexibility when it comes to the types of investments that the businessmen can enter. 
Those who are interested in opening a SICAR in Luxembourg, another type of fund available for registration here, must know that this structure is also compatible with venture capital projects. This type of fund is especially designed to fit the needs of those who want to participate in venture capital in Luxembourg. The SICAR is regulated by the CSSF, which acts as a supervising entity on almost all types of funds available here (certain categories of funds benefit from simpler supervisory rules). 
Businessmen, both local investors and foreigners, have the options of investing in a venture capital project in Luxembourg though a reserved alternative investment fund (RAIF) as well. The RAIF offers a high level of investor protection and the management of the fund is assured by an alternative investment fund manager. 
Another type of vehicle that is available for registration in Luxembourg for venture capital purposes is the Luxembourg European Venture Capital Fund (EUVECA). Those who want to open a fund in Luxembourg will have the possibility of marketing the fund to other qualified investors established in the European Union (EU). 
If you want to know more on how to select a suitable vehicle for venture capital in Luxembourg, you can always rely on the advice on our team of financial specialists, who have an extensive expertise in registering any of the above mentioned types of funds. 

What is the value of investment in venture capital in Luxembourg?

Venture capital in Luxembourg has become increasingly popular throughout the last decade. Nowadays, this type of investment is used to raise capital for various tech incubators that create products or services that can have a local and international market value. Below, you can find out some of the main highlights of the venture capital industry in Luxembourg
  • in 2019, the venture capital industry was represented by approximately 10% of all the funds registered in Luxembourg (regulated and unregulated entities);
  • funds related to venture capital in Luxembourg have invested approximately EUR 9 billion by 2019;
  • since 2000, the assets under management of private equity and venture capital funds in Luxembourg have gradually increased from one year to another, up until 2017;
  • in 2005,  the value of a SICAR in Luxembourg was of EUR 2,597 million; 
  • in 2017, the investments of SICARs accounted for EUR 46,565 million. 

What is the law on venture capital in Luxembourg?

Venture capital in Luxembourg is regulated in this country as per the regulations of the Law on Venture Capital Investment Companies of 15 June 2004. Venture capital is one of the main options for raising capital for various business projects, while other options would be of raising capital through angel investors, third party lending or government subsidies. 
Investors have to know that since the United Kingdom exited the EU, new rules apply on marketing funds involved in venture capital. It is also important to know that investors, both local and foreigners, have the tendency of investing in special limited partnerships for venture capital projects, due to the benefits provided by this structure. For more information, please contact our team of financial specialists