Paperjam Club: Do you still see equity gaps at particular ticket sizes (pre-seed, growth, bridge, etc.)?

Lily Wang: How can we close them without creating counter-productive competition among investors? Luxembourg-based companies often have to be international from inception given the limited size of the local market. Although Luxembourg has €5.16trn AUM in investment funds, little has been invested in Luxembourg-based companies. The Digital Tech Fund managed by us, Expon Capital, was an initiative from the Luxembourg state in financing early-stage innovative companies since 2016. After our funding, once companies have obtained a large customer base and proven product market it, they are in a position to raise more capital to scale up.

However, except for spacetech companies, at the scaleup phase, all of those companies in our portfolio had to raise from foreign VCs. With the rapid growth of the Luxembourg startup ecosystem, there are definitely lots of room for additional scale-up capital without creating counter-productive competition.

How can the various players (fund-of-funds, business angels, accelerators, incubators) collaborate to help Luxembourg start-ups scale from the domestic market to international arenas?

We invest at the pre-seed and seed stages through our early stage fund. In a number of cases, the companies never raised money before our investment. We would typically lead the round, but do not take the whole round. Therefore, there are rooms for angel investors to co-invest.

In other cases, we invest after the angel round. The Luxembourg Business Angel Network (LBAN) is especially an active group of angel investors who also add value to startups. We visit startups from incubators and accelerators on a very regular basis to exchange with entrepreneurs even if it might not be the right time for us to invest yet.

In a rapidly evolving technological landscape, how can Luxembourg’s family businesses remain competitive on a global scale?

Family businesses can leverage a number of B2B technological solution to improve the efficiency and attractiveness to changing consumer behaviours. With the right partner and strategy, it represents an opportunity for family business to grow and become more profitable. Additionally, diversification through investments is another way to preserve wealth and expand into new businesses.