Has Luxembourg become Europe's hub for data-driven startups?

Startups using data essentially need three things to thrive: an environment with excellent data processing capabilities, access to international talent, and some high-profile clients willing to bet on a good thing. While often overlooked, Luxembourg, the neighbour to France, Belgium, and Germany, might just be holding the recipe to that all coveted secret sauce.

With almost 50% of its population coming from abroad, and roughly half of its workforce made up of cross-border commuters, Luxembourg is the most international country in the EU. 

The international environment, coupled with a data economy-driven approach and a solid reputation for stability, makes this small country an attractive destination for data startups.

Ensuring long-term growth

With a triple-A country rating (which is the highest a country can have and signals its creditworthiness to outside investors), Luxembourg has an excellent reputation for being an economically stable location. It comes as no surprise that it has also been named the number 1 most economically resilient country in the world. 

Why does this matter for a startup?

Jonas Mercier, Startup Luxembourg Coordinator, tells us that location plays a key role in attracting investments as a hallmark of legitimacy and trustworthiness. 

“Being able to do business in a stable environment, both economically and politically, is obviously very valuable for an entrepreneur. But when you are a start-up, it is also a guarantee that will reassure your current or future investors.”

Data galore

Building on its legacy as a global finance center, Luxembourg has spent the past 20 years focusing on becoming a knowledge-based data economy. The country plays host among the largest number of tier-4 data centers – the highest level for data facilities - in Europe. It also provides the shortest latencies to Frankfurt, Amsterdam, London and Paris.

This forms the perfect foundation for the government’s strong commitment to develop a data economy. However, this ambition to become Europe’s most trusted data economy is a challenge that the public sector wants to pursue in collaboration with the private business community.

The recent launch of the HPC (High-performance computing) is a good example of such public-private collaboration. 

While the majority of supercomputers in Europe are used for research activities, the Luxembourg authorities have decided to make 65% of the computing capacity of Meluxina - the name of the Luxembourg HPC - available to companies, including start-ups.

“It is obviously not enough to just set up the HPC and expect everyone to be able to use it,” points out Mario Grotz, Director General for Industry, New Technologies and Research at the Ministry of the Economy. Our goal is to make supercomputing accessible to all. We have set up a national HPC competence centre that provides operational support and training for users.”

A unique way of combining strengths

In parallel with the development of this digital infrastructure, a major effort has been made to secure the networks. Cybersecurity is in fact another priority of the public authorities. The idea is to have a high-performance data economy that is also secure.

A national cybersecurity centre has been set up to ensure a high level of security of data transfer, and also to provide rapid assistance to companies that are victims of cyber attacks and to help train private-sector experts.

“The ecosystem has many individual strengths, but it is the unique way that Luxembourg combines these strengths that becomes our real value proposition,” says David Foy, Head of International Business Development – Data Economy at Luxinnovation, the national innovation agency.

These arguments led Estonia to ask Luxembourg to host its e-embassy  – servers, which are considered an extension of the Estonian government. This is an innovative concept for handling state information, since states usually store their information within their physical boundaries.A global first of its kind. 

A small country that packs a big punch

With over 600 startups (a figure that places Luxembourg 4th in Europe in terms of startups per capita) and an impossibly international workforce, just about any startup can comfortably source a team from a variety of Europe's largest countries. 

The openness of the business community as well as the ease of interacting with public authorities contribute to creating an atmosphere where startups can accelerate and expand internationally.

When all is said and done, it's clear that the country has sculpted a road to success by making itself attractive to startups. They've examined their innate advantages, worked with a long-term digital strategy, and built the infrastructure to thrive. 

In other words – they understood the assignment.

Lead Image: Christophe Van Biesen