One year after Luxembourg’s prime minister and deputy prime minister took to the stages of the Open Innovations forum at the Skolkovo Technopark, representatives of the small innovative nation returned to Skolkovo last week to tell resident startups about the opportunities offered by the hi-tech grand duchy.
Luxembourg, "a historic medieval city and country full of castles that is still at the forefront of innovation." Photo: Vitaly Shustikov/Sk.ru.
“I like to come to Skolkovo, because it gives you hope every time that the country is developing brilliant entrepreneurs who are starting and developing very interesting companies,” said Jean-Claude Knebeler, ambassador of Luxembourg in Russia, welcoming tech entrepreneurs to an event at the Skolkovo Technopark titled “Luxembourg: A Great Place to Open a European Office.”
“We are trying to persuade more and more people to come from Luxembourg to Russia to discover this vibrant scene of entrepreneurship and new technology, to see what is going on here and to build bridges between our countries,” said the ambassador.
The Skolkovo Foundation and Luxembourg have been working together since 2013, when the foundation established its first contact with Luxinnovation, the country’s innovations agency, said Maxim Romanov, head of Skolkovo’s international cooperation department. Since then, Skolkovo resident startups have taken part in business missions to Luxembourg for the last two years, and this year, Skolkovo signed an MOU with Luxinnovation on promoting Russian tech startups. The cooperation saw a government delegation headed by Luxembourg Prime Minister Xavier Bettel attend Open Innovations last year, in which the prime minister took part in the plenary session with Russian Prime Minister Dmitry Medvedev, while Deputy Prime Minister Etienne Schneider contributed to a lively discussion on asteroid mining.
Friday’s event was aimed at Russian tech startups who are interested either in entering the Luxembourg market, or in opening an office there as a springboard to access other European markets. Along with Skolkovo startups who have opened offices in Luxembourg and who shared their experiences with the startups present, two representatives of Luxinnovation stated the case for the tiny land-locked country in the heart of Europe.
Jean-Claude Knebeler, ambassador of the Grandy Duchy of Luxembourg in Russia. Photo: Sk.ru.
Size doesn’t matter
If in the ‘90s, Luxembourg saw a lot of big corporate names from all over the world, including Russia, establishing a presence in the country, then following the 2008 financial crisis, that began to change, said Knebeler. The country began to see more and more Russian entrepreneurs leaving big state corporations and investment banks to set up their own projects, he said.
“In order to come to Luxembourg and be welcome, you don’t need to be Gazprom, Sberbank or VTB,” the ambassador told the entrepreneurs.
“You don’t have to be big. We value everyone, and we are a small country made up of mainly small companies.”
Indeed, most of Luxembourg’s economic growth comes from small and medium-sized enterprises (SMEs), said Ian Cresswell, head of international affairs at Luxinnovation.
Luxinnovation's Ian Cresswell (left) talks to one of the Russian entrepreneurs present at the event at Skolkovo. Photo: Sk.ru.
“We’ve always had a strong SME community in Luxembourg,” said Cresswell.
The country also has a strong and flourishing startup community, he said.
“In the last five years, especially the last three years, we’ve seen a strong uptake and strong recognition of the role of startups in the development of our economy. Initially that was supported primarily by the government through ventures with their partners, and now we’re seeing the private sector taking over in this particular aspect. We’re seeing a lot of relatively small highly focused incubators associated with private companies,” said Cresswell.
One degree of separation
Luxembourg covers an area of just 2,586 square kilometres, and has a population of about 600,000. These factors, coupled with the authorities’ enthusiasm for tech and innovations, offer another advantage to entrepreneurs: easy access to the necessary people.
“If you have a valid project, you will meet the relevant decision makers,” said Knebeler.
“In this case, they will even come to you. You can meet the ministers to explain what you want to do, if you want to pursue a disruptive project that you think could really add value to what we do and what we believe in.”
For Fyodor Antonov, CEO of Skolkovo startup Anisoprint, which uses additive manufacturing to print composite materials, this has certainly proved to be the case, he told the other Russian entrepreneurs.
“In Luxembourg, you have a really short connection to everyone,” said Antonov, who recently incorporated a company there for the purposes of international expansion and fundraising.
“You have direct connections to real decision makers in the field you need, not just some low-level bureaucratic gateway, so if you need support, you can get it at a really high level,” he said.
Fyodor Antonov (left), CEO of 3D printer-maker Anisoprint, has just incorporated a company in Luxembourg with the help of Luxinnovation. Photo: Sk.ru.
Luxembourg’s location surrounded by France, Germany and Belgium, at the heart of the EU market, is another obvious advantage.
“Of course it’s convenient that it’s in the middle of Europe,” said Antonov, though he lamented the fact that there is no direct flight from Moscow.
“This year we’re launching sales in Germany, then next year in France, so I will always have to be both there and there – and probably in the middle too,” he laughed.
As a jurisdiction, Luxembourg is viewed favourably by investors, added Antonov.
Both Anisoprint and ExoAtlet, another Skolkovo startup that has opened an office in Luxembourg to launch European sales of its medical rehabilitation exoskeletons, ultimately chose the tiny grand duchy over other European countries because of the services offered by Luxinnovation, the companies’ representatives said.
David Foy, head of digital economy at Luxinnovation. Photo: Sk.ru.
ExoAtlet commissioned research from PwC on the relative advantages and disadvantages of Cyprus, the Netherlands and Luxembourg as potential European bases for the company, and chose Luxembourg after its CEO Ekaterina Bereziy visited the country, toured its tech innovations infrastructure and met with relevant people with the help of the innovations agency, said Mikhail Krundyshev, co-founder and business development manager of ExoAtlet. Luxembourg is also very convenient for global medical companies in terms of logistics, certification and taxes, the company said when it announced its European expansion.
Antonov said Luxinnovation had been “very open, very helpful.” Present to explain exactly how the government-backed agency can help Russian startups was David Foy, head of the digital economy sector development at Luxinnovation. Having formed several tech clusters including ICT, biohealth and ecoinnovation, the agency helps companies with their international growth, said Foy. It can also help foreign startups to set up a company and bank accounts, find the necessary infrastructure, such as data centres, and arrange meetings as required – all free of charge. Luxinnovation can also advise innovative companies on funding sources, including government grants for research and development.
The country’s Fit 4 Start accelerator programme for startups, for example, accepts 15 companies from about 200 applications every year, selecting them according to what value they can bring to the Luxembourg economy, said Foy. The companies are allocated 50,000 euros upon selection, and up to 100,000 euros upon graduation, after 16 weeks of intensive coaching in pitching to VCs, developing a business network and other valuable training.
Unsurprisingly, as a leading financial centre, Luxembourg has a dedicated fintech hub called The LHoFT (Luxembourg House of Financial Technology), a public-private initiative devoted to building a fintech ecosystem and providing a soft landing platform for fintech businesses to access the EU market.
The country also offers individual programmes aimed at helping entrepreneurs to digitalise their companies, be innovative and expand.
Luxembourg Prime Minister Xavier Bettel (left) taking part in the Open Innovations forum plenary session at Skolkovo last year with Russian Prime Minister Dmitry Medvedev. Photo: Sk.ru.
Moving with the times
Luxembourg startled the world in 2016 by announcing it would adopt a legal framework that allows private companies based there to profit from space resources through activities such as asteroid mining. Explaining that decision at last year’s Open Innovations forum at Skolkovo, Luxembourg’s Economy Minister Etienne Schneider said the country’s small size means it has always had to reinvent itself and its economy. This forward-looking attitude is key to fostering innovations, according to Foy.
“What’s important about the legal framework is that we have government ministers who actually understand the technology side of stuff,” he said.
“A lot of things get slowed down because they need to be regulated. And if they get slowed down too much, there’s no point in doing them, because the next part’s already there. So I think the fact that the government’s very business- and tech-savvy helps us to progress things much faster,” said Foy.
Luxembourg's Deputy Prime Minister Etienne Schneider taking part in a session on asteroid mining during Open Innovations. Photo: Sk.ru.
The government’s success in positioning the country as an innovations hub is undeniable. Luxembourg was ranked second worldwide in innovation efficiency according to the Global Innovation Index 2018. The Estonian government chose to trust Luxembourg with all of its data, keeping vital information backed up there in what is known as a digital fortress, and Luxembourg recently won a European tender to roll out the format of its cybersecurity training centres across the continent, said Foy.
One of the secrets of Luxembourg’s success in attracting successful entrepreneurs and tech giants from all over the world, such as Skype and PayPal, which have their European headquarters there, is undoubtedly its openness to foreigners. Over 50 percent of people living and working in Luxembourg are foreigners – including both Foy and Cresswell, who are both British, the ambassador pointed out.
“When you come as a foreigner, you’re not the other, you’re one of us. You’re not the odd one out,” said Knebeler.
At next month’s Open Innovations forum at the Skolkovo Technopark, Luxembourg will once again be a high-profile presence, with a 40-person economic delegation in attendance. And for Russian tech entrepreneurs looking for a European base, the ambassador had some simple advice: visit Luxembourg to see for yourself what the country can offer.
“We like people to travel and see that you can have a historic medieval city and country that is very green, full of forests and old castles, but is still at the forefront of innovation and very modern,” he said.