Overview of programmes supporting startups and scaleups at the European and Luxembourg level

BACKGROUND

Despite Europe’s 35,000 startups, too many struggle to develop and often opt to move their operation outside of the European Union.

Several issues hinder the development of startups in the European Union, which include:

• market fragmentation;
• the incompleteness of the single market with for example an incompletely harmonized regulatory environment; and
• a European Union financial system which remains predominantly bank-centred, with a low-risk appetite from investors, even though venture capital would be suited to fund startups.

In its communiqué dated 28 May 2025, the European Commission detailed its strategy with regard to the promotion of European Union startups and scaleups companies. As part of the implementation of the strategies detailed in the communiqué, the TechEU programme has been put in place by the European Investment Bank (“EIB”) with the corresponding TechEU platform having been launched in July 2025. The TechEU programme aims to mobilise up to EUR 250 billion by 2027. Whilst broadly aligned on the objectives of the Horizon Europe programme, the TechEU programme provides further value by aiming to ensure the sustainable growth of European entities involved in innovation.

Self-evidently, measures aiming to develop the startup ecosystem have also been taken at the national level, with countries like Luxembourg having developed large scale initiatives to develop their startup ecosystem.

In this article we will provide an overview of the TechEU programme mentioned earlier, as well as a description of the Luxembourg Future Fund I and II, which also aim to provide funding for innovation.

What kind of companies are eligible to benefit from the TechEU programme and what are the fields in which the TechEU programme will invest?

The types of companies which are eligible

The EIB has established a list of companies to which its funding would go as part of the TechEU programme. These types of companies are:

• public and private entities undertaking research and development to drive technological innovation;
• innovative companies growing and scaling their businesses;
• European corporations looking to embark on innovation acquisition;
• companies developing technology and digital infrastructure projects; and
• startups and scaleups looking to pursue their growth in Europe, by offering exit solutions to facilitate European initial public offerings (IPOs) and deepen the market of companies wishing to migrate to the European Union for further growth.

The list above illustrates the objective of the EIB to make the TechEU programme available to a broad range of companies. The TechEU platform should make obtaining funding as simple as possible for European startups and scaleups, the goal being to have the TechEU platform used as a one stop shop for companies in search of funding and advice.

The fields in which the TechEU programme will invest

The TechEU programme will fund the following innovative fields;

• Clean tech;
• Digital tech;
• Bio/Med tech;
• Defence and space; and
• Research and skills.

With regard to investment in space exploration, we can single out the TechEU supported, and Luxembourg based project named “Lunar Outpost”. Lunar Outpost is an advanced technology company with a focus on developing technologies that have both earth and space applications. More specifically the Lunar Outpost project aims to develop autonomous robotic systems to survive and operate in extra-terrestrial and extreme environments.

What are the specific measures planned for startups and more mature companies in the TechEU programme?

The EIB splits the types of funding and the services it intends to provide into 2 categories, which are (i) startups and (ii) more mature companies (scaleups).

Measures targeting startups

Venture Capital funding: This measure involves supporting ventures via capital investment through the European Investment Fund (“EIF”) or through venture capital fund partners. This venture capital funding measures aim to back companies across the entire innovation life cycle from tech transfer to startups, and to the later stages of growth and scaleups.

Venture debt: The TechEU programme will provides long term debt to startups featuring bullet repayment and equity risk-linked remuneration, complementing existing venture capital financing.

Advisory services: The TechEU programme offers various services to support and enhance all stages of the project cycle and beyond, to make these projects happen.

Bank loans for small and medium businesses (SME): The TechEU programme shall make available loans for innovation and digitalisation to SMEs via a network of EIF and EIB financial intermediaries, such as banks and alternative finance providers.

Direct equity co-investments: As part of the TechEU programme, the EIF aims to invest in equity co-investments towards startups in order to help them realise their full potential and magnify their impact on core EU priorities like Climate and Deep tech[1].

European Tech Champions Initiative – ETCI: As part of the TechEU programme, the EIF will invest in large-scale venture capital funds, which will in turn provide growth financing to European tech champions in their late-stage growth phase.

Mature and large companies

Debt financing: The TechEU programme intends to offer tailored debt financing for scaleups and companies developing breakthrough technologies.

Guarantees: The TechEU programme shall also offer a variety of guarantee instruments, covering risks of a single or several projects. The TechEU programme will unlock additional financing for small businesses or mid-cap businesses by covering a portion of possible losses.

Infrastructure investment: The TechEU programme provides support through EIB financing for digital infrastructure projects as well as through EIF backed infrastructure funds (indirect equity), that back projects such as data centres and innovative online platforms.

Bank loans for small and medium businesses: Financial intermediaries of the EIF and the EIB are to provide SMEs with loans for innovation and digitalisation.

Venture capital funding: The TechEU programme will offer venture capital investments. Such venture capital funding will be done via the EIF’s network of venture capital fund partners.

Direct equity co-investments: As with startups, the EIF intends to invest in equity co-investments towards scaleups.

Two examples of initiatives at the Luxembourg level in favour of startups and scaleups: the Luxembourg Future Fund I and the Luxembourg Future Fund II

In addition to initiatives such as TechEU, there are of course investment initiatives which aim to foster the sustainable development of Luxembourg strategic sectors (this includes companies active in ICT, cleantech, artificial intelligence and cybersecurity). In the following table we will compare the Luxembourg Future Fund I investment initiative with the more recent Luxembourg Future Fund II investment fund initiative:

To sum up

The launch of the TechEU programme is a clear sign that the European Union aims to coordinate both debt and equity funding in order to massively promote innovation in the European Union.

The TechEU programme will be made available to a wide range of companies and aim to fund innovation in a number of sectors such as medical technologies and space exploration, whilst giving more emphasis on equity funding instead of the current bank centred approach. At the national level, the EU and individual member states have also strived in recent years to promote innovation with numerous initiatives such as the Luxembourg Future Funds I and II we described above. The communiqué published by the Commission stresses that these measures in favour or startups and scaleups should be implemented swiftly with the overall objective being to ensure that in the near future, startups will choose to remain and develop within the European Union instead of migrating outside of the Union.

[1] An area of business or research that involves using advanced science and technology, such as artificial intelligence, blockchain, or advances in biotechnology, to provide solutions to complicated problems.

[2] A business angel is a person who gives financial support to a commercial venture and receives a share of any profits from it, but who does not expect to be involved in its management.

[3] The criteria LSEC are listed in the following link: Luxembourg Future Fund 2