The Luxembourg Future Fund 1 is a EUR 150 million fund which aims to stimulate the diversification and sustainable development of the Luxembourgish economy by attracting Venture Capital fund managers and early to later stage innovative businesses into Luxembourg. It was set up by the EIF and the Société Nationale de Crédit et d’Investissement (SNCI) and combines a EUR 120 million contribution from SNCI with EUR 30 million from the EIF.
The Luxembourg Future Fund invests directly or indirectly in Venture Capital funds and SMEs to foster the sustainable development of Luxembourg strategic sectors (i.e. companies active in the ICT, cleantech and other technology sectors excluding health technologies and life science sectors). These are key for the diversification of the Luxembourgish economy.
As of December 2022, LFF’s portfolio consisted of the following:
In October 2022, the LFF 1 investment period ended and as such no additional primary fund & co-investments are foreseen.
The Luxembourg Future Fund comprises two sub-funds. You will find here below the objectives of each Sub-Fund and the related eligibility criteria:
The sub-fund will invest in Venture Capital funds not yet established in Luxembourg, targeting early to growth stage innovative technology companies.
The targeted Venture Capital fund will preferably be located/domiciled in Luxembourg. Each targeted Venture Capital fund will be required, as part of its investment strategy, to dedicate at least twice the amounts drawn down from the Venture Capital fund (in the relevant sub-fund) for the purpose of investments in SMEs based and/or active in Member States of the European Union and in candidate and potential candidate countries and include Luxembourg in their investment focus.
The target Venture Capital funds will also be expected to engage actively in the Luxembourg Venture Capital ecosystem.
Co-investments will be made alongside Venture Capital funds or Business Angels on equal footing in innovative technology SMEs (excluding enterprises already established in Luxembourg) in their start-up, development or growth phase, which, at the time of the decision to invest in such SMEs, are expected to bring highly relevant international spillover to Luxembourg (see “spillover criteria” below). Business Angels will be preferably Luxembourg-based and showing or planning Luxembourg-relevant investment activity.
Investments by the sub-fund will be made on a commercial basis with risk-commensurate financial performance objectives. Venture capital funds and Business Angels will have the power to decide to proceed with an exit or disposal of a company for the account of the Luxembourg Future Fund.
Investments in Venture Capital funds and/or in SMEs shall have one or more of the following envisaged spillover effects on Luxembourg:
These effects will foster the sustainable development of Luxembourg strategic sectors (i.e., SMEs active in the ICT, cleantech and other technology sectors excluding health technologies and life science sectors).
The means through which the projected spillovers in Luxembourg as described above shall be generated shall be one or more of the following:
The envisaged spillover effects on Luxembourg as described above should be generated over a medium term perspective and be sustainable.
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Regulation (EU) 2019/2088 (SFDR):
The Fund defines with the assistance of the Investment Advisor certain excluded sectors in which the Fund is prohibited to invest directly or indirectly The selection of such sectors is based on the Investment Advisor ESG guidelines: EIF Environmental, Social and Corporate Governance (ESG) Principles as well as on investment considerations meant to avoid inter alia any actual or potential material social, governance and/or environmental negative impact on the Fund performance. Such excluded sectors are taken into consideration in the investment process and decision-making process of the Fund.
The Fund does not consider adverse impact of investment decisions on sustainability factors at the present time considering that (i) in the absence of regulatory guidance, it is not clear what regulators will expect of entities that elect to consider such matters at this time, and (ii) it is also not clear that there is sufficient data, and data of a sufficient quality, to support entities that do so, in the relevant asset classes, industries or sectors in which investments have been/may be made. Sustainability factors are environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
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