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Raising Capital in Luxembourg

A wide range of solutions to structure the capital raising activity

There are many ways to raise capital for new business, ventures or investment funds.


Luxembourg offers a wide range of solutions to allow corporations, promoters and entrepreneurs to structure their capital raisingactivity.

 

The creation of investment funds, being public funds and alternative investment funds, can provide interesting solutions, from venture capital, private equity hedge fund, real estate fund or listed equity investments fund.

 

Promoters also set up holding structure, like the SOPARFI, to pool their equity participations and finance subsidiary companies in Luxembourg or abroad.

The main solutions for smaller/medium size companies:

 

Raising Capital Solution

 

 

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Business Angels and Venture Capitalists

But these measures are often not enough for start-up companies and finding investors is necessary. This can be achieved with the help of :

  • “Business Angels” are high net worth individual investors who seek high returns though investment of a share of their assets in an innovative and high potential company. Usually these former entrepreneurs or executives also offer their competencies, experiences, networks and time.

  • “Venture Capital Investors” are investment firms which inject capital in cash in exchange for shares and active role in the invested company (board participation, strategic marketing, governance, structure,..). They have a long term strategy allowing companies the time to mature into profitable organisations. Generally they have a limited operating time and their aim is to achieve a good rate return; they thus have an exit strategy too.

Business angels and Venture capital companies invest in new or very early companies with often a high degree of risk.  Equity is then the common way to attract new investors. It provides the investors with a share in the overall returns and potentially even decision influence or even control over a company. Issuance of bonds and hybrid instruments allows entrepreneurs to attract capital without giving away equity, even for smaller and medium-sized enterprises.


It used to be possible to issue bonds only for capital needs in excess of EUR 50 million. Creatrust now offers solutions for committee.

  • capital raising from the very early stage of the creation and development of any start-up based in Luxembourg

  • bond issuance from as little as EUR 1 million and with lead times of several weeks only, thanks to a securitisation vehicle. The bond issuance is then subscribed by potential investors who then receive a yield which depends on the risk and value of the underlying company or assets.

The «Juncker Plan»

Moreover, agreements have been signed in 2015 between the European Investment fund (EIF) and two banks in Luxembourg in order to provide to small and medium sized companies incorporated in Luxembourg a total of EUR 111 million of loans for investments, working capital and business transfers. Eligible borrowers have to fulfil some innovation relative criteria.

Guarantee baked loans have very competitive interest rates, offers a high level of transparency, facilitate access to funding -at an earlier stage- and may be a complement to Business Angels or Venture Capital companies investments.



 

 

 

 

 

 

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