Finding startup capital in current markets is difficult. Business angels form a key part of the early stage ecosystem.
Can you describe LBAN in a few words ?
LBAN is the business angel network in Luxembourg. Its mission is to develop, support, and promote early stage investing by connecting and nurturing a community of investors and start-ups. On one hand, it provides quality deal flow (potential high growth investment opportunities) to its members. On the other hand, it provides funding and experience to innovative start-ups, accelerating their growth and chances of success. LBAN eventually engages with the entire ecosystem, ultimately promoting Luxembourg as a thriving place for startups and investors.
Who are your members ?
Today we have more than 130 members, each with an individual investor’s profile, all of whom desire to offer their experience and network to invested startups, which benefits fellow business angels. They can either be successful entrepreneurs who are also founders of startups, or high profile corporate professionals with skills useful for founders’ projects. The individual ticket size usually ranges from EUR 25.000 and 100.000, while the syndicated amount from the business angels pool hovers around EUR 150.000 and 300.000 per startup, though outliers can be significantly higher. Business angels mostly focus on early-stage startups with a valuation between one million and ten million Euros.
What types of investments ?
SaaS (Software as a Service) is by far the most popular investment segment among LBAN members, with a concentration in vertical SaaS, focusing on specific needs of a singular industry. However, industry preference can vary a lot between business angels, from foodtech, adtech, and edtech to e-brands and circular economy, to name a few examples.
LBAN as an association has acclaimed significant achievements in recent years. I would like to mention four specific areas of interest:
1. We have grown to an active community of 130+ members, and, as of September 2022, we also introduced our Angel Academy, welcoming the first cohort of trainees in the 2022-2023 academic year.
2. Our members can attest to the quality of our dealflow, which provides them investment opportunities they otherwise would not have access to, investments curated by a solid investment committee.
3. With the support of NOW Partners, we have created a co-investment tool allowing more junior investors to both join deals with smaller ticket sizes (5k to 10k range) and meet, discuss, and share views with more seasoned business angels.
4. Its contribution to the economy is now quite sizable, with 40+M EUR invested over the recent year, reaching 8.5M EUR last year. Additionally, this impact has persisted, as year over year growth tops 20% and has proved to be immune to the macro events of the past three years.
Likewise, we are actively engaged with the ecosystem, acting as effective levers for startups and entrepreneurs in various ways as,
– Members of Juries: Fit4Start by Luxinnovation, Startup World Cup by Ernst&Young, CYEL,…;
– Participating in reverse pitches with incubators; and
– Mentoring in University programmes.
This more prominent role is recognised by the authorities, but we have recently experienced a fast growing interest from Luxembourg corporates. They are willing to join our cause and give us a helping hand, but all hands are welcome!
Our success ?
It’s a bit too early to display a significant track record of success, as it usually takes five to seven years for business angels to exit their startups. I think we’ll see more of it within the next two to three years, but believe me, some senior angels are extremely happy with the performance of some of their portfolio startups.
What risks is LBAN facing ?
I personally believe the main risk is two-sided:
– Losing very active members who spent a considerable amount of time and energy to upgrade LBAN to its 3.0 version; and
– Not further accelerating diversity through new members and new investment segments.
We are carefully addressing these two points as we move forward, like offering opportunities for new members to quickly take on new roles and more responsibility, which should generate more sustained effort from all members.
There is one additional risk that can only be addressed at the political level : the absence of a real tax shelter that puts
What are the opportunities for LBAN ?
With more resources, we know we can do much more and build a strong network to support and accompany the launch of new businesses. This will create new jobs in Luxembourg, allowing us to leverage our experience in other European startups to further strengthen Luxembourg’s image as a true startup nation. However the absence of a real tax shelter is Luxembourg may soon become a real deterrent when neighbouring countries offer actual incentive to angel investments.