SNCI and EIF Launch Luxembourg Future Fund 2 (LFF 2)

• LFF 2 succeeds LFF 1 with additional firepower of up to € 200 million
• LFF 3 will support investments to stimulate further the diversification & sustainable development of the Luxembourgish economy
• It will have a broader scope including hybrid debt equity investments in addition to venture capital

On Friday, 17 March 2023, the Ministry of Finance, Ministry of the Economy, Société Nationale de Crédit et d'Investissement (SNCI) and the European Investment Fund (EIF) officially launched the Luxembourg Future Fund 2 (LFF 2).

LFF 2 is the successor initiative to the existing Luxembourg Future Fund (LFF 1), which reached the end of its active investment period.

The launch of LFF 2 highlights the successful cooperation between SNCI and EIF aiming to stimulate the diversification and sustainable development of the Luxembourgish economy via funding activities. With € 200 million in total financing commitments between SNCI (up to € 160 million) and EIF (up to € 40 million), LFF 2 provides additional firepower in support of innovative projects in Luxembourg.

During the press conference, Minister of Finance Yuriko Backes highlighted: "With the launch of the LFF 2, we will pursue a unique partnership that is built on the EIF's deep expertise of managing public policy focused investment initiatives and the SNCI's as well as the Ministries' knowledge of the Luxembourg economy. This complementarity helps focus investments in innovative technologies that will generate a sustainable and positive impact in key sectors like finance and climate technologies, thus contributing to the further diversification of our economy."

Like LFF 1, LFF 2 will target a risk-adjusted financial returns whilst simultaneously stimulating the diversification and sustainable development of the Luxembourgish economy with investments across a range of sectors including climate technologies, Fintech, cybersecurity, energy resilience, life science and medical technologies, as well as new space technologies.

Minister of the Economy Franz Fayot said: "From a public policy perspective, LFF 2 will provide an important tool in driving forward the diversification of the Luxembourg economy and the development of its strategic sectors by cooperating with the private sector in pursuit of sustainable innovation here in Luxembourg."

In line with the existing LFF 1 initiative, investments under LFF 2 will continue to take place in the form of fund commitments and/or co-investments. However, compared to LFF 1 the investment scope has been broadened and will now:

• Include investment funds and businesses already established in Luxembourg, thereby allowing these entities to expand local operations further.
• Target more mature innovative businesses by providing hybrid debt-equity investments. These less dilutive investment instruments may appeal to companies unwilling to give up further equity stakes. Thus, the addition of hybrid debt-equity investments will allow LFF 2 to invest into companies at different stages of development.
• As such, investments will also be considered for more mature companies, facing a complex and uncertain market environments, including businesses currently exposed to changes in digitalisation, supply chain disruptions or companies transitioning to a low-carbon business model.

SNCI President Vincent Thurmes stated: "By further valorising the "ecosystem dynamics" initiated by LFF 1, LFF 2 will continue to develop together with all the stakeholders Luxembourg's sustainable and resilient economy of tomorrow."

"We're pleased to partner again with the SNCI and leverage on the EIF's experience for the second generation of the LFF initiative," said EIF Chief Executive Marjut Falkstedt, "Broadening the scope to include hybrid debt equity investments in addition to venture capital will help address the financing needs of innovative companies that can bring value to Luxembourg and strategic sectors of the European economy."

Background Information

About the EIF:

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. For more information, please visit www.eif.org.

About Luxembourg Future Fund (LFF 1)

The LFF 1 is an equity investment mandate, amounting to EUR 150m in aggregate commitment volumes between SNCI (EUR 120m) and EIF (EUR 30m). LFF 1 operates under an umbrella structure with dedicated compartments for venture capital (VC) fund investments and co-investments into companies alongside investment funds. It was launched in 2015 and its active investment period ended in Q4 2022. As such, no new fund nor co-investments will be conducted under LFF 1 and LFF 2 will serve as the successor initiative.

As of 31^st of December 2022, the LFF 1 portfolio included the below listed VC fund commitments:

• Fabric Ventures Fund 2021: VC fund investing in decentralized network technologies including blockchain enabled infrastructures.
• GP Bullhound Fund V: VC fund investing across a range of innovative technology sectors.
• Middlegame Ventures Fund I: VC fund investing in financial technologies related ventures.
• Paladin European Cyber Fund: VC fund investing mainly into cybersecurity technologies.

The LFF 1 portfolio also included the following co-investments alongside the investment funds indicated.[1]

• CrossLend GmbH (with Lakestar II LP Fund) in FinTech sector.
• Cyberhedge Europe Sarl (with Paladin European Cyber Fund) in Cyber-Security sector.
• Pagantis (with Prime Ventures IV Fund) in FinTech sector.
• LendInvest Limited (with GP Bullhound Fund IV) in FinTech sector.
• SolarisBank AG (with Lakestar II LP Fund) in FinTech sector.
• Spire Global Inc. (with RRE Leaders) in the New Space sector.
• ICEYE (with OTB Fund) in the New Space sector.
• NorthStar (with Telesystem) in the New Space sector.
• ClearSpace (with OTB Fund 2) in the New Space sector.

Through its investment activities and the strong support of key actors of the Luxembourg innovation ecosystem, LFF 1 has established itself as a catalyst for international start-ups and investment funds willing to establish their presence in Luxembourg. LFF 2 is now continuing this activity thereby further strengthening the Luxembourgish economy.

About SNCI:

The Société Nationale de Crédit et d'Investissement (SNCI) is a public-law banking institution specialized in medium and long term financing of Luxembourg based companies. SNCI's financing instruments cover investments in fixed assets, innovations and exports. SNCI also grants start-up/transmission loans to newly incorporated or inherited SMEs. It may also finance investments of Luxembourg companies abroad. SNCI may take equity positions, either directly or through affiliated financing companies. For more information, please visit www.snci.lu.

Additional information regarding the LFF 1 co-investment companies:

SpireGlobal is a Software as a Service (SaaS) company providing data analytics services with the data collected from space (low-Earth orbit). The company collects data by its constellation of nanosatellites and offers data products to for instance maritime, weather & aviation customers. The company opened its European HQ in Luxembourg, with part of its management in the country.

NorthStar offers a commercial service to monitor space, via a constellation of satellites with dedicated optical sensors. With a secure and expanded data-driven 3D catalogue of the space environment, NorthStar's information services enable safe navigation in space. The company has already opened an office in Luxembourg and actively engages with other LFF portfolio companies.

ClearSpace was founded out of the realization that in-orbit servicing and space debris removal are vital services for the future of space explorations. In 2019, ClearSpace was selected by the European Space Agency to lead the first mission to remove debris from Orbit by 2025. The company is planning to launch an office in Luxembourg (timing of which to be confirmed).

ICEYE is a microsatellite manufacturer, founded as a spin-off from Aalto University in Finland. The company tries to address challenges (such as reliability, timeliness, access) associated with the use of Earth Observation Data. In December 2021, the company opened an office in Luxembourg.

Cyberhedge is a financial services firm specializing in managing technology risk. The company has developed predictive models that provide an accurate calculation of cyber risks' impact on enterprise value. The cloud-based service is intended to assess potential cyber risks that affect a company's financial health and shareholder value. The company has its European HQ in Luxembourg and created several high-skilled jobs in the country.

Pagantis (formerly known as Digital Origin) is a financial technology company founded in 2011. Pagantis created a scalable technology platform to provide automated, friction-free consumer finance for e-commerce transactions in Europe. In early 2020, the company established an office in Luxembourg with employment of local directors.

LendInvest is an online marketplace for property finance. The marketplace on one side provides property investors and developers with bridging, buy to let and development loans. On the other side, it provides investors with ways to invest in secured property loans. Lendinvest established a first Luxembourg-domiciled fund and is looking to raise a new Luxembourg-based fund.

SolarisBank is a technology company, founded in 2016, with a banking licence in Germany, offering a digital banking platform to third parties (such as digital service providers and online merchants). The company has concluded a strategic partnership with CrossLend, leading to a number of synergies for both entities.

CrossLend operates a loan origination and securitization platform that brings together borrowers and investors in the alternative consumer finance/peer-to-peer lending sector.

Press contacts:

EIF (Equity Investments, Mandate Management): Joel Wajsberg ([email protected] )

EIB Group/EIF: Sabine Parisse ([email protected])

SNCI: Eva Kremer (E-Mail: [email protected])

Ministry of Finance: Max Dörner ([email protected] Chiara Luciani [email protected])

Ministry of the Economy: Paul Zenners ([email protected])

[1] Note: For further information regarding LFF 1 portfolio companies, please see additional information provided on pp. 5.

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