Starting a business is still possible, financing one is much harder

Luxembourg entrepreneurs continue to set up businesses and invest despite the uncertain economic climate, even though access to finance has now emerged as the main obstacle to the growth of start-ups, ahead of recruitment difficulties and set-up costs.

Luxembourg continues to boast one of the most dynamic entrepreneurial scenes in Europe. According to the Global Entrepreneurship Monitor (GEM) Luxembourg 2025/2026, presented on 2 July by Statec, the Chamber of Commerce and the Ministry of the Economy, 9.4% of residents aged between 18 and 64 are involved in setting up or developing a start-up. This figure is slightly lower than that recorded in 2024 (9.9%), but remains close to the country’s historical average. The European average, meanwhile, is on an upward trend and has exceeded 10% for the first time, reaching 10.3%.

According to Cesare Riillo, who led the study for Statec, this slight decline does not signal a collapse in entrepreneurial spirit. Entrepreneurial intentions remain among the highest in Europe, and 36% of start-up entrepreneurs anticipate strong growth in their business – a figure that continues to place Luxembourg amongst the most ambitious countries on the continent. As for the fear of failure, it remains low at 42%.

Funding is becoming the main obstacle

The real lesson to be learnt from the report lies elsewhere. For the first time in several years, access to finance appears to be holding back the growth of start-ups. According to the survey, 52% of the entrepreneurs questioned said they were experiencing difficulties in financing their projects.

This tension is reflected in the ways in which businesses are funded. Start-up founders continue to rely primarily on their own resources. Personal savings are by far the main source of funding for 57% of respondents, ahead of credit cards (37%) and family and friends (29%). In other words, entrepreneurs starting out rely on self-funding.

Financial institutions and public support schemes follow, with utilisation rates of 18% and 12% respectively. This finding comes at a time when the government is stepping up initiatives to strengthen the start-up ecosystem, notably with the recent introduction of a tax credit for private investors and the reform of the tax regime for share options. Finally, private investors, venture capital funds (at 9%) and crowdfunding platforms (5%) remain much more marginal sources of funding.

This financial barrier joins other, more traditional major obstacles, such as the cost of office space (57%) and difficulties in recruiting skilled workers (48%). Remarkably, 59% of residents believe that starting a business in Luxembourg remains easy.

Global uncertainty is taking its toll on entrepreneurs

The report also highlights the growing impact of geopolitical and trade tensions. For the first time, GEM Luxembourg has surveyed entrepreneurs on the expected consequences of developments in international trade, customs duties and migration policies.

The outlook is cautious. Four in ten business owners expect production costs to rise, whilst a majority believe that financing opportunities and access to foreign markets are likely to deteriorate. Exporting companies are particularly concerned.

The message is clear: whilst business activity is holding up for the time being, the outlook is clouded by an international environment that has become far more unpredictable.

Artificial intelligence remains a strategic priority

Artificial intelligence remains a priority for Luxembourg entrepreneurs, although enthusiasm appears to be more subdued than it was a year ago.

In 2025, 32% of entrepreneurs regard AI as a very important part of their strategy, compared with 34% in 2024. Luxembourg remains well above the European average, but has lost its top spot on this indicator to the United Kingdom.

Economic expectations regarding AI are also becoming more realistic. Only 24% of entrepreneurs now believe that this technology will have a very positive impact on their business’s growth, compared with nearly one in two in the previous survey. Conversely, concerns about data protection and cybersecurity remain high.

A lead that is eroding in terms of sustainability

Another notable development: Luxembourg remains ahead of the European average in terms of sustainable development, but this lead is narrowing.

The proportion of entrepreneurs reporting that they are implementing initiatives with a significant social impact has fallen from 56% to 45%t, whilst those stating that they are taking action to limit their environmental impact has dropped from 61% to 53%t. The country remains above the European average, but no longer holds the top position it previously occupied on these indicators.

Opportunistic, male-dominated and foreign entrepreneurship

Finally, the report confirms several structural characteristics of the Luxembourg ecosystem. Entrepreneurship remains primarily driven by the identification of economic opportunities rather than by the need to find a job. 36% of respondents start a business because of a lack of employment. The EU average is 58%.

The gender gap continues to narrow, although fewer women are still starting businesses – 7.2% compared with 11.5% in 2024. These figures stood at 6.47% and 13.3% respectively in 2024. Finally, immigrant residents are more likely to start a business than those born in the country (10.5% compared with 7.5%).

Ultimately, the GEM 2025/2026 paints a picture of Luxembourg’s entrepreneurial sector as still dynamic, but facing a change in the economic cycle. Ambitions remain high and the entrepreneurial drive shows no sign of waning, but the ability to finance projects is gradually becoming the main factor limiting their realisation.