How does making a startup differ in Luxembourg?

I have spent the last 9 months in Luxembourg starting a Neurotechnology business. Sofar I spent most of the time & effort in 3 things:

1. Field knowledge in my area, Neurotechnology
2. Determine the Local needs
3. Determine the definition of "Startup" business here, and in Europe in general

Neurotechnology vs other fields

Neurotechnology is new and emerging, and there is little public information about how it works. Questions that arise in my field are more fundamental about the science and technology than, for example, in AI.

If someone makes a financial system that uses AI, others do not ask "Will this AI become alive and start giving money away all my money to the poor?". Because they know how AI works in general, so they are focusing on how it will apply to a financial area.

With Neurotechnology, the real problem is that it has not yet entered public knowledge. People will ask first "How does Neurostimulation work?", "Is it dangerous?", "Can it cause me problems?", even though it has been scientifically proven that it has low to no side-effects, it has been tested for 40 years, and the EMA and FDA have cleared it to use for anxiety and depression.

Effectively, I have to answer these questions all the time, before getting into the specifics about usage, usability, aesthetics or features of any Neurotech product at all. I also had to answer these before even making a product to ask people about whether they would buy it. A picture is not enough, nor is a software demonstration, because potential customers cannot make the same assumptions as with other products that they know more about, like AI.

Impressions from the environment in the US

The US has a different context, terms and methodologies for Startups

Advice and models about Startups almost everywhere, in books, the internet, and what Coaches know, mostly come from the US. The US is a very different environment with completely different needs than Luxembourg, and possibly many places in Europe, and also has different methods and philosophies about how to cover them. This alone creates a confusion about how to go about creating a Startup, as often the methodologies are interlinked with the environment they came from ie the US. Making a Startup in Europe requires getting out of the US mindset, and being selective with the knowledge coming from the US as to how they fit the Luxembourg and EU environment.

The US has a narrow focus on IT-related solutions

In the US they seem to be very focused in a single area, primarily IT technologies, and it is those that drive the growth of most startups. Many people are looking for how to make another mobile application or an online platform, because that is what they are good at. They do not primarily look for how to solve a problem. The primary concern is how to apply their software on something new. Software is a medium that can be used to make part of the solution, but not the solution itself. But in the US, they ultimately consider and present one as the other.

The US has an abundance of services & products already

The question is not about how to make something that does not exist, but how to make something that can stand the competition. In Luxembourg, there are simply not enough services in many areas, and so there is no such competition. It is the same for many European countries.

Solution vs Disruption

There are 2 ways to deal with a problem: One is to solve it directly with a new solution. The other is to disrupt the underlying context it exists within, by creating a new field where the problem does not exist within it. For example, if the problem is that an analog radio player cannot pick up radio station signals everywhere, one solution is to build an antenna with a wider range. But instead, someone else can make an internet radio application, and completely disrupt analog radios and make the problem of signal coverage redundant.

In the US, the competition in businesses is massive. Most often, they make startups with the single purpose of disrupting a field. And because so many are trying to disrupt existing fields, this creates a bigger positive feedback loop for more disruption. That is because, if someone is trying to solve a current problem within a field, there is a very high chance that they will be disrupted, and they will be left with a solution for a non-existing problem!

Within Porter's Five forces model, this means that the Threat of Substitution is high in the US.

In Luxembourg, and in Europe there are fundamental needs for new services and products, and so there isn't exactly something to compete with. Often, all they want is to create a new service, or digitize an existing one. They do not see full disruption as so critical. The threat of new solutions being disrupted by the EU is low. The threat of a disruption coming from the US is also low, because there are barriers of new products and services coming from the US to the EU.

Local needs in Luxembourg

Despite its richness, there are a lot of services which are scarce in Luxembourg. Some things do not exist. To try and innovate for those is even unnecessary. Building something to cover those needs can go far alone.

One key characteristic of Luxembourg is that there is a big demand for services for corporate professionals. 60% of people in Luxembourg come from other countries to work, mostly surrounding ones like France, Germany and Belgium. All of them have some common needs for professional reasons. For example, a laundry service with high access, availability and low cost would likely be highly successful. It would also be better than another mobile application.

To make a business in Luxembourg is easy in this respect: simply, scan the local market and find a local need, non-software related. Then, find a solution for it. Unlike the US, software and hardware are needed only to improve the effectiveness of the solution.

Summary: Some differences between US & Luxembourg

Making a Startup in Luxembourg is more like making a traditional business, selectively using some ideas from the US Startup methodology.

US

1. Disruption almost vital. Solutions that disrupt a whole field are highly preferred.
2. Target market scope: Global, from the get-go. Scalability is vital for the Startup to later become a global business.
3. Primary purpose: Develop more Software and internet related technologies.

Luxembourg

1. Creating new services or digitizing existing ones is vital. Too disruptive solutions are seen as unfit, because of being too far ahead.
2. Target market scope: Local first. Scalability is not seen as a priority.
3. Primary purpose: Cover a local need. Using software or hardware does not give as big an advantage. Technology is not the first priority. The priority is to be covering the need, whatever the means. But using a well known technology that they are familiar with is more likely to be accepted.

I hope you find this useful! Good luck with your entrepreneurial pursuits.