Medtech Venture Capital Fund Luxembourg: How to Structure Your Investments

Why medtech venture capital and why Luxembourg?

We explain why medtech is attractive and why Luxembourg is a natural home for cross-border medtech funds.

The global medtech industry, including medical devices, diagnostics, digital health and AI-led tools, is estimated at well over USD 650 billion in 2024 and is still growing each year. Healthtech and medtech funding in Europe and the US is rebounding, with healthtech startups reportedly raising close to USD 8 billion in the first half of 2025 alone. Investors are again backing AI diagnostics, surgical automation, connected devices and remote monitoring solutions as healthcare systems digitize and age.

Luxembourg brings three decisive advantages for medtech venture capital. First, it offers a complete toolbox of regulated and semi-regulated fund vehicles aligned with AIFMD, including the Reserved Alternative Investment Fund (RAIF), the Specialised Investment Fund (SIF) and the SICAR. Second, it sits in the heart of the EU single market with full passporting for marketing to professional investors across the European Economic Area. Third, it combines political stability with a competitive effective corporate tax rate around 23.87% in Luxembourg City from 2025 for fully taxable companies, while fund vehicles such as RAIFs investing in diversified assets are usually exempt from corporate and municipal income tax and pay only a low subscription tax on net assets.

For medtech venture funds that need to deploy capital into high-growth companies in Germany, France, the Nordics, the US and Asia, a Luxembourg platform allows one structure to reach many jurisdictions while keeping regulation and governance under control.

Mapping the medtech investment universe for a Luxembourg fund

Here we outline the main medtech sub-sectors and business models a Luxembourg venture fund can target.

Medtech is broader than hardware. A Luxembourg-based fund can build a thesis that spans several verticals:

• Medical devices and implants. Cardiovascular stents, orthopedic implants, minimally invasive surgical tools, smart prosthetics and wearables.
• In vitro diagnostics and lab automation. Molecular diagnostics, point-of-care tests, imaging software and laboratory robotics.
• Digital health and AI. Clinical decision support, AI radiology, remote patient monitoring, telemedicine platforms, digital therapeutics and workflow automation.
• Health data infrastructure. Secure data lakes, interoperability platforms, medical billing and revenue cycle tools, cybersecurity for hospitals and connected devices.
• Hospital and home-care solutions. Durable medical equipment, connected infusion pumps, home dialysis, and devices that shift care from hospital to home.

Globally, medical devices alone are forecast to move from around USD 570 billion in 2025 to more than USD 880 billion by 2032, with a CAGR above 6%. Digital and AI-driven medtech segments often grow at double-digit rates. For a Luxembourg medtech VC fund, this growth translates into pipelines of seed, Series A, growth and pre-IPO deals in Europe, North America and selected Asian hubs.

A clear sector map helps the investment manager define sub-strategies and compartments in a Luxembourg umbrella fund. For example, one compartment can target early-stage diagnostics in the EU, while another focuses on later-stage US and Asian surgical robotics or connected device platforms.

Choosing the right Luxembourg fund wrapper for medtech VC

We compare the main fund vehicles used by medtech venture capital managers in Luxembourg.

Most medtech VC sponsors choose between the following structures:

• RAIF (Reserved Alternative Investment Fund). An AIFMD-compliant fund that is not directly supervised by the CSSF but must appoint an authorised external AIFM. It benefits from fast time-to-market, flexible investment policies and is typically exempt from corporate and municipal tax. Instead, it pays an annual subscription tax of 0.01% on its net asset value, with exemptions for certain assets. RAIFs can be set up as partnerships (Special Limited Partnership/SLP/SCSp or SCS), as corporate funds (SA/Public Limited Company, Sàrl/Limited Liability Company, SCA/Societes en Commandite par Actions/Partnership limited by shares) or as a contractual fund (FCP).
• SIF (Specialised Investment Fund). A CSSF-regulated fund aimed at well-informed investors with risk-spreading requirements. It also enjoys tax exemption on income and gains, with the same 0.01% subscription tax model in most cases.
• SICAR. A risk capital investment company that is fully tax-exempt on qualifying risk capital investments but subject to ordinary corporate tax on non-qualifying assets. It suits classic private equity and risk capital strategies and can also be used for later-stage medtech growth equity.
• Part II UCIs. Funds governed by Part II of the 2010 UCI Law that can be marketed beyond professional investors but with stricter regulation and prospectus rules. They are less common for pure medtech VC but may fit hybrid strategies.
• Unregulated SCSp / SCS with AIFM. A simple partnership vehicle that, when managed by an authorised AIFM and structured as an AIF, can still benefit from the AIFMD passport through the AIFM licence. This is often used for co-investment vehicles, parallel funds and GP/Carry vehicles.

For most international medtech venture sponsors, the RAIF in the form of an SCSp has become the default choice. It combines contractual flexibility, tax neutrality at fund level and EU-wide marketing through the AIFMD passport. In case of of the use of a RAIF, most of fund sponsors will use a SICAV RAIF can be created in several legal forms.

An SCSp-SICAV RAIF is the most flexible option because it works like a partnership and lets investors and managers tailor the rules of the fund with ease. An SCA-SICAV RAIF adds a stronger governance model, with a general partner in control and investors acting as shareholders. It suits managers who want clear decision-making and a stable corporate setup.

An SA-SICAV RAIF follows a traditional company structure with a board of directors and formal governance, making it attractive for pension funds, institutions and large family offices. All three structures keep the core benefits of a RAIF: fast launch, AIFMD passporting and a tax-efficient framework for cross-border medtech investing.

Typical Luxembourg medtech VC structure from LP to portfolio

Let’s walk through a standard medtech venture capital structure using Luxembourg entities.

A common architecture for a medtech VC platform looks like this:

• Fund vehicle. RAIF structured as an SCSp with an umbrella setup and several compartments, for example “Early Medtech Europe”, “Growth Medtech Global” and “Co-Investment”.
• General Partner (GP). A Luxembourg Sàrl acts as general partner of the SCSp and carries unlimited liability vis-à-vis third parties, but usually has limited assets. It is often the carried interest vehicle or closely linked to it.
• AIFM. Either a Luxembourg AIFM or a passported AIFM from another EU Member State. The AIFM handles portfolio and risk management and gives access to the EU passport.
• Management company / advisory entities. One or more advisory companies based in Luxembourg, France, Germany, the UK or the US provide deal origination, due diligence and monitoring services to the AIFM.
• SPVs and co-investment vehicles. Luxembourg or foreign special purpose vehicles may hold specific medtech assets, co-investments with strategic corporates, or country-specific clusters such as “DACH medtech diagnostics SPV”.
• Investors (LPs). Family offices, institutional investors, corporate medtech groups, pension funds, sovereign funds and high-net-worth individuals typically subscribe as limited partners in the SCSp.

This structure allows:

• Clear separation between the risk of the medtech portfolio and the commercial risk of the manager.
• Efficient profit allocation through carried interest and management fee flows.
• Flexible creation of new compartments or vintages without rebuilding the entire platform.

Tax and regulatory mechanics that matter to medtech investors

We highlight the main tax and regulatory elements LPs and GPs should understand.

Most medtech LPs want tax transparency or at least tax neutrality at fund level. An SCSp itself is not a separate taxpayer for Luxembourg income tax purposes and is treated as transparent in many investor jurisdictions. Income and gains flow through to investors and are taxed in their home countries according to applicable tax treaties and rules.

When a RAIF adopts the SIF tax regime, it is exempt from corporate income tax, municipal business tax and net wealth tax. Instead, it pays a 0.01% annual subscription tax on net assets, with exemptions for certain assets such as investments in other funds or qualifying debt instruments. In parallel, Luxembourg’s corporate income tax for fully taxable companies in Luxembourg City falls to 16% in 2025, resulting in a combined rate around 23.87% when municipal tax and the solidarity surcharge are included. This matters for GP companies, advisory firms and fully taxable holding SPVs, but not for tax-exempt funds.

On the regulatory side, the key points are:

• AIFMD passport. An authorised AIFM can market the medtech RAIF to professional investors across the EEA.
• Well-informed investors. RAIFs and SIFs are restricted to well-informed investors, typically professional investors or those investing at least EUR 125,000 and declaring awareness of the risks.
• Risk-spreading. RAIFs and SIFs must comply with risk-spreading rules, which are usually compatible with a diversified medtech portfolio spanning 15–40 positions.
• CSSF involvement. The RAIF itself is not supervised by the CSSF, but the AIFM is. SIFs and SICARs are supervised at fund level and require CSSF authorisation.

Practical case studies for medtech VC structures

This section illustrates how different medtech strategies translate into concrete Luxembourg structures.

Case 1 – Pan-European early-stage medtech RAIF

A manager based in Paris and Munich wants to raise EUR 250 million to invest in 25–30 seed and Series A medtech startups across France, Germany, the Nordics and Benelux. The sponsor structures a Luxembourg RAIF in the form of an SCSp.

• Target investors: European family offices, corporate medtech strategics and sovereign funds.
• Investment focus: AI diagnostics, digital therapeutics and minimally invasive devices with clear CE-mark and Food and Drug Administration (FDA) pathways.
• Structure: One RAIF compartment with a 10-year life plus two one-year extensions, with a typical 2% management fee and 20% carry over an 8% preferred return.
• Benefit: Multinational LPs invest into one EU-compliant structure and receive look-through reporting for their domestic tax and regulatory regimes.

Case 2 – US medtech growth fund using a Luxembourg feeder

A US manager raising USD 600 million for growth-stage medtech wants European institutional LPs but prefers a Delaware main fund. The solution is a Luxembourg RAIF feeder.

• The Delaware fund invests in US and global growth-stage medtech, including surgical robotics, connected implantables and AI-enabled monitoring devices.
• A Luxembourg RAIF SCSp feeder aggregates European LPs, offers EU-compliant reporting and benefits from the AIFMD passport via an EU AIFM.
• The feeder invests into the Delaware master fund and passes through returns. Luxembourg treaty access may also help reduce withholding taxes on certain non-US investments.

Case 3 – Corporate medtech venture arm

A listed medtech corporate in Germany wants a strategic venture arm to invest EUR 150 million in startups aligned with its surgical and digital strategy.

• The group sets up a Luxembourg RAIF SCSp with a single cornerstone LP (the corporate) and a small number of co-investors.
• A dedicated advisory company in Germany and a Luxembourg AIFM run the strategy.
• The RAIF co-invests alongside the corporate in Series B–C deals and can continue to hold financial stakes even if the corporate later acquires assets.
• This preserves governance and ring-fences risk while giving the corporate a professional VC platform.

Governance, risk and ESG for medtech funds in Luxembourg

This section covers governance expectations, risk management and ESG integration.

Medtech investing carries specific risks: regulatory approvals, clinical trials, reimbursement, data protection and cybersecurity. A Luxembourg AIFM must document and monitor these risks through policies, due diligence checklists and ongoing reporting.

Governance elements typically include:

• Investment committee with a mix of financial and medtech clinical expertise.
• Scientific or clinical advisory board to review trial design, endpoints and evidence quality.
• Compliance and risk functions at AIFM level, covering clinical trial disruption, product liability and data breaches.
• Regular stress-testing of portfolio cash burn, runway and fundraising scenarios.

ESG is increasingly central. Medtech funds often fall under SFDR Article 8 or 9 if they promote environmental or social characteristics or have a sustainable investment objective. Examples include:

• Devices that reduce hospital-acquired infections or re-admissions.
• Digital tools that improve access to care in underserved regions.
• Products that lower environmental footprint by reducing waste or energy use.

A Luxembourg AIFM can help the manager align ESG policies with SFDR and EU Taxonomy requirements and translate them into concrete KPIs for each medtech company.

Step-by-step: how to launch your medtech VC fund in Luxembourg

Damalion guides you in the completion of the following steps:

1. Define strategy and target investors. Clarify ticket size, target IRR, geographies (for example EU plus US), medtech sub-sectors and whether the fund is Article 6, 8 or 9 under SFDR.
2. Select the fund wrapper. Choose between RAIF, SIF, SICAR or unregulated SCSp, depending on investor type, speed and tax profile. For most cross-border medtech VC strategies, a RAIF SCSp is the leading option.
3. Choose service providers. Appoint an AIFM, depositary, administrator, auditor and legal counsel. Select advisors who already understand healthcare and medtech risk.
4. Design the economics. Set fund size, management fee, carry structure, hurdle rate, recycling rules, GP commitment and co-investment policies.
5. Draft fund documents. Prepare the LPA or management regulations, the private placement memorandum, subscription documents and side letter framework.
6. Implement onboarding and AML. Put in place KYC/AML procedures, investor classification, tax forms (FATCA/CRS) and operational workflows for capital calls, distributions and reporting.
7. Launch and first close. Once cornerstone LPs commit, hold a first closing and start deploying capital into a seed portfolio while continuing fundraising toward final close.

Key features and benefits for medtech investors 

This section summarises the main features and benefits of a Luxembourg medtech VC structure in simple, scannable form.

• EU-wide reach. One Luxembourg AIFMD-compliant structure can access professional investors across the entire EU and EEA.
• Tax neutrality at fund level. SCSp-based RAIFs and SIFs are typically exempt from corporate income tax and municipal tax and instead pay a small subscription tax, preserving returns for LPs.
• Fast time-to-market. RAIFs avoid direct CSSF approval at fund level and can be launched in a shorter timeframe than fully regulated funds, subject to AIFM readiness.
• Flexible medtech strategies. Umbrella funds and compartments allow separate strategies for early-stage, growth, co-investment or impact medtech within one legal platform.
• Strong governance. AIFM oversight, independent depositary and audited NAVs provide institutional-grade governance, which is important for regulated investors.
• Global deal flow. Luxembourg structures can invest in medtech companies in Europe, North America, Israel and Asia while using local SPVs when needed.
• Investor protection. The well-informed investor regime, risk-spreading rules and AIFMD framework help protect LPs while allowing sophisticated strategies.
• Scalable platform. Once the first medtech fund is in place, the same infrastructure can host follow-on funds, continuation vehicles or dedicated co-investment compartments.
• Alignment of interests. Carried interest, GP commitment and co-investment rights can be calibrated to align sponsor economics with LP outcomes.
• Compatibility with ESG and impact. Luxembourg’s regulatory framework and data culture make it easier to embed measurable impact and ESG metrics in medtech strategies.

Damalion supports entrepreneurs, investors and family offices in structuring medtech venture capital funds in Luxembourg, including incorporation, fund setup, coordination with banks and alignment with legal and tax requirements. Please contact your Damalion experts now.

Glossary – Medtech venture capital fund Luxembourg

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FAQ – Medtech Venture Capital Fund Luxembourg: How to Structure Your Investments 

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