(Science|Business) Europe’s quantum tech companies need more users, say funding experts

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Quantum technologies are heralded by the European Commission as key for the future security and prosperity of Europe. But Europe’s investors are heading in the opposite direction. 

According to a recent report from the European Quantum Industry Consortium (QuIC), investment in Europe’s quantum start-ups fell by 40% between 2023 and 2024. In the US, meanwhile, it tripled over the same period.

Europe is especially short of venture capital firms capable of leading investment rounds above €100 million, the report notes. This pushes quantum companies to look elsewhere.

For those involved in funding Europe’s deep tech sector, however, the solution is not more venture capital, but more users.

“When I assess a quantum company, what I’m interested in is: is this project bankable? And to understand whether a project is bankable, I want to understand who will be the potential buyers of the product,” said Désirée Rückert, an economist at the European Investment Bank, at an event organised by Dutch network Quantum Delta NL.

“What is very important now is that the big industrial players start using [quantum technologies],” she went on. “Once [they] are used to the European quantum technologies as industry, [they] will keep on using them in the future.”

Expecting Europe’s private investors to step in now is unrealistic, according to Hicham Najem, fundraising specialist at the European Institute of Innovation and Technology Digital community. “The private sector comes in when [the technology] has been de-risked,” he said.

The difference between Europe and the US is not down to the US having less risky technologies, but the amount of money available to the venture community. “Your risk aversion is directly correlated to the amount of cash you can spend without blinking,” Najem added. 

At this stage in the sector’s development, it is down to governments to fill the gap, he went on. This could be with direct funding for national or regional quantum projects, procurement contracts or public-private partnerships. 

Transformational technology

For this to happen, governments must realise that quantum technologies such as quantum computing could have a transformative effect on their economies.

“If you look into Fortune 500 companies, for example, the vast majority of them are built on some foundation of chemistry or physics or mathematics or materials, and I think this is where quantum computing comes in,” said Jeremy O’Brien, the co-founder and chief executive of quantum computing start-up PsiQuantum. 

The superior computing power promised by quantum will speed up innovation cycles in all of these areas. “There is no industry that’s not going to be transformed by quantum computing,” he added. 

Despite the structural weaknesses highlighted in the QuIC report, interest for quantum is growing. According to advisory group Heligan, Europe’s top quantum start-ups are already seeing an increase in investments this year, including Quantinuum with £617 million. 

For its part, QuIC recommends the creation of a dedicated quantum fund to support start-ups, and a pan-European tax relief scheme for investors.

Meanwhile, the EIB is looking to accompany start-ups with advisory services and long-term venture debt, Rückert said. “Rather than only giving grants [. . .], it’s also about helping quantum companies stand on their own feet.”