The EU should support more funding initiatives targeted to deep tech and quantum technologies, according to founders and strategists working within the quantum field in France.

Quantum computing is based on the theoretical promise that quantum calculation capacities can immensely reduce the calculation speed of highly complex problems, bringing the time down from years to hours or even minutes.

Developing such a technology would give a “quantum advantage” to its owner. At the moment, quantum computers can only create incremental improvements to current computers, while quantum sensors, like inertial navigation systems, are the closest to entering the market.

“For Europe to fully play its role, we need to establish synergies between what is happening at the national level and what is taking place at the EU level,” Neil Abroug, head of the French quantum strategy, told Euractiv.

A capital-intensive industry

As the quantum industry is capital-intensive, companies require large amounts of investment to grow their businesses.

“France is arguably one of the best countries to launch a tech startup,” said Théau Peronnin, CEO and co-founder of Alice & Bob, a Paris-based startup building quantum computers.

France has put in place several initiatives to support its tech ecosystem, notably with the French Tech label, supporting the structuring and growth of French tech startups.

The fiscal system has also been adapted with multiple initiatives to favour entrepreneurship and startup creations and growth.

Moreover, when it comes to quantum, one French investment fund, Quantonation, has fully dedicated itself to investing in quantum technologies, managing assets worth €100 million.

According to Abroug, Quantonation has been a trendsetter for the French quantum ecosystem. Its investments in quantum gave confidence to generalist investment funds to invest in quantum technology companies as well, eventually creating a virtuous circle of investments.

A lack of large European funds

Yet, according to Peronnin, “fragmented European funding limits growth in the quantum sector”, when quantum companies want to raise larger amounts of cash.

Exemplifying this state of play, as the French startup Pasqal raised €100 million during its Series B round in 2023, it opened its capital to Temasek Holdings, the Singaporean sovereign wealth fund and Wa’ed Ventures, Aramco’s investment fund, a Saudi state-owned oil company.

These resources from non-European private actors have been complemented by resources from European public entities: the French public investment bank Bpifrance and the European Innovation Council.

Pasqal’s head of strategy, Nicolas Proust, told Euractiv that looking towards the future rounds of investments, “Pasqal focuses on the overall financing ecosystem that the French authorities must continue to build for deep tech startups.”

Pierre Desjardins, co-founder and CEO of quantum startup C12, echoes this point. “We have now reached the point where we, start-ups, need even more concrete action from public authorities to enable us to enter the phase of technological development.”

The lack of large European investment funds has been a longstanding challenge in the EU.

In 2020, a parliamentary investigation commissioned by former Prime Minister Édouard Philippe submitted a report which included the following recommendation: “to establish a trusted late-stage investment fund of €300 to €500 million dedicated to quantum startups.”

Abroug, a rapporteur for the investigation, told Euractiv that the current evolution of the quantum ecosystem makes him believe that such a French or European investment fund dedicated to quantum should now manage more than a billion euros.

Some EU initiatives exist. For example, the European Tech Champions Initiative, launched in 2023 by the European Investment Bank alongside major EU countries such as Germany, France, Spain, Italy, and Belgium, aims to support 10 to 15 large venture capital investment funds managing approximately €1 billion each.

Still, this initiative aims to boost tech investment funds but has not set any hard objective on whether one of these funds should be dedicated to quantum technologies.

“If I were to raise €100 million, I would have to find a lead investor who would contribute half the amount. However, the lead investor can only take on 5% of the fund. That means a fund of at least €1 billion. The challenge is that such European investment funds, with the know-how to invest in deep tech, are hard to come by,” sums up Peronnin.

Source: Euractiv.com