Quantonation has closed €70m of its second fund, intending to reach €200m by early 2025.
The French VC fund invests globally, mostly at pre-seed and seed stages, in companies building applications in quantum computing, sensing and communications.
The first €91m fund, launched in 2021, is an early backer of some of Europe’s notable quantum computing startups, including France’s quantum computer developers Pasqal and Quandela, as well as Spain’s quantum algorithm startup Multiverse Computing.
French public bank Bpifrance has returned as an LP for this second fund, as has Bradley M. Bloom, the founder of US PE firm Berkshire Partners. Other LPs include Singaporean investor Temasek’ subsidiary Vertex Holdings, Singaporean family offices, high-net-worth individuals in the US and European institutionals.
While the first fund only invested in European and North American startups, Quantonation says it will now also target companies in Asia, particularly Japan, Korea, Singapore and Australia.
“These are countries where there is a lot of science and many academic quantum labs, as well as startup ecosystems and big industrial groups that are taking an interest in the topic,” says Quantonation founder Olivier Tonneau.
Tickets will range from €200k-4m at pre-seed, with half of the fund set aside for follow-on investments in up to five companies through to Series B, with tickets that could be as much as €20m.
In total, the new fund will back 25 companies. Four investments have already been made: Australian quantum computing startup Diraq, French quantum materials company PioniQ, quantum sensing deeptech Steerlight, as well as Paris-based Resolve Stroke, which develops high-resolution imaging software.
From hardware to software
Quantonation’s previous fund largely backed companies building quantum computers but, as the hardware space matures and sees fewer entrants, Tonneau says that the focus of the fund is likely to shift.
“It’s becoming complicated to launch new hardware startups, but the existing ones are developing, they are more reliable, they are starting to be usable to demonstrate use cases,” he says.
“What’s at stake now is to develop the application layer and software.”
Tonneau anticipates the next 12-18 months will see the first demonstrations of quantum advantage — meaning that quantum computers will show that they can solve a problem better than traditional computers. This means there is growing interest for startups that are developing the algorithms and software which can help develop business use cases.
This is already the case with companies like Multiverse Computing, which develops quantum algorithms for different applications ranging from finance to manufacturing, through cybersecurity and energy; and Finland-based Algorithmiq, which focuses on applications of quantum computing in the life sciences.
“There are industries where we know that there are applications of quantum in the near-term,” says Tonneau. “Molecular simulation in pharmaceuticals or chemistry, optimization in finance or logistics, and everything that contributes to the acceleration of machine learning.”
Scouting for startups
Quantonation invests in companies at the earliest stage, often by scouting for promising prospective founders in university research labs.
Quantum sensing startup InSpek was spun out of MIT, quantum security company KETS came from Bristol University, and MemQ, which builds infrastructure for quantum communications, is a University of Chicago spinout.
“At pre-seed, we’re the only ones at the table with the founders,” says Tonneau.
With the second fund, Quantonation is also launching a network of “quantum startup studios”.
“These studios will find projects that aren’t mature yet in research labs and take them through a development phase of 18-24 months, which will make them sufficiently mature for us to invest,” says Tonneau.
Participating startups will have access to office space and quantum equipment, such as quantum computers.
The studios will take between a 10-15% share in the startups, and once they are mature enough, Quantonation will have a priority right to invest. Quantonation is a shareholder in the studios, which are also managed by local partners such as universities or other VC firms.
Two — in Canada and Italy — are already active, and the firm is also working on launches in France, the US and Asia-Pacific.
