To build deep technology businesses, founders need to be highly skilled and possess vast knowledge. Knowledge and skill, however, won’t necessarily build a business that can move products and services from lab to market by themselves. Business, finance and research will need to work in tandem to turn deep tech into real tech.
Building those collaborations in a capital-intensive space, such as quantum technology, is proving to be both absolutely necessary and extremely difficult. Quantum computing startup SEEQC and venture capital firm EQT Ventures team members offer a path forward. They say that truly successful startups in deep tech areas can forge partnerships based on a united mission and shared values, such as humility, trust and an awe of scientific discovery.
In an interview, John Levy, CEO of SEEQC, Gregory Bernstein, Investor of EQT Ventures, and Ted Persson, Partner of EQT Ventures, discussed the need, the challenges and the promise of creating lasting relationships between funders and founders.
“When Greg and I set out, we wanted to build a frontier tech practice that we felt would reflect much more where things are in the market today, and apply more of a philosophical lens to it, in which we would actually allow both stories as well as technology to be front and center.”
SEEQC , headquartered in Elmsford, NY with facilities in London and Naples, joined the EQT Ventures portfolio in September 2020. SEEQC is building scalable single flux quantum chip-based quantum computing systems combining classical and quantum technologies on an application specific basis across a spectrum of industries such as chemistry, pharma, energy and financial services. The company’s leadership in the quantum field and vision for the quantum era made it a natural fit for EQT’s frontier tech portfolio, according to Bernstein, who focuses on early stage, frontier technology in the US and Europe.
“When Greg and I set out, we wanted to build a frontier tech practice that we felt would reflect much more where things are in the market today, and apply more of a philosophical lens to it, in which we would actually allow both stories as well as technology to be front and center,” said Persson. “Our investment theses seek to apply VC’s first principles which is not always the case in today’s landscape. And I think when we met John, he totally got that and was brought up as a VC with that type of mindset. So from the beginning, it was a really strong connection.”
Building VC for the Deep Tech Era
Even though venture capital was originally built on financing engineering-centric firms, current relationships between the venture world and the academic world are now – to put it politely – strained.
Some of the current strain arises simply from the different values and languages of each group. Also, the timespan for quantum to be viable – let alone mature – enough to become profitable requires an investor to be patient and comfortable with uncertainty, which are two traits you are least likely to hear in a sentence about venture capital.
Bernstein said he gets that.
“We are risk capitalists, first and foremost. But most VCs and private equity folks are not always viewed in the most positive light and there are legitimate reasons for that. We think that some of our peers have forgotten first principles which stem from the fact that we exist to back technology that matters beyond ourselves and to be rewarded for doing so. Profit with purpose if you will. But what is central to that whole equation are the founders and the value that technology can bring. And if you’re humble before that, I think you can put engineers and really brilliant people at ease.”
“Think the same way about investors as one does when building a senior management team. You want to build out a diversity of complementary experiences and complementary capabilities.”
Levy said that founders must recognize that successful businesses are built on understanding their own knowledge gaps.
“Technical founders, who often come directly from academic backgrounds, may have expertise in quantum computing and quantum physics, or in computer science and electrical engineering, but most do not have a business background,” said Levy. ”I think what makes people nervous when they deal with venture investors for the first time – or even the second or the third time – is they feel that they’re on unfamiliar ground.”
Levy added that it’s important to build connections with investors who offer different skills and experiences.“When I think about investors and venture capitalists, I don’t think of them as a homogeneous group,” said Levy. “Think the same way about investors as one does when building a senior management team. You want to build out a diversity of complementary experiences and complementary capabilities.”
As an example, Levy points to EQT Ventures, as well as to Merck, which is a customer as well as an investor through M Ventures, the pharmaceutical giant’s venture arm. The Merck team includes highly technical scientists and researchers with backgrounds in quantum physics and quantum chemistry, who understand the needs and the requirements of end users.
Investing to Change the World
The glue that binds both EQT Ventures and SEEQC goes beyond, solely, the opportunity to make money from quantum computing. They are on a mission to change the world for the better, according to Bernstein.
Both teams are also in the space for the long term. They believe that quantum will be a long – maybe even a multi-generational – project to improve lives and perhaps alter humanity’s relationship with nature in a fundamental way.
“We’ve done a tremendous amount of work over many years to develop our core technology, and our goal now is to apply it to applications that we really care about,” said Levy. “And when Greg says we’re on a mission, we’re not just on a mission to build scalable, energy efficient quantum computing (the meaning of the company’s name), but we’re also on a mission to work on the applications that have the potential to drive enormous change in in our world, changing something that would probably be impossible at any other time.”
Rather than shying away from big challenges, Levy said founders have the privilege to embrace these “big, meaty and consequential” problems. “One of the biggest actions one can take as a human – as an entrepreneur or venture investor – is to identify the largest and most consequential problems of our time and design and build practical solutions to solve those issues. I think people often think too small and too incrementally – I know I have – but we have the opportunity to embrace the major challenges of our times and bring together technology, capital, commitment and humility to address them. That’s the promise I’m embracing with quantum computing.”
“People seek meaning in all kinds of ways, but when you think that you may have a chance to be able to invest in technology that can do that – and also has that level of commercial application, what else could you ask for?”
Investing to Understand Nature
For Bernstein and Persson, investing in the quantum and deep tech spaces includes the thrill of building a successful business and the challenges of tackling societal problems, but it also is driving their organizations to the cusp of potentially epoch-changing scientific discovery.
“If you are investing in quantum, it should be made clear exactly what that means. You’re comfortable betting on a technology that, in theory, uses multiple dimensions, imperceivable to you, to make an inference or make some type of decision in the reality you’re living through,” said Bernstein. “If that doesn’t get you going, I don’t know what will.”
That looming power has the potential to change everything – from building real world business applications to exploring reality itself, according to Bernstein.
“When the first commercial application happens – when one of these computers influences your reality, like discovering a new drug or sequencing a molecule , for instance, there are going to be industries built just around the notion of what that will mean, because it will fundamentally change everything,” said Bernstein. “People seek meaning in all kinds of ways, but when you think that you may have a chance to be able to invest in technology that can do that – and also has that level of commercial application, what else could you ask for?”