Venture View: Francesco Ricciuti from Runa Capital on why quantum computing start-ups need to stop thinking like scientists

As a former student of robotics and someone that “did a lot of quantum physics” at university, Francesco Ricciuti is not your typical VC associate. He joined Runa Capital just two years ago in 2022 (his first job in investment) to focus on quantum and deep tech start-ups. Clearly, Ricciuti has the sort of background that means he can talk on a technical level but that’s just half the story. Ricciuti’s own experiences in developing a start-up business, seeing it rise and then fall, are also standing him in good stead.

One of the key lessons he has learned is the need for entrepreneurialism. It sounds obvious but given that so many deep tech start-ups emerge out of university labs, it’s a good point to make.

“Stop being a scientist and become an entrepreneur,” says Ricciuti. “Technology is important but technology is useless if nobody buys it, or if nobody can actually use it. So you have to think about products. You have to think about markets.”

Ricciuti refers to one of Runa’s investments as an example. Paris-based Pasqal is a quantum computer developer that last year received a €100m Series B round led by Temasek, with the European Innovation Council (EIC) Fund, Saudi Aramco’s Wa’ed Ventures and Bpifrance. Pasqal has been trying to demystify quantum computing by focusing on use cases. In March this year, the company announced a new road map and cloud-based platform called Quantum Discovery, to help business and tech leaders “understand quantum fundamentals, experiment with Pasqal’s processors, and identify potential use cases within their organisation.” The company has also recently announced that it has struck a deal with Saudi Arabian oil and gas business Aramco [see panel below].

While this fits with Ricciuti’s main point of always having an application focus in mind, Pasqal also recently announced a partnership with Welinq, another Runa-backed quantum business. According to the company, Pasqal will leverage Welinq’s quantum interconnect technology (that allows for the networking of multiple QPUs) to enable Pasqal “to surmount the hurdles of qubit scaling for fault-tolerant quantum computing.”

Working together in quantum cybersecurity

For Ricciuti, this is another key point – collaboration is important to overcome technical challenges more quickly. He says that the quantum community is a small one, and although “many countries have their own champions,” especially in quantum cybersecurity, there are opportunities to work together, across borders even.

With cryptography and quantum security, Ricciuti believes that in Europe at least, the ‘nationalistic’ approach makes it difficult for investors. While he accepts it’s become “a hot sector,” he also believes “it’s a very tricky space” – his point being that with security limited to within national boundaries, European countries are not going to be able to develop and sustain a large enough business to give good returns on any investment.

So, where does he see the gaps in the portfolio and the future opportunities to invest?

“Something we have not invested in is quantum software,” says Ricciuti. “I think, in the next few years, we need to start looking at that. The more the hardware will mature, the more we will need to look into the software space but I also believe there is still a lot of opportunity for new hardware platforms in quantum.” Ricciuti feels very confident that Europe is well placed for this. 

“I would say that quantum is one of those sectors where Europe is really good, both in terms of investments and in terms of talent. And I was actually talking recently about US companies stealing talent from European and in particular, UK universities. That’s because European universities are really good in quantum. So I think we should nurture our own ecosystem because it’s an ecosystem where we’re very competitive.”

Taking advantage of quantum technologies

That brings us back to Ricciuti’s collaboration point. He’s as well aware as anyone that this is a fast evolving sector, which, to some extent, is being driven by large corporations as much as VCs. He talks about how a number of businesses, in fintech, pharma, telecoms, energy, and, of course, defence are setting up dedicated teams to investigate the potential use and impact of quantum.

“It’s important that businesses are ready to take advantage of these technologies when they become widely available at scale,” says Ricciuti. “And so you’re seeing a lot of pharma companies, for example, that are super advanced in that they already have teams that are developing algorithms.”

“I would say that quantum is one of those sectors where Europe is really good, both in terms of investments and in terms of talent. And I was actually talking recently about US companies stealing talent from European and in particular, UK universities. That’s because European universities are really good in quantum.”

Francesco Ricciuti, Runa Capital

This goes back to the idea of applications. Yes quantum computing is difficult to develop at this moment in time, but it will be the use cases that will help give it focus and ultimately drive its further development and adoption. As Ricciuti says, quantum entrepreneurs need to think like business people.

This echoes one of the key points that came out of a talk by 500 Startups partner Mike Sigal recently. Speaking at a Startup Portugal event in Porto in early May, Sigal said that it is key for start-ups to understand how VCs think. Top of the list was that entrepreneurs need to be charismatic and know how to sell. Sigal operates in the fintech space but Ricciuti agrees it is also relevant to the deep tech market.

“It’s super important, because at the end of the day, especially if you’re an early stage investor, one of the risks you are considering is what if this person is not able to raise the next round? It’s particularly true in tech-heavy companies that are not going to make revenues in the next five to eight years. So, they will need that next round.”

The challenge, adds Ricciuti, is convincing a series B investor that isn’t technical and is most likely focused on traction, returns, and terms.

“To do this entrepreneurs need to have that sort of charisma, to show that they’re not only a scientist, but also a CEO, right? A leader of a company.”