[00:00:00] Veronica: Hello, and welcome to The Quantum Spin by HKA. I’m Veronica Combs. I’m a writer and an editor here at the agency. I get to talk every day with really smart people working on really fascinating subjects, everything in the Quantum industry, from hardware to software. On our podcast, we focus in on quantum communication, and by that I don’t mean making networks safe from hacking or entangling photons over long distance, but talking about the technology.

[00:00:26] How do you explain these complicated concepts to people who don’t have a background in science and engineering but want to understand all the same? Today, I am talking with Zeynep Korutürk. She is the founding and managing partner at Firgun Ventures. Thanks so much for talking with us today, Zeynep.

[00:00:44] Zeynep: Thank you, Veronica. It’s a pleasure to be here.

[00:00:46] Veronica: So you have worked at lots of very interesting places, and one of them was Goldman Sachs, where you co-founded and steered the company’s tech initiative for a decade, meeting with over 1,000 tech founders, and you’ve been an angel investor, a board member, an advisor, and now you are at Firgun Ventures, and this current job focuses exclusively on quantum companies.

[00:01:09] Can you tell us a little bit about what Firgun does?

[00:01:12] Zeynep: Indeed, I’ve had many roles in different companies. In my latest iteration, I’m a venture capitalist at Firgun Ventures, and Firgun was created to actually provide expertise as VC investors into the quantum ecosystem.

[00:01:24] It’s a VC fund that is purely dedicated to quantum, and it’s the largest one at this point globally focused on the quantum scale-ups, and that has actually truly a global mandate. So we are aiming to invest in twenty-five to thirty portfolio companies. Our target size is two hundred and fifty million, and we’re purely investing in quantum, but we’re in-investing in the entire quantum stack.

[00:01:47] So that means quantum computing, quantum sensing, and quantum communications. And within each of those, we go actually further into diversification. So on the computing side, for example, we do look at the hardware, middleware, software, et cetera. So the idea is to really offer investors the opportunity to invest in quantum and we know that if we think quantum is going to  be in a better place over the next ten years, which we are convinced is going to  be the case, then we know that multiple parts of the portfolio will reflect that.

[00:02:13] Veronica: Yes, the hardware and software get the most attention, but sensing and communications I feel like are sort of the twin dark horses. You know, they’re going to  have some more visible results I feel more than more than hardware, at least maybe in the short term.

[00:02:27] Zeynep:  Yes. It’s very different. It’s a very different investment case when you look at those opportunities. First of all, it’s, it’s nearer term. It potentially has a bit less upside than the quantum computing side, but it still has a very, very meaningful upside. And these companies are just at a later stage, so it’s actually a very nice way to diversify a portfolio as well as to look at those opportunities.

[00:02:47] Veronica: Yes. Yes. You invested in the very early days of Quantinuum. Quantinuum used to be Honeywell Quantum and Cambridge Quantum Computing. Everyone was so excited about the IPO, and now they just keep marching ahead and hitting all these technical milestones.

[00:03:02] I’m curious about your perspective about, you know, being there from the very beginning to what you think now.

[00:03:07] Zeynep: In general, in any industry, it’s a huge luxury to be able to see a company go from Series A company to a post IPO stage company. And in the case of Quantinuum, it’s even more so because they were truly one of the pioneers within the quantum ecosystem.

[00:03:20] Just like to take a step back, when I first invested in Cambridge Quantum, in 2016 there were less than 20 companies in quantum globally. And, and quantum was just a very, very, a niche ecosystem from that perspective. And a lot of the conversations were much more around will quantum computers ever work?

[00:03:39] So we’re in a very different position now. But, having seen it evolve, of course, It’s not been entirely surprising in the sense that the founding team was quite exceptional at Quantinuum, and Ilyas, the founder I have to single out there, definitely has the vision of Quantinuum today.

[00:03:55] So he had a very, very long-term vision from the beginning, and they were very, very focused on execution. And that’s why I’m not surprised that they’re hitting their milestones. It was very important for them to under promise, overdeliver, and they were just relentless in, in achieving their milestones, in attracting the right talent.

[00:04:11] So when you know the company from, from the early stages, it’s not surprising where they are today. But it is, of course, interesting because it also is an indicator of where we are in quantum today. There are close to a thousand quantum companies today, but ninety-nine percent of these companies remain private.

[00:04:28] So when you have a few of these companies going public, and especially if they go public via an IPO, it just brings much more attention to the space. And in their case, it’s just been a very prominent one. It was led by JPMorgan, they’ve been backed by Honeywell and a lot of other blue-chip institutional LPs.

[00:04:45] It’s definitely brought it more top of mind for, for a lot of broader LPs as well

[00:04:50] Veronica: And there have been a few SPACs this year as well. I’m curious what you think about that, that method of going, going public if you’re a quantum technology company.

[00:05:00] Zeynep: I think there is the perspective of the company, and then there’s a perspective of potential investors which might be different.

[00:05:06] I think I can see some of the appeal for companies because you suddenly have a way to access much larger pools of capital than is currently available in private markets. And I do personally think that there is still a difference between companies that can actually attract large amounts of private capital and companies that don’t think they will be able to attract large amounts of private capital in the near term.

[00:05:29] And if you don’t think that you’re going to  be able to attract that type of capital, I can see the appeal of going to public markets for it. But it is a doubleedged sword. You do get the capital, but suddenly you’re a public company. And I think we all have to be realistic about what market expectations are of public companies.

[00:05:48] And, and you can debate whether or not a lot of these quantum companies are ready to be public companies. All the metrics- Yes … that we would normally use as public markets investors to assess opportunities are very hard to use in the case of quantum. Normally, you definitely have to look at revenue multiples, which are currently not there, and a lot of other considerations.

[00:06:08] I think it can be tempting for companies to go public, but I think it will– there will be a bit of a risk element in having taken that step and then finding themselves in a situation where they have to manage expectations of the public, of the markets. And I do expect some volatility over the near term in public markets.

[00:06:28] Veronica: Yes. Yes. So you have been investing in quantum for more than a decade. How do you think about quantum today that you didn’t have that understanding five years ago?

[00:06:38] Zeynep: There were a few things. Even five, six years ago,we were still at a phase where we were discussing if quantum computers would ever actually become real. I think today that would be a very, very niche view. The science itself, I think, has just advanced immensely, and as an example, when we enter companies, we just do not underwrite science risk.

[00:06:58] At that point, the science is proven. When we come into companies, we have the mindset of growth investors, and we’re much more underwriting a specific engineering risk with specific execution risk, talent risk. Mm-hmm. And that’s a very, very different investment profile than it was five years ago.

[00:07:15] And, and you would have noticed that five years ago, a lot of the investors that were going into these types of companies were specialist early-stage investors. Now you have many more blue-chip large companies, partly because the space has evolved to, to actually own larger companies that want to get in.

[00:07:31] But there is still the question of how to diligence appropriately, how to source support appropriately, and how to underwrite appropriately, which is why we think there’s definitely a need for a specialized investor that could consistently, in an informed manner, do that on a global scale. But I think now the key challenges that some of the companies we are interacting with have are engineering challenges, which is very different to science challenges.

[00:07:54] And then there is the manufacturing, there is the geopolitics, there is the execution, the ability to attract talent. Those are all very real considerations, but they are much closer to growth investments than they are to, to early-stage scientific investments.

[00:08:09] Veronica: Right. Right. And I think the quantum supply chain is really complex, but at least it is there, and people have a good enough understanding of how to manage that, whereas if you’re trying to figure out a physics problem or a laser problem, that’s a little more challenging.

[00:08:23] Zeynep: Yeah, and I think we had a lot of investors like large research grants, government intervention. I think those were the actors that were very prevalent in the very early stages. But now there’s a real need for, for broader support from, from the private investment capital community. But the challenge a lot of investors have is that because they go in and out of quantum, they just have a, a harder time truly grasping the ecosystem and the evolution of the ecosystem, which is why in many of the rounds that we participate in, I think we’re very welcome as an informed investor, and we very much help also bring together the broader syndicates.

[00:08:57] Veronica: Looking around the world as a global industry, Singapore is investing, the UK, the EU, the United States government recently put together, more funding for quantum.

[00:09:06] Do you think that that will continue, or do you think private investors will take over more now? It seems like there’s still a need for that government funding. Yeah. Do you think that’s true?

[00:09:14] Zeynep: I think it is true, and like in any other big, generational shift that is happening, you have to kind of take a step back and look at the broader picture and, and ask yourself, why are governments investing now?

[00:09:24] What a lot of LPs don’t speak about is the existence of China. I think the big elephant in the room in a lot of these conversations is that China has been at the forefront of quantum, having invested officially fifteen billion, probably in real terms closer to thirty billion or so, in quantum, and they’ve done that almost a decade ago at this point in time.

[00:09:44] So most people who are active in academia or, or national security circles would know that or argue that China is probably very close or already there in terms of quantum. And therefore, there is a real scenario where the West can just not afford to not also get there, which is why, there is actually much more interest from governments.

[00:10:03] I think a lot of them are also a bit more motivated by preventing a disastrous Q-Day scenario. So that’s the near-term risk. But in the longer term, I think there is a real scenario where a lot of countries might just fall behind if they’re not developing quantum technologies.

[00:10:19] That’s why governments have been heavily investing, especially over the last few years. And I can only see that going up at this point because the stakes are too high. That doesn’t mean that private investors won’t also increase. I think the fact that there’s been the IPO of Quantinuum and, and the SPACs have just brought quantum more at the forefront in people’s minds.

[00:10:40] I think there were developments in AI and the potential collaboration between AI and quantum that also appeals to a lot of people. And I think because of that, there will be more private capital going in. But if you look at the large blue chip players, they will just only feel comfortable getting in with larger tickets at the later stages.

[00:10:58] So there’s still a bit more time, I think, for them to get involved. And with regards to earlier stage private investors or or venture funds, institutional investors, there’s still the question of there is a knowledge gap in terms of how to invest in quantum. And that’s easier to overcome if you’re purely dedicated to quantum.

[00:11:17] But it is quite hard if you’re a generalist investor to do some quantum investments.

[00:11:22] This is one of the few areas in tech where you definitely have to have a portfolio approach because you do want to diversify your bets and, and that’s what we’re trying to achieve.

[00:11:31] Veronica: Yes. Yes, I think that it is too soon to pick a winner, and there may be a variety of winners depending on what you want to do, drug research or, you know, optimization or, yeah… portfolio management.

[00:11:44] Zeynep: You make a very good point because even the conversation we’re having now, had we had it five years ago, most people thought there would be a winner in quantum, or that one of the modalities will really advance much faster than others.

[00:11:57] And I think today, with the advances of AI as well, that perception has really shifted within the ecosystem. Now, I think most people do think that there will be multiple winners, potentially different modalities used for different types of problems, and that also actually justifies even more portfolio investment to quantum as opposed to single name investments.

[00:12:16] Veronica: Right. As I mentioned, you worked at Goldman Sachs for several years, and I’m really curious how your conversations with companies are the same now and how they’re different.

[00:12:27] Zeynep: It is very different because Goldman Sachs is a huge organization, and, I think when we were looking at quantum at the time,

[00:12:34] It was much more of a strategic conversation. And at this point in time, we are actually in touch with quite a few different banks who want to have conversations with us with regards to our portfolio and how they can potentially partner with our portfolio or co-invest in some of these deals because these computers and the type of technologies that they bring on board will just have very many applications in finance.

[00:12:55] So there’s definitely a strategic conversation. But when I was at Goldman Sachs, quantum was only one of the areas that we were looking at. So it is very different to be day in, day out, only immersed in quantum. You can go much, much deeper when, when you have the luxury of being fully dedicated to quantum.

[00:13:13] And then we have the advantage of course being one of the very few funds dedicated to the early growth companies in quantum that we get a lot of deal flow and we get a lot of information from companies. So it allows us to look at every new opportunity as a standalone company, but it also allows us to look at every single opportunity with respect to their, to their peers.

[00:13:32] And that’s a very, very big insight that you can have and you have that luxury only if you’re purely dedicated to quantum.

[00:13:39] Veronica: So it allows you to build a more of a portfolio approach to investing in the sector as opposed to just picking one or two winners.

[00:13:47] Zeynep: Exactly. There’s that, and then it allows you to be much more informed when you look at the company because you have the benefit of having seen, at this point, like just to give you an example, in the first six months of our existence, we diligenced close to 80 companies.

[00:14:04] Veronica: Oh, wow.

[00:14:04] Zeynep: And that’s just immense. Some people say that they have looked at 10 companies over the last decade. So if you can look at 80 companies in six months, of course it sharpens your insights into any new company that comes your way.

[00:14:18] Veronica: Mm-hmm.

[00:14:19] Zeynep: And my expectation is that that will only grow further with time as we see more and more companies, and we will be able to see much, much better pattern recognition, and we will have ideally the upside of having been very early investors.

[00:14:31] And as we get fund two, fund three, fund four, this will just exponentially grow.

[00:14:36] Veronica: Right. I assume that gives you the ability to pick complementary technologies as well.

[00:14:42] Zeynep: Yes. And, then you also see potential synergies between different companies that they themselves might not immediately see.

[00:14:49] Mm-hmm. Because one of the elements that you notice in the ecosystem is that everyone… I mean, there is never an IQ shortage in quantum. I mean, these people are incredibly smart. They know their field better than anyone else. Most of them are either professors in quantum or, or have done multiple years of postdoc in quantum.

[00:15:06] But they are still very focused within their field because they have to be that when they’re building their companies. But sometimes having a partner along the way that actually looks at the broader field can actually deliver a lot of insights that you would not immediately see if you’re very, very laser-focused on a specific point.

[00:15:24] And I think with regards to the broader portfolio that we’re building, we’re seeing also a lot of synergies of different companies that can actually be complementary and help each other out, and, and that’s something that we would, ideally share, want to share with the, with the rest of the portfolio.

[00:15:38] Veronica: Yeah, that’s a really valuable asset, I would think, for an entrepreneur trying to, trying to make it all happen.

[00:15:44] So when you’re looking at a company, obviously the team and sort of maybe not 100% proven science, but at least a solid plan around that. Are there other factors that influence your decision to invest?

[00:15:56] Zeynep: I mean, actually the science, we almost want it to be 100% in the sense that they have to be published, they have to demonstrate what they’re thinking.

[00:16:03] And as I said, we’re just not there really to underwrite the science element. But what would not be proven would be more the engineering scale-up phase. And there, of course, they have to make certain assumptions, and they’re going with specific milestones, and there’s a very big element that goes into diligencing the technical roadmap of the company.

[00:16:21] And there we have the immense value add of our third co-founder, Professor Mete Atature from Cambridge University. And then we bring on board other experts as well, depending on what technology we’re looking at. But there is definitely a big underwriting of the technical roadmap.

[00:16:36] But aside from that, which is very, very technical and specific to quantum, there are other metrics that other growth investors will be familiar with. And that can include does this team or does this company have the ability to raise meaningful amounts of capital going forward? Because there is the reality that for any company that is now operating in quantum and at the stages that we look at, they have competitors that have tapped into hundreds of millions of dollars in public funding, and that will be spending that money, whether it is to consolidate or make acquisitions or, or M&A type of opportunities.

[00:17:10] And they will just have more capital to deploy for their own technical roadmaps. So we have to have a meaningful amount of confidence that this team or this company will be able to attract that type of funding. So that’s one. Then there is the question of whether or not any potential manufacturing challenges can be overcome.

[00:17:30] What is the geopolitical dynamics? Will this team be able to attract the top level of talent that is needed to build a quantum winner? It’s interesting where not a lot of people speak about it, but there’s always this conversation about the AI talent shortage, when we know that quantum talent is a fraction of AI talent.

[00:17:49] So it’s an easy conclusion to make, to say that those that are able to attract the right talents and a meaningful amount of that talent have a just much, much better chance of winning. And all those considerations come into play when we look at companies. And there, of course, we have a huge advantage, as, as I just pointed out, that we’re looking at the company as a standalone company, and then we’re looking at the company compared to all their peers that we’ve had the chance to have conversations with as well.

[00:18:15] And that’s very, very valuable at our stage.

[00:18:17] Veronica: Right. We’re always thinking about, as a marketing agency, how to communicate these ideas and how to be, you know, just technical enough and just detailed enough and not to get too far into the weeds, but still show, you know, some of this amazing work that’s gone into these milestones that the companies have achieved.

[00:18:33] We sort of understand modalities now. There’s trapped ion and there’s superconducting. Yeah. Is there a new sort of common misunderstanding or a new stumbling point that you see?

[00:18:42] Zeynep: Yeah, I think that’s a big problem in the industry, by the way, I think. Everything is explained in, in very technical manner by, by generally the founders and the challenge is that, of course, as your audience changes over time, because initially you might be speaking to other colleagues who are, quantum PhDs, eventually you start speaking to VCs, then at some point you’re going to  be speaking to, blue chip companies who have even less understanding of quantum.

[00:19:06] You have to kind of moderate your message to make it understandable to different audiences, and that’s a skill, and it’s a skill that can be learned, but you have to put some effort into it. I think that’s, in general, a big problem in quantum. And then for people who invest, it’s the same problem.

[00:19:20] There’s the modalities that are hard to grasp for a lot of people who don’t go deep into it. And I think there’s also a lot of confusion created by numbers of qubits. People get incredibly confused. I mean, we speak to LPs that are ongoingly confused about that because there are different metrics that are being put out by different companies, and people just don’t really know if they’re comparing apples to apples and, and they aren’t.

[00:19:43] They are generally comparing apples to oranges. So we generally explain to a lot of LPs that a, a usual framework for them to have is how many raw qubits have been obtained, how many logical qubits have been obtained. I think that’s generally a good framework to have so that you compare… I mean, then you can still argue that not all logical qubits are the same.

[00:20:03] But it still is a bit more helpful than looking at logical versus raw qubits. And then we have published a few things internally with regards to what people can expect at X lo- number of qubits. Because I think one of the big confusions in this space is this talk about million qubit machines.

[00:20:22] And I think unless you’re really into quantum and have have looked at quantum in detail, there are a lot of people who think that quantum computers will not be able to deliver any real value until get to the millions of qubits, and that’s just not the case. That conclusion would mean that if you don’t get to the millions of qubits, nothing will happen, and that could not be further away from reality.

[00:20:44] I think the reality is just much more incremental but, but exponential in the sense that we know that once you reach X numbers of logical qubits, you will be able to solve certain challenges in drug discovery or in material sciences. Once you get to X, you’ll be able to tackle certain financial problems, and this is going to  grow further and further with the different applications that are added until you get to the millions of qubits machines, where that’s, of course, like the moonshot investment where you will be able to do a lot of things that we cannot even imagine today.

[00:21:14] Zeynep: But there is a road to get there, and the commercial opportunity will just grow, more and more with those qubits milestones being achieved, and that’s something that gives a lot of confidence to investors in the space.

[00:21:27] Veronica: Yes. And do you see a tipping point? Do you think there will be sort of a, “We found this new drug”?

[00:21:34] Will that be enough to establish the, the, the industry more firmly, or do you think it will be more gradual over time? I don’t know if there’s going to  be a ChatGPT moment of, “Wow, look at what this new thing can do,” but I do think that there will be some sort of industry specific accomplishments that will really show the future power

[00:21:50] Zeynep: Yeah, I mean, I, we don’t really see a ChatGPT-ish moment, partly because, quantum at this point is much more of a B2B solution than a B2C.

[00:22:00] Veronica: It’s not a consumer technology.

[00:22:01] Zeynep: I do think that quantum will be able to deliver real value before we agree on whether or not quantum has arrived. I think it will be specific applications that already solve certain challenges that are currently not solvable, and I think that’s going to  happen over the next few years, where it’s not going to  be a broad-based technology that is used by, by everyone, but I think it will start solving specific problems that are meaningful problems, for corporates.

[00:22:27] And I think at that point, we will still not think that quantum computing has arrived. If we’re lucky, there could be some of these application specific problems that are also easier for people to imagine. I mean, if, of course, suddenly there is a potential new drug that is discovered for Alzheimer’s or Parkinson’s, of course it will appeal to people and it will get to their imaginations.

[00:22:47] But I think some of the first results and commercial outcomes might not be in a very sexy field and therefore the broader audience might miss out on it.

[00:22:56] Veronica: Yes, I think that’s a good way to put it.

[00:22:58] That’s the way I’ve been thinking about it as well, that, you know, in drug discovery or in portfolio optimization or some of the logistics challenges that no one really thinks about unless you are UPS or Amazon.

[00:23:09] Zeynep: There is a real case where from a risk perspective, if Bitcoin is cracked, people will understand that this is actually now.

[00:23:17] Right. So I think that might be, yes … something that wakes people up, and again, an advance in a specific drug discovery for a very known illness is also one of those things. So I think those would be the equivalent of the ChatGPT moments for quantum. Yes.

[00:23:29] Veronica: Yes, for sure. So, speaking of AI, we all know how much money has been pouring into that industry

[00:23:35] Do you see some of that enthusiasm shifting to quantum?

[00:23:39] Zeynep: I don’t think the exact word is enthusiasm. I think it’s just full on still the AI mode, so I think the enthusiasm hasn’t really shifted. I think there is more and more recognition among AI investors that quantum is there to stay and that it will benefit from AI, and AI will benefit from quantum.

[00:23:54] So that’s among knowledgeable AI investors, there’s definitely more and more interest in quantum. We do see that. And I think the existence of AI has been just very good because it actually showed us that the adoption curve in a new technology can still move extremely fast if we can actually start seeing the benefits from it.

[00:24:11] And I think that gives some indication of what might happen in quantum as well, and it might actually move much faster than we think once it reaches specific milestones and revenue potential. I think at this point in time, especially if we’re looking at potential VC investments, et cetera, I think most of the bandwidth is still occupied by AI, and a lot of people kind of fear almost taking the pedal away from AI because it’s moving so fast..

[00:24:35] Veronica: Yes, I, and we’ve talked, with our clients, quite a bit recently about the reciprocity between the two technologies. Yeah. You know, quantum can help AI be more efficient in certain ways, and then AI can help with designing some of these chips and circuits and algorithms.

[00:24:52] Zeynep: Yes … that is really something interesting that we’re keeping track of as well. It’s definitely something that, I mean, AI has without a doubt affected the quantum industry immensely over the last few years, and it’s thanks to AI that there’s been a lot of breakthroughs in these technical roadmaps overall.

[00:25:05] I mean, if you look into where the roadmaps were five years ago versus today, you will notice that they shrank very meaningfully, and a big part of that is thanks to AI. So we’re very happy with the progress in that field.

[00:25:16] Veronica: So is there anything that you’re keeping your eye on in these last few months of twenty twenty-six in terms of the industry?

[00:25:21] Zeynep: Well, one of our thinking was that as we, touched upon in earlier questions, was that you need to have access to the different modalities and some of the top players within those modalities if you want to build a good portfolio in quantum, in our opinion.

[00:25:35] We are very excited about the fact that we are in some of the really top cutting-edge quantum companies. We already have ten portfolio companies. And we’re expected to probably end the year in around fourteen, and it’s a portfolio that we’re incredibly excited about. We’ve been very focused on the hardware side.

[00:25:51] And now we’re actually starting to see also very exciting opportunities on the middleware and software side. So in twenty twenty-seven, there may be a few additional opportunities that we add to our existing portfolio on, on that end.

[00:26:04] Veronica: Wow.

[00:26:05] Zeynep: And there will be a lot of synergies between the hardware and the software players within the portfolio as well.

[00:26:10] Veronica: Right. Well, I’ve learned so much. Thank you so much for your time. This has been a fascinating conversation. I really appreciate it, Zeynep. Thanks for joining us today.

[00:26:17] Zeynep: Thank you so much, Veronica. Thank you for, for having me.

[00:26:19] Thanks for joining us for another episode of The Quantum Spin by HKA. You can find all episodes on our website, hkamarcom.com. Of course, you can find us in all your favorite podcast platforms as well. Follow us on LinkedIn under HKA Marketing Communications if you have an idea for a guest, or if you’d like to be on the podcast yourself, you can reach me on LinkedIn, Veronica Combs, or you can go to our website and share your suggestion via the contact us page. Thanks for listening. Talk to you soon.