04 Aug 2023

Event Round-Up: Investing in emerging tech series: Supercharging Investment in Quantum

techUK’s Head of tech and Innovation, Laura Foster, welcomed speakers and attendees to the event:

Roger McKinlay, Challenge Director–Quantum Technologies, UK Research and Innovation
Glenn Manoff, Chief Marketing Officer, Riverlane
Richard Murray, CEO and Co-Founder, ORCA Computing
Chris Elphick Senior VC Manager, BVCA
Manjari Chandran-Ramesh, Partner - Early-Stage Funds, Amadeus capital

In setting the context for the discussion, Laura mentioned that this event was in the days following the chancellor’s speech at Mansion House, which looked to support pension investments, energise the UK’s financial services, and increase the access to funding for technology and other key sectors of the UK economy. The Chancellor announced reforms focused on three areas:

Restructuring pension investment vehicles that will support pension fund holders and increase funding liquidity for high-growth companies.
Increasing the UK’s attractiveness as a listings destination for companies looking to start and grow.
Reforming the financial services sector that will aim to balance regulation with stability.

This speech also reaffirmed the UK’s desire to be the next Silicon Valley, accompanying the Government’s ambition to lead in technologies like quantum and AI. These reforms fit in the UK’s wider agenda to bolster the domestic tech sector’s ongoing success and ambition, which in 2022 became just the third country to host a tech sector valued at $1 trillion.

In this context, the event looked to offer a realistic overview of investment into quantum and whether these changes would address some of the key challenges unlocking investment in this space. The quantum market is still in its infancy, there are a lot of unknowns around how this market will look in a decade, and in handing over to the presentations, Laura highlighted that collaboration between quantum businesses, private sector investment, academic institutions and UK Government will be critical.

Presentation from Roger McKinlay

Roger delivered a comprehensive presentation on the UK's National Quantum Technologies Programme, a 10-year investment of £1 billion in the quantum sector. He emphasized that the program is currently in its ninth year, highlighting the long-term commitment to advancing quantum technologies in the country.

During the presentation, he discussed the goals and objectives of the UK Quantum Strategy. He mentioned that the strategy aims to allocate £2.5 billion over 10 years for research and development, with a focus on establishing the UK as a world leader in science and engineering, aligning with the techUK tech plan's call for increased investment in critical technologies such as quantum, AI, and semiconductors. The strategy also includes an infrastructure review and the creation of £100 million in new research hubs.

To support the growth of the quantum industry, the UK government has increased funding for skills development, including doctoral training and fellowships. Additionally, they are actively seeking global partnerships and working towards the creation of a national and international regulatory framework to ensure the safe and efficient utilization of quantum technologies. Roger highlighted the importance of leveraging these technologies to deliver societal benefits and accelerate government procurement.

The presentation touched upon the ongoing activities and funding within the UK quantum ecosystem. Notable initiatives mentioned included missions in quantum computing and positioning, with investments exceeding £70 million. Furthermore, Roger highlighted the allocation of £100 million for research hubs, £25 million for skills development, £15 million for the Quantum Catalyst program to boost government procurement, and £20 million for the Quantum Networks Accelerator.

The UK Quantum Strategy encompasses various aspects of the quantum ecosystem, including science, skills development, infrastructure, facilities, regulation, international and technical diplomacy, venture capital investment, and foreign direct investment. The government recognizes the potential of quantum technologies and aims to foster an entrepreneurial culture within the country.

Roger emphasized the need for cohesion in the technology base, with a focus on sensing, imaging, networking, computing, and the intersection of machine learning/artificial intelligence with quantum computing. He noted the formation of supply chains within the quantum industry.

Addressing misconceptions, Roger emphasized that quantum technology is not "spooky magic" but rather a form of deep tech that the UK government sees immense potential in. He stressed the importance of stimulating the computing market and creating a market for sensing/positioning, with a mix of public and private sector involvement. The government aims to act as a procurer to drive progress in these areas.

The presentation acknowledged the significance of revenue generation but also highlighted the importance of achieving technological milestones. The UK government encourages the growth of both start-ups and foreign direct investment in the quantum industry.

Lastly, Roger mentioned that the adoption of quantum computing is not a matter of "if" but "when" and highlighted the increasing competition among governments in terms of developing quantum technologies. Rather than wrestling with nature, governments are now focused on competing with each other in this rapidly advancing field.

Presentation from Chris Elphick

Chris delivered an overview of the venture capital (VC) landscape, highlighting the importance of the BVCA as a trade body. He discussed the status of quantum investment in the UK and the need to convince investors of its value. This connects to the techUK tech plan's objective of building a competitive innovation economy by reducing the cost and time it takes to invest in R&D.

Chris emphasized the unique models of deep tech investment and the UK's lag compared to the US, aligning with the techUK tech plan's call for a smarter approach to foreign and trade policy to secure supplies of key technologies and attract foreign investment. He also mentioned the regional distribution of high-growth quantum companies and their equity investment.

The presentation included an overview of the VC landscape using data from Beauhurst. The data covered 51 active, independent private quantum companies headquartered in the UK. It encompassed equity deals from 2013 to 2022 and highlighted that these companies employ over 500 people based on their latest accounts filed at Companies House. The data also accounted for companies that have exited through acquisition or initial public offerings (IPOs) as well as those that have ceased operations. The focus was on UK SMEs utilizing quantum technologies to drive progress in the technology ecosystem nationwide.

Chris emphasized the immense potential of quantum-driven advancements in strategic fields such as drug discovery, cryptography, security services, and artificial intelligence (AI), setting the stage for transformative outcomes.

Panel Discussion and Q&A

The panel discussion and Q&A provided a comprehensive and multifaceted understanding of quantum investment dynamics, revolving around various topics related to quantum technologies.

Glenn and Richard shared their experiences and insights from building start-ups in the quantum industry, offering valuable perspectives. Glenn emphasized the significance of fostering a supportive ecosystem for startups in the UK, highlighting how access to government funding and private investments has been crucial for their company's growth and research in the quantum field. He also underscored the role of universities in nurturing talent and providing a pool of skilled individuals to drive innovation and success in quantum startups.

Richard shed light on the groundbreaking nature of the quantum computing industry, emphasizing its diverse range of applications that hold the potential to revolutionize various sectors. By focusing on specific applications and addressing real-world challenges, quantum companies can create significant value and societal impact.

The panelists delved into the topic of fostering startup success in the UK and discussed the merits of setting up abroad. While the UK offers a favorable environment for quantum startups, they acknowledged that international collaboration and partnerships with global institutions can accelerate knowledge exchange and market access, contributing to the growth and scalability of quantum ventures. The panel emphasized that international success for UK businesses at an early stage should be seen as a positive outcome, as it signifies the global reach and impact of their innovations.

Another critical aspect discussed was the need to support academic spinouts. Many quantum companies emerge from universities with innovative products, but founders may lack exposure to the investment ecosystem. Building connections at the academic stage can help investors identify promising ventures. Moreover, the panel highlighted the importance of equipping founders with commercial skills, bridging the gap between academia and industry, and enhancing the transformation of cutting-edge research into viable quantum technologies.

Throughout the discussions, the significance of government investments and private funding in the quantum domain resonated with the techUK tech plan's focus on unlocking investment opportunities in critical technologies. The panel also emphasized the importance of cross-sector collaboration, where companies in different technology sectors, such as high-performance computing and quantum computing, can foster partnerships and share knowledge.

Furthermore, the panel discussed the role of the government in fostering the quantum ecosystem, recognizing the stability it can bring to the market. While praising the positive role played by the UK Government, they also highlighted the need for broader support across deeptech investment and the development of a culture of UK start-up success.

The discussions also touched upon the importance of hardware development in attracting more investors to the quantum computing industry. Prioritizing the underlying hardware layer and integrating quantum systems alongside high-performance computing systems can drive technological advancements and commercial applications.

Lastly, the interest in exploring the collision between quantum computing and large language models revealed potential investment opportunities. Leveraging the synergies between these technologies can lead to transformative advancements in both fields.

In conclusion, the panel discussion provided a comprehensive and multifaceted understanding of quantum investment dynamics. The emphasis on collaboration, government support, international openness, and investment in hardware demonstrates the importance of a holistic and strategic approach to propel the quantum industry's success in the UK and beyond. The discussions aligned with techUK tech plan's overarching goal of instilling confidence in the future and addressing challenges in the tech sector, advocating for a global perspective in quantum development.

Final Messages

Roger emphasized the real and amazing opportunities for the UK in quantum through the help of the government.
Glenn highlighted the importance of protecting collaboration and international openness.
Richard highlighted the diversity and groundbreaking nature of the quantum computing industry.
Manjari highlighted the potential of the industry but mentions the challenges and importance of engineering and product delivery skills.

The event concluded with a networking session, allowing participants to engage in informal discussions and build connections within the quantum community. The insights shared during the presentations and panel discussions provide a solid foundation for developing more established thinking around scale-up investment and the UK's investment ecosystem, as techUK aims to drive progress and secure the UK's position in the global tech race.

What is the Investing in emerging tech series?

Underpinning the UK’s ambition to become a science and technology superpower is a thriving start-up and investment community that can turn the latest innovations into blossoming businesses and services.

The UK has a strong emerging tech start-up scene and has more tech unicorns than Europe, coupled with leading emerging tech industries in AI, fintech and Quantum. However, there are still bottlenecks to overcome if the UK is to become a world leading investment hub, competing internationally as the place for emerging technologies to thrive.

From building awareness around the opportunities of different emerging technologies, their timelines towards development, and how short-term to long-term return on investment may differ; to exploring the larger questions facing the UK investment ecosystem such as dealing with uncertain macroeconomic environments and how to signal to businesses that they can scale long term and internationally from the UK.

These sessions will facilitate the opportunity for these groups to identify and address these challenges together, and navigate how UK Government can bolster this investment ecosystem and enable it to thrive.

Find out more about techUK's Supercharging UK tech campaign

Unleashing the Potential of UK Tech and Innovation.jpg

For more information, please contact:

Laura Foster

Associate Director - Technology and Innovation, techUK

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