Quantum technology is among the “deepest of the deep” when it comes to deep tech, said P33 CEO Brad Henderson. The technology is risky. The commercial viability is unclear. There are likely to be many more unknowns than knowns for at least five years.

So how can early-stage quantum startups catch the attention—and dollars – of investors when the revolutionary potential of quantum technology is matched by its uncertainty?

That was the central question posed at a webinar Tuesday hosted by Duality, the nation’s first startup accelerator devoted exclusively to supporting quantum ventures. The event took place just ahead of the March 25 deadline for quantum startups to apply to be part of Duality’s Cohort 2.

Launched last year, the 12-month program offers each startup $50,000 in nondilutive funding as well as entrepreneurship education, access to technical and business mentors, and opportunities to network with corporate and industry leaders. Based at the University of Chicago, Duality is run by the Polsky Center for Entrepreneurship and Innovation and the Chicago Quantum Exchange, with the support of founding partners Argonne National Laboratory, University of Illinois at Urbana-Champaign, and P33, a nonprofit committed to establishing Chicago as a global tech leader.

The webinar featured a panel consisting of P33’s Henderson; David Dorsey, principal at venture capital firm 11.2 Capital; Liz Ruetsch, general manager of quantum engineering solutions at Keysight Technologies; and Chuck Vallurupalli, senior director of Duality. It was moderated by Mike Lightman, strategy and outreach coordinator for Duality and a startup ecosystem consultant.

The panelists offered varied perspectives on what motivates their organizations’ interest in the mysterious quantum space and what they look for in quantum companies they are considering for investment or partnership.

Dorsey’s San Francisco-based VC firm, which invests in emerging technologies, typically expects returns to be 10 times the capital invested, so it is interested in companies with potential to achieve exits.

He looks for true technology differentiation and teams that are “smart, humble, not trying to hide anything, upfront about the challenges they will face.” They must also be able to tell a convincing story of what the company looks like in success when there isn’t much of any precedent, not only to draw customers and investors, but also compete for hard-to-find talent.

“Is this someone who can attract the best talent?” Dorsey said. “Because that will determine who is successful.”

The importance of having humility in an industry with so many question marks was a theme of the discussion. While the potential applications of super-powerful quantum computers, super-precise quantum sensors, and other quantum innovations are groundbreaking — speeding drug development, cutting manufacturing costs, identifying renewable energy materials — it isn’t clear when they will come to pass.

P33, whose goal is to build a healthy multi-partner deep tech ecosystem in Chicago, focuses on founders who are willing to compare notes with competitors to advance quantum faster, Henderson said. He has seen that spirit of collaboration in Duality’s Cohort 1, whose teams show “a real desire for curiosity and connectivity.”

Keysight, a $5 billion California company that makes electronic test and measuring equipment, is primarily interested in how quantum factors into its long-term growth, including through talent recruitment, partnerships, and acquisitions. When assessing a company, Ruetsch wants to see if it has paying customers, and repeat customers willing to keep paying for its product. She also wants founders to be clear about what they are selling.

“A lot of companies call themselves software but really they are services,” Ruetsch said. “Software is scalable, services maybe not. Tell me really what you’re selling and who is engaging with the customers.”

As an accelerator, Duality’s aim is to propel the growth of quantum innovators so that we might more quickly see the impact of quantum technology on how we live and work, Vallurupalli said. Duality seeks early-stage startups that have a business mindset and are ready to scale.

“You have emerged from the stage of just being enamored with technology and are thinking of your business model as your destiny,” he said. Duality has connected the six startups in Cohort 1 with more than 30 corporations and solution providers and 40-plus investors, resulting in investments and ongoing discussions about funding and partnerships.

There are unique hurdles to pitching a quantum business, the panelists said. That is in large part because it isn’t clear what the technological advances will be, whether they will materialize, and if they do, whether the market will capture their value.

“I have a harder time with quantum thinking how the company looks in success,” Dorsey said, which is why it is imperative the startups paint that picture.

Another challenge is that there are also a large number of quantum startups coming out of universities, so for many academics there is a steep business learning curve. And corporations have to figure out how to integrate academics into the business environment, Ruetsch said.

Quantum startups also have to figure out how to get early funding without relying on equity investors.

“All of the revenue projections for these industries are like, “Not a lot, not a lot, not a lot,” and then it is $1 trillion,” Henderson said.

Federal resources, often in the form of nondilutive grants, should be integral to a funding strategy, he said. And startups should get scrappy around finding limited corporate revenues to be able to show traction.

The panelists offered a few pointers for how startups can catch their attention.

Vallurupalli said to go a step beyond describing a novel technology and the potential market. Provide evidence that the technology is feasible and show that you have done customer discovery that proves there is a market.

Ruetsch said she wants to feel inspired by a pitch. She wants to see the best-case scenario, delivered in a way that is understandable to all audiences and makes clear the value of the technology, with visuals instead of dense technical text.

To that end, the quantum industry is fertile ground for people who aren’t physicists. From software engineers to marketing professionals, there will be a need for diverse voices and talents.

“It takes a village in order for this to be successful,” Ruetsch said.

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