Published on: 2025-05-14

For a number of years, I worked in academia on the topic of quantum hardware. You can find the traces of these activities sprinkled over this blog. But over time it became increasingly clear to me that I would like to venture outside of this well-trodden path. As this was the time when names like IonQ, IBM or Pasqal really were exciting developments, I obviously also investigated the possibility of a startup. If these (senior) peers could do it, why not me ?

The motivation

My research experience focused on hardware development, so it felt natural to look into this direction and I left the topic of software on the side. However, this comes with enormous drawbacks:

• Quantum hardware is notoriously slow to develop. It takes you years to get something close to a working industrial prototype.
• Quantum hardware is notoriously expensive, which means that you are very quickly forced to raise substantial amounts of capital for deep tech. 1M is basically the very minimum to even start thinking about something super basic.
• Without working prototypes, we couldn't make a convincing business case.

Taken together these three conditions meant that the very first steps of the company would need 1 to 2M€ of funding in the seed / preseed phase. To get this amount of money we basically had two options:

• Option A - Get public funding: This comes attached with A LOT of strings, A LOT of administration and it is quite slow. It is nice to slowly expend out of your lab, but is not really adapted to get a startup of the ground.
• Option B - Go to the VCs and pitch your case: Sounds fast, business oriented and with a clear growth path.

So we had a deeper look into option B with the VCs.

The VCs

A new culture: As we started, we needed a team of at least three people to start our fundraising campaign. Talking to VCs, we quickly realized that that they really do not care about the tech but only about the business case. But how do you explain the business case without a working prototype ? You basically have to make up the business case based on your current knowledge. And once you dream up those business cases, you have to show that they are scalable. FAST. So we had no working prototype for industrial standards, therefore no possibility to benchmark the business cases on sound numbers. Yet, we still had to present enormously ambitious business plans to the VCs.

A world of (unfounded?) assumptions: This world was completely different from the academic environment that I was used to. This made the beginning of the whole adventure super exciting. People are fast and responsive. They have a different perspective to your well known technical approach. They force you to think about the project in business ways that you never thought about before. On the other hand, this world is also based on enormous amounts of assumptions. hese assumptions were often impossible to verify for years. And these assumptions got stretched increasingly to make the ambitions of the VCs work. Further, these assumptions have substantial consequences. This was in deep contrast to the academic world, where failure does not threaten your job. When your academic experiments fail, you do another one and move on. If your business assumptions fail you have burned massive amounts of money and everyone lost their job.

Diverging expections: Given these consequences, I personally would have liked to go the cautious route. Yet, within the process our predictions got increasingly detached from reality. At some point we had discussions with technical experts that told us that our time lines are at least by a factor of two (rather four) to optimistic. On the other hand, we had discussions with VCs that told us that our timelines were at least a factor of two (rather four) to slow to make the fundraising cycle work. Personally, this was hard to digest and eventually one of the reasons why I had to get out of this business quite quickly.

Some realities on returns

You might think it's still worth it for the freedom and potential wealth, right ? Well, not so fast.

• VCs in Germany typically asked for at least 20-30% of the company to invest 1-2M €.
• They also expect you to keep the equity within the company.
• You have leaver clauses which bind you for years to the company.
• With each round the shares of the owners get quite substantially diluted.

Then you can go through the different scenarios

Scenario A: You go bust. This is what happens in something like 80% of the time. Over the years, you got your salary. It was sub industry and with enormous amounts of stress. To make the numbers simple let's say that you can assume that this scenario lost you roughly 100k (give or take) compared to your standard industry job.

Scenario B: You muddle through. This will happen approximately 15% of the time. In this scenario you do better than in scenario A and you do not go bust. You have a product. It works, but it is not quite as profiable as you would like. This is after you raised Seed (VC took 30%), Series A (VC took 30%) and now it becomes clear that a Series B will not fly. So you have to find some buyer that takes the IP of the company for 5M and move on. So in this scenario, you basically end with a 500k payday as one of the founders.

Scenario C: Payout by the big industrial player. This will happen between 1 and 5 % of the time. This is the dream scenario where everythings works out for you. You perform, you have raised Seed (VC took 30%), Series A (VC took 30%) and Series B (VC took 30%) and now you have pay day with a buyout of 50M. So in this scenario, you basically end with a 5M payday personally.

What is the expected value of the whole enterprise ? Taking the numbers above, we get to:

(80% × -100.000€) + (15% × 500.000€) + (5% × 5M€) = ~250.000€

So I end up with a rough expected return of 250k give or take. So it is certainly not a loss. But is this worth the stress and the uncertainty ? This is most likely the key question that everyone has to decide.

And the freedom in all of this ?

With the startup does not just come the premise of money, but also the freedom to do what you want. The little I saw, I have strong doubts about this. The VCs bring the money and this means that they also set the tone. Your business plan becomes focused on securing the next funding round, not what you think is best. And I would be slightly surprised if there was a relaxed approach to monitoring progress. Remember that they gave you 1M for an idea ? Now you better deliver. If you want to leave, remember those leaver clauses which bind you to the company for a number of years. So you are basically stuck in a company that you do not like anymore. Taken together I rarely had the feeling of freedom in this setup as the VCs are the ones that set the tone. Not the clients. Not the employees. Not the founders. The VCs. But I genuinely hope that I had simply had a bad impression on this part.

The end of the story

I felt a huge amount of releave when I left this scene. I was never able to shake the imposter syndrome and could not enjoy the ride. I felt the excitement but the negative feeling were substantially stronger. Nowadays, I evolved on towards a completely different career path, which I am grateful about.

What saddens me most is how difficult it is to launch a deep tech startup in Germany. I still feel that the step from academic research and deep tech startups in Germany is so much bigger than it could be and a number of things could improve the situation quite drastically:

• Better incubators connected to Universities. Many universities have little incentive to develop strong incubator programs. Hence they are rarely up the potential. This would lighten the knowledge gap of researchers as they have to discuss the wonderful world of business. I would be interested to hear about successful examples.
• Simplify the public funding process. It was really a nightmare to go through the public funding process. It genuinely felt like a bureaucracy that was only made to up to let some people feel important. Please, make it easier.
• Get us all VCs with deeper knowledge. I think that this speaks to itself.

I hope that you enjoyed the post. If you have any comments or suggestions, please leave them in the comments below. I would be happy to hear from you. And as usual, do not forget to push the like button.