The Netherlands is excellent at quantum research but not at its commercial execution: 'Build a strong story around your product'
Nargiz Najaf devoted her thesis to the question why Dutch quantum struggles to attract private investment
Published on November 20, 2024
As editor-in-chief, Aafke is ultimately responsible for the content of our platform, but she also likes to get into the pen herself. She is also responsible for the content of our events. She likes nothing better than explaining complicated things in an accessible way and is fond of telling the story of the people behind the technology.
We are all waiting for the disruptive power of a universal quantum computer. The Netherlands has positioned itself within the European ecosystem as one of the key players. The sector is known for its innovative research and an intensively collaborative ecosystem. A few weeks ago, it was announced that Europe's newest quantum computer is coming to Amsterdam.
Yet, it also faces significant challenges. Even though much research into quantum computing is being done in the Netherlands (10% of European quantum patent applications come from the Netherlands), companies are struggling to attract the private investment needed for commercial success. Dutch entrepreneurs with technical ideas have difficulty securing funding to get through the first difficult years. Whereas PsiQuantum from the United States has already received $665 million from investors, QuiX from Enschede has to make do with €5.5 million. It is expected that an estimated €1 to 2 billion is required to bring the currently existing 14 startups to the intended profitability, with roughly €150 to 300 million expected in the year 2024 (Vaessen et al., 2023).
Azerbaijani Nargiz Najaf could not find information on exactly how that is possible and how companies can change it anywhere. So, she decided to devote her master's thesis (Quantum Leap: Catalysing Private Investment in the Dutch Quantum Computing Ecosystem) for the Rotterdam School of Management to the question.
Financial discrepancies
Perhaps the sector's biggest advantage is its biggest pitfall: it relies heavily on government funding, limiting its growth potential. As of 2024, the total amount allocated to quantum investments since 2019 in the Netherlands has approached nearly €1 billion. Of that, €615 million comes from The Hague, making quantum one of the critical technologies. As of mid-2024, private funding contributions to Dutch quantum companies are estimated to have totaled only around €60 million, a significant shortfall compared to the public investments allocated thus far. Before this year, private investment was even more scarce, with only slightly above €40 million invested before 2024.
Although public financing provides a valuable foundation, quantum companies have difficulty scaling up without substantial private investment inflows. In this, the Netherlands lags, especially compared to countries such as the United States and neighboring Germany, where private sector involvement is much more prominent.
In France, the government has committed around €2 billion to quantum investments, while Germany has allocated €4.9 billion, according to the latest update. Private funding also plays a significant role. While the exact number for Germany is not announced, France is reportedly seeing approximately €800 million in private investments, a considerable share of its total quantum funding. These figures demonstrate that public and private investments in quantum technology are significantly higher in France, Germany, and the UK than in the Netherlands.
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Consequently, one of the Dutch quantum sector's most vital assets is a strong "value chain" approach in which research institutions, companies, and government agencies work together. Public initiatives like Quantum Delta NL are crucial in developing this partnership. Najaf: “The Dutch quantum (computing) startups have their role in the value chain. There is not much overlap – one company develops the chips, another produces the cables, etc. This results in the companies often working together.”
Idealistic approach
Najaf interviewed 11 industry professionals. She noticed that almost everyone has a romantic, intrinsic drive to make an impact. "In the Netherlands, almost everyone working in the sector is a (former) scientist. Many of them think a good product will market itself. That is not the case—building a brand and marketing the product correctly is important."
When she asked up front during interviews, "How do you think you can attract investors?" almost everyone replied that a marketing and commercial department is essential. "While many companies don't fully utilize their commercial department, some don't even have one. In Germany, the commercial aspect is much better developed. There are also quantum companies in France and Finland that are making a name for themselves. But the Netherlands has yet to develop big names in the global quantum industry."
Prioritizing commercial execution
The Netherlands is good at quantum research but much less at commercial execution. One of the main challenges Najaf identified is the lack of an apparent commercial route for quantum companies. Therefore, her main recommendation for the Dutch quantum sector is to prioritize a commercial department: "Make sure the people working in those departments understand what they are selling. Create a story around your product, and ensure investors understand what you're up to."
In addition to a long lead time and technological uncertainty, the high development costs of quantum technology, the long time frame for returns, and a general lack of understanding among investors about the complexity also play into investor reluctance. "In that, too, a strong story around a quantum product can make all the difference. It is essential to explain well to investors what you are doing," Najaf said. "Dutch quantum sector can make an unprecedented impact, as long as it doesn't lose sight of the commercial aspect."
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Learning from other markets
In her research, Najaf compared the Dutch quantum market to other major markets in Europe and the United States. For example, the German market is more commercially oriented, with more robust private sector involvement and a greater focus on product development. In Germany, quantum startups are more successful in attracting private capital because they adopt a commercial mindset earlier in their life cycle by developing products that are attractive to investors.
Similarly, the U.S. market benefits from a more risk-tolerant investment culture, with venture capital firms and angel investors more willing to support emerging technologies, even in their early stages. In contrast, the approach in the Netherlands is more cautious, with a stronger focus on academic research and less on rapid commercialization.
Najaf points to examples from Finland (IQM raised €4 million earlier this year) and France, where a few well-known quantum startups have gained international recognition - partly because of their solid commercial strategy. “A stronger commercial focus is essential for success in the Dutch quantum sector,” the economist concludes.
Meanwhile, Najaf created a clear roadmap that shows what steps companies should take at what point in their development, which she wants to share with the industry. “The Dutch quantum sector has so much potential; it would be a shame if that potential disappears abroad.”
Are you interested in contacting Najaf? If so, message me at , and I will link you to her.