Europe’s Quantum Computing Sector Faces the Same Capital Trap That Hit AI

When scaling up, many European startups run into a funding gap. For large rounds, US investors — often from the Silicon Valley ecosystem — are therefore frequently the obvious contacts. But capital comes with expectations, board seats, and influence over strategic decisions. This can create new dependencies. Having already struck the semiconductor industry and AI infrastructure, this structural problem is now showing up again in quantum computing.

By Alexander Schult, Co-Founder & CFO, Peak Quantum

Europe’s startup ecosystem has developed noticeably in recent years: more experienced seed funds, more business angels with industrial backgrounds, better funding instruments. In the early stage, Europe is competitive. The real challenge begins with growth. When a research spin-off needs 50, 100, or 200 million euros to turn technology into industrial products and manufacturing capacity, the supply of European growth capital thins out considerably.

For capital-intensive hardware startups, this gap is especially acute. Quantum computing hardware can’t be scaled with a small team and a cloud instance. It requires cleanrooms, cryostats, specialized manufacturing facilities, and highly qualified engineers.

Capital is never neutral

International capital — often from the US — isn’t inherently negative. Many of the world’s most experienced technology investors are based there. Their networks, operational experience, and risk appetite are a genuine competitive advantage. But capital is rarely neutral. Every investor brings their own priorities, and with larger financing rounds these increasingly become part of a company’s strategy.

An example from the quantum sector shows what that can mean in concrete terms: the British quantum computing startup Oxford Ionics was acquired by the US company IonQ in 2025. The technology stays the same. But control and value creation no longer remain in European hands.

Such acquisitions aren’t automatic. But they show what dynamic can emerge when European growth capital is lacking and international investors step in to fund a company. With each financing round, the probability shifts that manufacturing, value creation, partnerships, and strategic decisions migrate to where capital and markets already exist. In such cases, European companies and research institutions become customers rather than partners — ultimately paying for technology that was developed with European public funds.

Europe has already lived through this with semiconductors: decades of excellent chip research, but manufacturing in Asia and North America. Something similar is happening with AI infrastructure: European models running on American data centers. In quantum computing, the same risk exists — even before the industry has entered its scaling phase.

When technology originates in Europe but control over it lies elsewhere, European economies benefit only marginally from the public funds that flowed into research and education. Value creation, jobs, and strategic expertise follow the capital, not the origin of the idea. At Peak Quantum, we want to break this cycle in quantum computing — with technology and manufacturing infrastructure built in Europe, and an ownership structure aligned with that vision for the long term.

What the Google case shows

The fact that capital is never neutral doesn’t just apply to private investors — it applies to state programs too. It recently became known that Google, among others, declined to participate in a US quantum funding program worth over two billion dollars. The reasoning: the conditions attached would slow down their own pace of development. Charina Chou, COO of Google Quantum AI, spoke of terms that didn’t fit Google’s approach to building a practical quantum computer.

The case shows that capital is almost always tied to expectations — regardless of whether it comes from investors or the state. Funding programs have their greatest impact when they align with industry development cycles and accelerate innovation, rather than slowing it down with added complexity. For Europe, that’s an important signal. Programs like the EU Chips Act, the EU Tech Sovereignty Package, a potential EU Quantum Act, or Germany’s High-Tech Agenda can only realize their full potential if they’re aligned with the industry’s development cycles.

Europe is competing with the world

At the same time, another development shows how much Europe struggles with itself: France tried to block the UK’s participation in the Scaleup Europe Fund — a five-billion-euro instrument specifically designed to invest in European deep-tech scaleups. The point of contention: geographic restrictions on who counts as “European.” Governance is a fair thing to debate. What Europe can’t afford, though, are months in which capital sits on the sidelines because of political disagreements. While Europe debates, competitors in the US and China keep investing.

What needs to change structurally

Europe has made significant progress in recent years in building a competitive deep-tech ecosystem. More experienced investors, stronger funding programs, and initiatives like the European Investment Fund or national development banks have helped meaningfully improve the conditions for technology-focused startups.

The next step forward, however, isn’t simply expanding existing instruments. In fact, we face three interconnected structural challenges today: capital allocation, demand, and talent. These areas have already evolved — but their potential is far from exhausted. Only by strengthening all three together will Europe consistently produce its own technology leaders.

The first is capital allocation. Deep-tech companies don’t build apps — they build cutting-edge industrial technology. Development cycles of ten years aren’t the exception; they’re often the rule. Such companies therefore need capital with a correspondingly long time horizon.

Europe has made great strides especially in the early stage. But the real funding gap emerges at growth rounds of roughly 50 to 100 million euros. It’s precisely at this stage that European capital often flows into international technology companies, while European deep-tech companies are forced to seek growth capital abroad.

Long-term-oriented capital providers such as pension funds, insurers, family offices, or industrial companies could play a much bigger role here in the future. The fact that they currently invest only to a limited extent in venture capital and deep tech is also a consequence of regulatory frameworks and institutional incentive structures.

The second is demand. In the US, the state is frequently the first customer for new technologies. Programs from DARPA, the US Department of Defense, or other public institutions create early demand and give private investors confidence that a market is forming. Awareness of the strategic importance of public procurement is growing in Europe too. At the same time, there’s still potential to involve startups more as early technology partners and thereby send important market signals.

The third is talent. Anyone who wants to attract the best engineers, physicists, and entrepreneurs worldwide has to offer attractive conditions. That includes competitive employee stock ownership programs. Some European countries have made progress here as well. Still, differing tax and regulatory frameworks continue to make it harder for many young technology companies to attract and retain top talent long-term.

These three challenges reinforce one another: without demand, less private capital flows in. Without capital, fewer successful scaleups emerge. And without attractive equity models, it becomes harder to attract top talent.

Europe has proven in recent years that it can evolve its innovation policy. Now it’s time to take the next step and consistently develop capital, demand, and talent together.

Europe does excellent research. What matters now is that scaling, production, and value creation also happen where the innovation originates.

About the author:

Alexander Schult is Co-Founder and CFO of Peak Quantum, a Munich-based quantum computing company developing inherently fault-tolerant, superconducting quantum processors. After studying banking and finance and earning an MBA from London Business School, he worked as a Project Leader at Boston Consulting Group in Corporate Finance & Strategy, and subsequently founded and led several companies. At Peak Quantum, he is responsible for finance, administration, HR, legal, and investor relations, and shapes the company’s fundraising as well as its strategic and commercial build-out. Together with his team, he’s working to establish Peak Quantum as a technologically leading and financially sustainable company within Europe’s quantum computing ecosystem.