Quantum Technologies and the Future of Security, with John Ridge CBE & Joab Rosenberg

In this week’s episode of Time to Talk Quantum [TTQ], Firgun Ventures co-founder Dr Kris Naudts is joined by Joab Rosenberg, Partner at US-Israeli deep tech fund Deep33, and John Ridge CBE, Chief Adoption Officer at the NATO Innovation Fund, for a conversation about the shifting relationship between venture capital, geopolitics, and emerging technologies.

This conversation explores how quantum technologies are moving from theoretical science to strategic infrastructure and why the decisions made today about investment, governance, and innovation may define the technological landscape for decades to come.

Available to watch on YouTube 

 Episode Themes: 

• Why venture capital is driving the next generation of defence innovation
• Quantum computing and the future of encryption
• The growing technological competition between the West and China
• The geopolitical stakes of emerging technologies
• Silicon Valley’s renewed relationship with defence and government
• The risks facing global technology supply chains

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About the guests:

Joab Rosenberg is Partner at US-Israeli deep tech fund, Deep33, where he leads investments in quantum technologies.Joab served as a Colonel in IDF Intelligence, where he was commander of the prestigious Talpiot program and served as Deputy Head Analyst, overseeing the work of around 1,000 analysts.In 2015, he co-founded and was CEO of Epistema, now Ment.io, an AI platform for improved decision making.

John Ridge CBE is Chief Adoption Officer at the NATO Innovation Fund. John spent over 30 years in the British Army and UK government. He joined as a reservist in 1989, was later commissioned into the Royal Engineers, and went on to command 8 Engineer Brigade and serve as Chief of Joint Force Operations at the UK’s crisis response headquarters. After leaving the Army, John joined the Civil Service, serving in Defence Intelligence, working at 10 Downing Street, and as Director Defence Innovation at the Ministry of Defence.

Music: NGN2 by ILĀ from their album Quantum Computer Music. 

Resources 

• Books: The Technological Republic – Alexander C. Karp
• DIANA 
• UK National Security Strategic Investment Fund (NSSIF)
• National Institute of Standards and Technology (NIST) – Post-Quantum Cryptography

This podcast is brought to you by Firgun Ventures.

Follow Dr Kris Naudts on LinkedIn

Firgun Ventures LinkedIn

Firgun Ventures Website

Content advisory: Time to Talk Quantum explores the intersections between quantum technology and AI, health, finance, defence and art. Some discussions may cover sensitive or technical subjects related to cybersecurity, global security, geopolitics or emerging technologies. The podcast is for informational purposes only and does not constitute investment, scientific, or medical advice. 

Transcript

SPEAKER_02 0:05

Welcome to Time to Talk Quantum. I'm Dr. Chris Knotz, neuroscientist and psychiatrist, founder of Culture Trip and co-founder of Firgun Ventures. Today I'm delighted to be joined by Joab Rosenberg, partner at US Israeli Deep Tech Fund Deep33, where he leads investments in quantum technologies. Joab served as a colonel in IDF intelligence, where he was commander of the prestigious Telpiot program and served as deputy head analyst, overseeing the work of around a thousand analysts. In 2015, he co-founded and was CEO of Epistema, now MENT.io, an AI platform for improved decision making. I'm also joined by John Rich, CBE, Chief Adoption Officer at the NATO Innovation Fund. John spent over 30 years in the British Army and UK government. He joined as a reservist in 1989, was later commissioned into the Royal Engineers and went on to command 8th Engineer Brigade and serve as Chief Joint Force Operations at the UK Crisis Response Headquarters. After leaving the Army, John joined the civil service, serving in Defence Intelligence, working at 10 Downing Street, and as Director of Defence Innovation at the Ministry of Defence. It's time to talk quantum. So, John, could you tell us a bit about the NATO Innovation Fund and what you do there? What does the fund do? What does the chief adoption officer do? Just tell us.

SPEAKER_01 1:24

Okay, I'll try and keep it as short as I can. But first of all, thank you so much for having me on. So the NATO Innovation Fund was a fund that was set up by NATO a few years back in the recognition that a lot of the technology that they were going to need in the future for defence, security, and resilience was going to come out of the private sector and not just out of government-funded research. So set up two organizations, Diana, which is an accelerator program, and the NATO Innovation Fund. So agreed by all 32 allies, but all the nations were offered the opportunity to join the fund, and 24 decided to do so and pooled their capital. So we've got a total of just over a billion euros to invest over the fund life is 15 years, but we've got an investment period of 10 years. We're just over a couple of years into that. And so we focus on dual-use technology that supports defence security and resilience. And we go the whole spread of technologies, and I know we're going to talk about quantum today, but we go from at the sort of left-hand side some very mature technologies in what we call the deep tech integrators. So robotics companies like Arx Robotics or Tech Ever, which is a Portuguese drone company, all the way through to the far end, companies involved like Fractile and Spaceforge, Spaceforge doing in-orbit manufacturing of semiconductors. So from the sort of the mature high TRL all the way down to some very, very low TRL stuff. And about 80% of our fund goes into direct investments in companies, and about 20% goes into a fund-of-fund strategy. And that's particularly to try and sort of catalyse bits of the market that are that are not functioning quite as we'd want them to, particularly on that kind of deep tech side. You say there's about 24 contributors to the fund?

SPEAKER_02 3:00

Yeah. 24 nation states, exactly. What are some of those in there and are there some not in there that we would get to?

SPEAKER_01 3:07

So the um I mean the most of most of the European nations are in there, so UK, Germany, Italy, Spain, the the big three who decided not to join at the beginning uh were the US, France, and Canada for all sorts of reasons decided that they they didn't want to join Fund One. But the idea is that the fund is set up so that we can expand it over time, we can have subsequent funds and everything else. So the idea is that NATO has this uh fund one, but we then build out from there over time. Okay. Um so that's the that's the fund. Um is it based out of London or is it? Uh it's actually Amsterdam headquartered. Uh we've got an office in Amsterdam and an office in London. I work in the London office, but quite a lot of my team work out in in Amsterdam, so it's kind of spread between the two at the moment. That's the fund, which to many extents looks much like any other venture capital fund, except that obviously it's got these 24 sovereign nations, which is a bit different from most of them. The the bit that I run is what we think is relatively unique in terms of a venture fund, which is a thing called the Mission Platform Group. And the mission platform group is very much a sort of portfolio company facing piece of the fund. So we have three functions in there. One is around protect. So we advise the portfolio companies on how to protect their IP from adversary influence, whether that's adversary investment on their cap table or whether that's employees who might have been influenced by adversary nations. So that's the first one. Sustainability and responsible use is a second function. So we're particularly keen where you're getting into the use of AI and autonomy, particularly in lethal systems, we want to make sure that's done in alignment with NATO's principles of responsible use. So that's the second function. And the third one, which is where the majority of my time goes, is on adoption. Um, and adoption is taking this incredible tech these startups have built and scaling it. So it doesn't help NATO if it's still a prototype kind of churning around with the ones or twos of these models. What you want to do is have that scaled. So I work on helping the portfolio companies link in either with government customers or also with industry partners as well, so that they can have their subsystem integrated onto a bigger system. So that's the job.

SPEAKER_02 5:06

Okay. Sounds like an excellent job to host for for any deep tech fund and for exactly. Very interesting. And the nations want what from it? What is their idea? Do you want a financial return?

SPEAKER_01 5:16

So I suppose three strategic goals that they want. One is uh ensuring that this technology can be harnessed by NATO to support defence, security, and resilience. So that's the first one. That's where my principal effort lies. The second is they want a financial return from the fund. So as LPs, they want to see a decent return at the end of it. And the third piece is around capacity building. So they want this to sort of generate momentum inside the ecosystem, build out venture capital in this sector. And we've seen that over the last two or three years really, really ramp up. But there's still work to do, particularly on the sort of later stage capital. Is there an equivalent in the world? There's I suppose the closest would be in the US IncITEL, which is a sort of a government-funded VC, or in the UK, there's a National Security Strategic Investment Fund. They're the closest things, but I don't think there's anything that's sort of multi-sovereign in in quite the same way.

SPEAKER_02 6:04

Okay, well, thank you very much. Your app, um, you're a partner at Deep33, I understand. Would you tell a bit more about Deep33 and about what you do there?

SPEAKER_00 6:14

Yeah, for sure. Thank you again for inviting us for this uh coming interesting talk, I'm sure. Um yeah, Deep33 were a venture fund, US Israeli one, uh suggestive from its name doing deep tech. But deep tech is quite a wide notion that you need to define better, and we invested a lot of time to understand our thesis and what we want to invest in and what we do not want to invest in. So at the moment, deep tech for us uh three verticals quantum technologies, which we will speak about uh I think soon, AI infrastructure, so not the upper layers of the software, but the infrastructure, the data centers, and how they should operate in a more efficient way, and energy, uh which is connected to data centers, but not only. So, for example, in the energy space, we've done an investment in a dual-use company called Particle that is building a miniature accelerator that can uh create an electron beam that can be used for defense but can also be used for other purposes. Um, we done our first closing of 100 million and uh we'll do our second closing soon, uh, up to 150 million. And we have three partners in the US, one on the West Coast, two in New York, and two in Israel. Uh, I mean between Israel, the Netherlands, and New York most of the time, as you know. Uh, we've already been lucky to do five investments. Um, so we started deploying the money already, uh, but now we will get to the final closing and be uh focused on that for a while.

SPEAKER_02 7:56

You started there reasonably recently, I understand. I mean, uh any surprises so far? Good and bad?

SPEAKER_00 8:03

Um no, I think uh I've been before, as you know, a colonel for the Israeli government for many years, and then have been a CEO and a founder of an AI company. So I'm starting my journey as a VC, which is the other side. I'm learning a lot. Uh I'm lucky to have very experienced partners in the fund from financial background that have done a lot of investments and have a great track record, which I hope to join and bring the great deals that we're looking for. Uh I'm very curious about this journey, and we had a lot of conversations, you and me, about the quantum market. So I'm curious both about the profession but also about this uh very interesting developing market.

SPEAKER_02 8:48

I agree. I think it's it's a very interesting time to be in the spaces we are in. Now, in general, defense is very fashionable today in the tech world. It it might not always have been, but today it certainly is. People talk about the Ukraine being the experimental theater almost for dual-use technology. Uh, the whole tech community talks about Taiwan and any pending conflict and what that might do to the chip industry, to the supply lines, and so on and so forth. And it is, I think, yeah, really interesting too to look at how the traditional defense industry is so disrupted by what you could not but call very heavily mediatized tech founders and investors, if you like. So you have, of course, Elon Musk, who's all over the place with SpaceX and Starlink and the consequences that these technologies have in real life. You have Peter Thiel, an early investor in Facebook and PayPal, but now obviously Palantir and Duril. Again, very consequential um investments, very consequential uh companies, you could argue. Um, and it's not only in the US, it's also in Europe, where you have Helsing, which was backed by the Spotify founder, and then there was a boycott of Spotify because Helsing technology was allegedly used in the Middle East, and then it turned out not to be the case. And then you have another person that may be less familiar to most, but again, is fairly famous in China in particular, is a guy called Frank Wang, who's the founder of DGI Technologies, the world's largest commercial drone manufacturer. He founded it out of his dorm room in 2006. Now, what is also very interesting to my mind, at least, and given that we are all in venture capital, is that all these defense companies, fashionable or not, they are backed by the major VCs. Sequoia is a shareholder in DGI technologies. Andreas Inhorovitz is a shareholder in, I don't know which one of those, I think Andro, and so on and so forth. So this is really a contemporary play that may or may not have been there already before. But you could wonder whether your average VC has the, how should I put it, moral, philosophical, intellectual say, strengths to to play responsibly in this space. And I wanted to ask you whether you had a view on that. Maybe, John, you can comment on that.

SPEAKER_01 11:06

Yeah, I mean it's a massive question. And I think it's it's a there's an interesting correction that's happened. So as I sort of touched on earlier, for the last 50 years, probably the majority of our disruptive tech, really disruptive tech, has come out of government-funded research or government labs. Um space, the atomic um or the atomic programs, these are things which were basically funded by governments. And what we've seen relatively recently is that shift quite substantially, so that many of those disruptive technologies, whilst government still plays in it, actually it's private money that's doing it. So certainly if you look at AI, materials, biotech, these are these are very heavily capitalized in by private investors, not by government investors. So we've seen that massive shift. What hasn't caught up is many of the sort of buy-side of that. So governments still have a particular relationship with defence primes. So we've got this tension where the technology is coming out of one part, but the system isn't configured to buy from that. That's what makes adoption hard for me. But I think you're absolutely right. And I think uh even two and a half, three years ago, when I was working as the innovation director in the Ministry of Defence, we were pushing really hard to try and have a more sensible discussion around defence and security and ESG. Seen even two or three years ago as polar opposites, that you sort of defence, if you were spending money on defence, it was it was in the same bucket as sort of tobacco and pornography. That that was where I mean it was a really tough discussion. Many of the LPAs effectively completely precluded investment, even in dual-use technologies, let alone single-use defence technologies. I think what Ukraine has done has actually really sharpened people's focus on the fact that ESG only happens if you've got security. And I think that's really, really important for people to recognise is you've you've got to have that baseline of security, and that means you've got to invest in it. I also, I mean, being pragmatic about it, we've started to see more money come in as well. So we've started to see companies like you mentioned, like Angeril, starting to make really serious revenues. Again, starting to see some early signs of that in the uh in the European ecosystem as well. So to have a really profitable company, one of our investments, we're starting to see those revenues appeal to some of the investors who historically would have been less comfortable. So I think it's a kind of mix of the real politic of seeing good returns, but also genuinely, I think many investors are now saying actually we need to play our part in this. We need to invest in these companies so that we can unlock these technologies so that we can secure, in our case, from our perspective, that NATO allies can have the sort of capabilities that they need.

SPEAKER_02 13:41

What's your view on it, Joe? And what do you think indeed about VCs who play in this space? What characteristics should they have?

SPEAKER_00 13:48

Yeah, I think I've seen it from three different angles, at least in the last 20 years. First, as the client. So I was responsible for some procurement programs as a colonel, deputy head analyst, I think most notably Palantir in the IDF, and then I also got quite close as a CEO later on to the what is referred to as the PayPal Mafia. So I met Alex Karp and I met Peter Till. Uh, one of the fans of Peter Till was one of my investors. So initially, you know, first of all, as a customer uh from the IDF, it's very difficult to work with startups, and we're very slow uh in the IDF and in the government. So it seems like oil and water to a certain extent, you know, it wouldn't. And then as a CEO, when I started my company, I just came out of the IDF and I thought I'd sell to the defense market. And back in 2014-15, it was a big no-no. So there's a very large ecosystem of investors in Israel, and almost 90% of them wouldn't allow you to say the word defense without throwing you out of the door. Uh and I think to some extent back then it was true because you know, as a startup who gets$1 million, can run for a year and a half, needs to build a product with 10 people and sell it to the to some army, the US Army or the IDF. It's on the verge of impossible. And then uh I agree. I agree that Palantir and then uh Andrew have done the shift and of course the geopolitical situation in Ukraine, uh, October 7th in Israel and and other parts of the world. So at the moment, there's a there's a lot of that, both dual use and defense funds that can declare themselves as doing defense. Uh I really enjoyed the new book by Alex Carp, The Technological Republic, where he actually explains in a very lucid way why Silicon Valley should be involved in defense and not only Silicon Valley. So I think sadly, because the geopolitical situation doesn't seem to go towards eternal peace. So it seems like there will be a need, and there will be a need for innovation. And there's a lot to be done with AI and then with quantum and then with weapon systems. So I think uh at least the Western world uh will have to do that for the coming decades at least.

SPEAKER_01 16:16

The Silicon Valley point's fascinating though, because again, if you it sort of denied its history for quite a long time. It came out of proximity fusing, these were the things which kind of kicked Silicon Valley off. Okay, it was government funded at that stage, but then I mean I think the the the Google situation, uh Google and Maven, where there was this.

SPEAKER_02 16:36

Could you talk a bit about the Maven project? Because I don't know if our listeners would know what you're referring to.

SPEAKER_01 16:39

Yeah, so um Maven was a was a DOD project where they wanted largely around using AI on image recognition. That's how it that's how it all started. And there was significant pushback from some of the major players in Silicon Valley, including particularly sort of most publicly Google. They dropped out of it, I think. Exactly. They said we we are not prepared to we'll kind of walk if you if you continue to to work on this. And now we've seen it kind of come full circle again, so we're now seeing really significant push from across Silicon Valley to sort of engage in defence and security. I think for the right reasons as well. That they feel that this is an important part of their contribution to sort of national endeavour. So, but it is fascinating this kind of sine wave of interest or or otherwise.

SPEAKER_00 17:21

Yeah, but also remember to some extent Silicon Valley and especially Peter Thiel and Elon Musk and the people around them initially were libertarians that were anti-government. So they thought we can do in Silicon Valley everything better than the government. So Palantir will replace the NSA, SpaceX will replace NASA, and then Andrew will compete with Lockheed Martin and the rest of them. So initially it was a bit confrontational, I think. Uh, but then it somehow aligned with the path of history now, because uh there's a real requirement and a real need, and also, of course, this involvement of both Peter Thiel in the first administration of Trump and now Elon Musk for a short while with the second administration. So the relationship of building, and remember, Palantir had to sue the US Army to get the software in because initially they were considered to be a startup that is not reliable enough, and they didn't want to put them into the bids and the contracts. So a lot of change in the last decade.

SPEAKER_02 18:22

No, I think it's super interesting, and I keep being hung up on that question of suitability of your average tech VC and knowing what they are indeed getting into, that they know what they're getting into from a technological technological perspective for sure. Will they do it better, faster? Almost certainly. I mean, we have seen evidence of that, but do they really grasp the political context in which they play? I I'm not sure. For example, and that's a question we were asked as well, and that you, uh John, touched upon in your answer on NIF's role as a VC fund. I don't know what you guys do in that regard, um uh UAP, but with the companies we back, should we should we involve intelligence services to look at indeed the hiring policies of these companies if they are indeed involved in critical tech that might affect national security? Should we do that? Should should should we talk to intelligence services? Uh how how how would you advise to approach that? So, I mean we What if we back a company that is full of Chinese spies?

SPEAKER_01 19:18

Yeah, so so we're really, really careful as part of our due diligence. We look incredibly carefully at who the employees are. We use there's a whole series of commercial tools which actually give you 95% of the information that you need, frankly. So, but understanding who the employees are. And as I say, it's really interesting that the the importance of getting inside cap tables as well, so that you really understand who the investors are, because many of the investors will get really quite privileged access board seats, etc. etc. So we're very, very careful during due diligence. And to be blunt, we have turned down investments, really good companies, because we couldn't satisfy ourselves that the protect risks were were good were low enough for us to be investors in there. So we have turned away good companies just because of that. And we we then work sort of through life with the company as well. So uh my protect lead will sit down with them when they're making a hire, and they they often kind of bring this in because they recognize the value of it and say, Hey, look, we'll think about the hiring this person, here's what their background's like, and we'll say, look, clearly it's your decision at the end of the day, but here are the risks. And one of the critical risks is that if you hire the wrong people in, you will not be able to sell your product to particular customers. I mean, it really is as simple as that. So that is quite a powerful motivation for these companies to think about who those hires are.

SPEAKER_00 20:32

I think it's uh it's a bit different from the traditional industries where you also want to check whom you're buying from. Some of them are government-owned, but some of them are not. Uh I agree that the small startup they just started, uh, it may be more suspicious and more dangerous in terms of the employees, but I think the routines that we have in procurement in governments for very, very long should apply also to the startups. And therefore, it will take longer time. Remember, if Palantir was not raising one billion dollars, they would not survive waiting for contracts. I think it took them about four or five years to get the first contract. Uh, if you raise only a million and a half, you probably will not survive waiting for the security checkups and for the procurement process. So people need to take that into account when they do the investments.

SPEAKER_02 21:22

That brings me also to another question. Is is it a VC play from a financial return perspective at the duration that we're looking? Is this a can you invest in a company and you can you realistically expect a 10x or 100x in 10 years?

SPEAKER_01 21:35

And and I I think the best companies will. Um I think it's hard, and I absolutely agree. The the bit that many defense curious investors I'd describe them at, I I think they miss just how hard it is to land these contracts. And that's why we invest in dual use companies, because for many companies being able to run some if you're big enough, you can run them both in parallel, for some companies running your Kind of commercial go-to-market first and then pivoting something across to defence is a good way to make sure you've got that revenue coming in. So that's and as I say, many companies are able to run both in parallel. There are some companies who start defence first and then pivot back across into the commercial, but it is hard because it takes, it takes a long, long time. I absolutely believe the returns are there. I think the really big returns on some of those long-term bets that I was talking about earlier, they are they're more the resilience end of our play than the defence play. I don't think there are going to be very difficult. How do you differentiate? So I would say defence are the sort of hard capabilities you recognise, which you'd see in the hands of NATO militaries, whether it's sort of air forces or whatever else. Security is a kind of middle ground. Resilience is the things that you mentioned earlier, things like energy resilience, um, resilient critical capabilities around things like quantum and and other biotech and things like that. So a much, much longer plays in many cases. Those are probably where the really outsized returns are. But I mean, look at look at Anderil's valuations, look at Helsing's valuations. These are these are good companies to be in, and I think there will be more. I think what we're going to see is more money flexing away from those traditional suppliers towards these novel suppliers because it recognises the capabilities that they provide, and even more importantly, it recognises their ability to generate real tempo in terms of developing those capabilities and spirally developing them. That's one of the kind of key lessons out of Ukraine. And our traditional defence companies generally struggle to just keep pace with the threats in that way.

SPEAKER_02 23:39

What do you think about that Europe? And do you see the space in general reorganizing itself through some consolidation? And if so, in which direction would that happen?

SPEAKER_00 23:48

Yeah, I think it's part of a wider picture of deep tech in general. So yeah, governments have their own pace, but also if you do, let's just say quantum computing for the pharma industry, or if you're doing deep tech for the financial industry, it will also take you very long. So you cannot compare it to the SaaS companies that we knew. But everybody, I think, agreed that the market goes away from those companies into the deep tech for several reasons: geopolitical, technological, financial, and many others. And therefore, I think the returns are there. It will require more capital on average. It will require not two years for an exit of one billion dollars, but usually more. Although we've just seen, you know, some acquisitions in the quantum space where young companies were acquired for hundreds of millions of dollars, like Atlantic by Google or other companies. So you see that too. And I think in terms of the VCs and the people financing that, as long as you have success-oriented, you know, two dilutions or three, uh, it's the same play in general, although you need maybe a lot of capital to participate pro rata in the later stages. But initially it's it's quite the same, and you can get the returns, not necessarily only only on IPO. There are other ways to get your returns within the time span of a decade.

SPEAKER_02 25:15

Okay. I just want to briefly say a few more things or ask a few more things on on Indeed geopolitics before we're gonna talk a bit more about quantum Indeed. I think it's it's fair to say that the West loved the world order as it was, and that the rest didn't quite, or not so much perhaps, and that it is all changing and changing quite fast. Now there is that whole geoeconomic contest, I feel, between China and the US, of course. Umically, of course, the US still has the reserve currency and the dollar and therefore can behave fairly hegemonically. Uh China has the same position in manufacturing, and both try to really break the dominance of the other, but they don't seem to succeed just yet. The tech contest, I personally believe, is still very much open and it's wide open, and it's not clear which way it will go. And I would even argue, or as a minimum, wonder if it's even a contest between nations, or whether it's indeed more a contest between tech companies, and that that will drive which way the world order reshapes more than the actual nation states they might or might not inhabit. But that that's just a view. If you take some of these points that I just raised into consideration, what role is there indeed? And you're well placed to answer that, for sovereign wealth funds, for nation states, and even for the old or current defence primes, how how how would how would they have to play in this new world?

SPEAKER_01 26:36

Wow, that's a that is a massive question. Um So we were out in Munich for the Munich Security Conference and the kind of run into that. And as you can imagine, the discussion around European sovereignty for want of a better or strategic autonomy, however you want to describe it, was a really live discussion that has has come into pretty sharp focus for all sorts of reasons over the last few months. It feels like it's long overdue and it feels like uh there's a there are a series of things. And I had I was at a discussion this morning where where this was covered as well. There are a whole series of government policy requirements. Uh there are a whole series of, particularly on the capital stack, thinking about I think the the lower stages of that, the kind of seed level seems okay. I think it's as the point was made earlier, it's really interesting to see where European companies have to go to get their really big capital raises, still predominantly from the US. I think that's that's going to hamper us should we want to build really, really big competitive companies inside Europe. And when you get into the kind of specifics of the def particularly the defence side, with a very, very fragmented market, it's quite hard to build world standard companies if you're trying to compete to so many fragmented markets. And we're starting to see some slight shifts. We we issued a report recently that we did alongside Deal Room talking about how the venture capital stack was looking, but also we tried to touch on what's happening in terms of sales and what's happening in terms of revenue, what's happening to sort of the ecosystems that are bumping into each other around the traditional defence primes, these neo primes, the sort of startups, and then the SMEs that make up the supply chain. And they're all kind of starting to interact in slightly different ways. So we are starting to see revenue inside Europe for some of these companies, whether it's Stark or Takeva or others, they are starting to ramp up. We're also seeing some really interesting plays where companies of one part of Europe will then build factories with all the associated jobs and the supply chain benefits and then produce in other nations. We've seen companies come to the UK and we've seen UK companies go abroad. I think this kind of blurring of the boundaries inside Europe is the way this plays out. But yeah, it's still, I think it'd be really difficult to predict what it looks like even in a couple of years' time, because it's still playing out in in real time, as it were.

SPEAKER_00 28:55

Indeed. Well, uh I think it's very clear we we're building a huge Chinese wall between the Western world and uh China mostly. Um, but to me, you know, the technological game I think is not the cause of it all. I think the cause is mainly that we're losing the grips of what we agreed on after the Second World War. So it seems like humanity's memory uh is surviving for centuries or so. Um, you know, the League of Nations survived far less, but the United Nations survived up till now. But there are more and more leaders around the world that uh do not accept the rules of the game uh in a simplistic way. So it started with Putin, of course, uh, but now we see President Trump behaves in a very different way, even more extreme than you know the first uh administration of his. Uh and the appetite is building for other leaders around the world too, uh, to take action and to disregard what used to be the norms. Um, you know, I I think maybe I'm not such an expert on the Chinese. They are fighting the information and the technological front, but at least up till now, I think the kind of, you know, the more restrained in terms of the activities. Of course, there's one activity that we're all very fearful of, and the Chinese taking uh over Taiwan. Uh but we see a lot of things happening around the world in terms of the way politicians want to influence the world that we haven't seen in the past. And Europe is somewhere, you know, still on the conservative side trying to preserve the old world, but uh acknowledging the fact that they have Russia uh on the eastern border. Uh so there's a need to prepare for that and to spend more money on that. So that I think that's the driving force uh mostly.

SPEAKER_02 30:58

Okay, thank you for that. We're gonna talk a bit about quantum indeed and and and some various aspects of defense that quantum already touches. So the first one that I want to uh hear your view on, in particular your app, is on indeed missile defense. Um Trump wants a golden dome, of course, um, even spanning Greenland, from what I understand. Israel has its iron dome, which obviously, well not obviously, but may very well come into use very powerfully again if a conflict were to erupt with Iran. But it's never been perfect, it's never been 100% intercepting missiles. It cannot. Quantum holds some promise there, and there was this recent um deal between Andorrill and D-Wave, I believe. Could you shed a bit more light on why quantum would make a difference there? What in the technology makes the difference?

SPEAKER_00 31:48

Um, well, I think there are different possibilities that can contribute and uh in different stages of being ready to deploy. So I think the first technology that is available and already being deployed is quantum sensing. And we need to explain, I think, at the outset, that when we speak about the quantum revolution, or as we refer to it as the second quantum revolution, because the first one was lasers and transistors, these are quantum effects from the 1950s. Now we're speaking about the second quantum revolution. It mostly has to do with the fact that we as physicists learned how to control single particles, which we didn't know how to do before. Both lasers and transistors involve many billions of electrons and photons. Now we are able to control single atoms, single photons, single electrons. So that makes the difference in terms of the technology. And these breakthroughs can be used both for sensors. So a single atom is very small, and if you control it, you can use it as a gyroscope to allow you to navigate without GPS. You can use it as a seismic kind of sensor, or you can use it as a magnetic sensor. So these things are similar in some sense to atomic locks that we know for very long and they're very precise, and being used in the defense industry for several decades now. So I think these are already very close to deployment. We've heard about navigating independently of GPS on boats from the US Navy and the UK Navy and others. So that's one thing that can help a lot in terms of missile defense and already been deployed in several places. And the next stage has to do with the actual quantum computer. A quantum computer is just like the ability to control not a single atom but 6,000 single atoms and then million single atoms, and that of course poses like new challenges, engineering challenges mostly, uh, that will bring the capability of a scalable quantum computer. And then you could solve all kinds of problems that have been proved to be a bottleneck of classical computing, amongst them many of the optimization problems in a shorter period of time, in a better uh results than we had up till now without any compromise on the number of parameters. And there again, one of the things could be how you detect incoming missiles, incoming drones, and so on. You could optimize for that in a better way. But I think that's like many other things that you hear today about quantum computing and D-Wave included, is kind of toy models, not yet ready to deploy, but I think within three to five years' time, I expect them to be deployed.

SPEAKER_02 34:48

Could you also talk a bit more about space and about indeed uh GPS and indeed also migrating to post-quantum cryptography standards in orbit? How would we approach that? There's a number of aspects here, but I'll let you share.

SPEAKER_00 35:01

So that I would say the third topic that people need to understand about the quantum revolution. We said sensing and we said quantum computers, but now you're referring to quantum cryptography and communication. And that has to do with the fact that we proved mathematically from the 1990s that a big enough quantum computer will be able to break all the codes, commercial and defense codes that we built along the years. So you need to find a better way to keep your communication safe. Um, so as oftentimes happens when you have a technological breakthrough, it's a threat, but it also serves as a solution. So, on the one hand, quantum computers could break all the codes, and we can speak about the timeline to it in a moment. But on the other hand, the quantum technologies also offer what is usually referred to as QKD, quantum key distribution, several technologies of encryption, new technologies of encryption that are quantum safe. So they will not be able to be breakable by quantum computers, but they're also based on quite the same quantum effects, in this case, entanglement. So quantum safe is a big challenge, not only for governments, but also for financial institutions and just privacy in general. And there too, we can say there are three different ways to actually deal with the threat. First of all, this kind that I mentioned already, QKD, the ability to use quantum technologies to be quantum safe. Then there are all kinds of different algorithms that had been recommended by NIST in the US and other parallel UK and European institutions, just replacing the algorithms that we're using today to new algorithms that are considered, at least for a while, to be quantum safe. And the third way, which is less well known, we have one company offering a solution that are called Cyber Ridge, is to actually encrypt on the physical layer of the communication. In the past, people were not so open to it because you really need to put hardware and it takes more than just doing an algorithm. But given the new threats from quantum computing, people are reconsidering the ability to do that, not in a quantum way, in a kind of a classical way, like different solutions on the hardware layer of the communication to make sure it's quantum safe.

SPEAKER_02 37:31

Well, Google itself very publicly announced only a week ago or two weeks ago that we need to really take notice and need to put our skates on to sort out the house when it comes to indeed some of these threats. And then there was also a paper by a group in Cornell, I think, um, that said that RSA could even be broken with 100,000 qubits. That's down from a million, that's down from 20 million only what a few years ago.

SPEAKER_00 37:55

Yeah, so that that's like two different topics that actually make the threat more imminent. Um, first of all, there's the well-known by now strategy of harvest now, decrypt later, which concerns all the governments. And I think there are real indications that it's already happening. So some of the uh enemies are recording encrypted channels to keep them recorded and waiting for the quantum computer to scale. And as we know, there are many secrets that you want to keep even within five years' time from now. So that that's one thing that made all the organizations concerned, and that drove the NIST, NIST and other organizations and regulators to actually say what needs to be done and really in a time frame of about two to three years before the quantum computer scales. Then, as you said, there's a progress on the side of the quantum computers. So, as you mentioned, when I studied in the Weizmann Institute, a course on encryption, uh quantum encryption, and it was only two and a half years ago, they told us you need a quantum computer with 20 million physical qubits to break the RSA code. Then, as you mentioned, last summer Google published a paper and they reduced it to one million, which means immediately like the threat is will be imminent not in 2035, but 2030, because that's the roadmap for one million qubits. And these are these are physical qubits.

SPEAKER_02 39:25

Physical qubits. I think it's important to explain that. Uh yeah.

SPEAKER_00 39:27

Okay, so and uh just now there was a publication of another breakthrough or another algorithm. People are just thinking and coming up with new ways to to solve the algorithm, and they said it's possible to be done with 100,000 physical qubits. I've heard some people arguing that in certain modalities like neutral atoms, you could do that even with less. And that means that we're getting to the point of thinking of 2028, 2029, where people can actually break both the RSA 2048, which is the most frequent commercial uh code, but also, you know, elliptical codes that are the base for Bitcoin, blockchain, and other applications. So yeah, it's becoming really urgent in a very worrying way.

SPEAKER_02 40:13

No, I would agree with that, and I want to bring it to you as well, John. I was reading in with quite a bit of attention the quantum uh strategy report by the EU, which came out last year. And it's one of these typical, um, I would say, very detailed, well-thought-through uh uh strategy papers with a 10-year plan, a bit self-congratulatory. And then it announces sort of a year or two years out all sorts of initiatives. And PQC post-quantum cryptography is very much in there as something that most EU countries or all EU countries are supposed to be doing in 2026. Now, of course, in the meantime, we are 2026 and we haven't heard any announcement that it is actually even happening. Um what's NATO's view on that? And and and might NATO occasionally have similar problems, of indeed plans that are a little bit too far out that they then struggle to adopt or don't revise fast enough? What's your view on that?

SPEAKER_01 41:03

Yeah, so I first of all I I should point out I'm an architectural engineer, so talking about quantum takes me way out of my expertise. So I'm not nothing like a quantum technology. So I come at this very much from a kind of use case perspective. How does it solve things that we want? I think your point on lagging the technology in terms of policy is applicable across a whole series of technologies. So, particularly these things that just move much faster than people really realise, whether it's AI or quantum, fingers crossed, fusion will move more quickly than people realise. But though I think where you've got the technology moving much, much more quickly than policymakers can keep up, it's it's always challenging. From a specifically from a quantum perspective, I really do worry about what happens when people can decrypt all this stuff, which we for very good reason have encrypted and they've been collecting. I think that is really scary. Um to a certain extent, the horse has already bolted, so anything that we're doing now is almost too late. But that makes it even more important that we get on with it. But I do I am optimistic about some of the other stuff. So, well, as as you point out, it's kind of it doesn't matter whether you're optimistic or pessimistic, almost all these technologies have two sides. The stuff that's happening in sensing is absolutely fascinating around all the things, and I've I've just listened to the the book on uh skunk works. So hearing about the development of stealth technology, which when it came out completely transformed the US military capability and and ours now. To a certain extent, depending upon the sensing modalities, you could completely reverse that. So all the advances you made on stealth could almost overnight suddenly disappear if you were able to detect these things at range. There are a whole series of positives from our perspective on that side, but clearly that also presents a vulnerability. So you end up in this kind of cat and mouse race around when you develop a measure, you then develop the countermeasure. So I think that's definitely true on the sensing. I do think on the compute, the some of the less glamorous problems are going to be really interesting ones that we'll be able to crack around whether it's logistics or supply chain management, stuff like that, could be absolutely transformational, but isn't glam isn't the sort of glamorous thing that we we might expect with um with quantum. But as I I think the bit on encryption is is very worrying um and is coming, according to the research you've just pointed out, coming sooner and sooner.

SPEAKER_02 43:21

So yeah, I think does NATO Innovation Fund for that reason look in particular for opportunities that that try to tackle that?

SPEAKER_01 43:28

Or we we absolutely do. I think the challenge is trying to find the kind of horizontal bets. So rather than focusing, and this to a certain extent is is true in most of the things we try to invest in, rather than finding a very, very clear vertical, we try and find something which has got applicability across it. So there's a whole load of the underlying infrastructure, whether that's on AI or quantum or fusion, frankly, that you want to have a bet that covers across multiple bases. And from my limited understanding of quantum compute in particular, trying to find technology. Which play to whichever of the modalities happens to be the one that gets there first feels like a more sensible way to do it, which makes it a really difficult thing to invest in. So I've I've got huge respect for you in terms of the investments you're making because it's it's incredibly difficult.

SPEAKER_00 44:14

I tend to think, first of all, cybersecurity is always a holistic game, right? It's not that there's one solution that solves everything. People are stealing bitcoins today, even though everything is still encrypted, right? You can steal bitcoins in many different ways. You can just pick up the phone and speak to someone who's stupid enough to give you the key and you stole his money. Um so I think you always need to protect yourself from different directions, and therefore, you know, the ecosystem of cyber companies is huge and ever growing in a sense. In terms of quantum computing, first of all, as as Chris knows, I I think everybody can learn it, but uh I do agree that most people who did not learn it uh tend to be quite afraid, and justly so. Like the knowledge gap is much, much bigger than studying what AI is. Uh, and it needs to happen because people will need to understand it. At the moment, apart from the encryption thing, I think many people still think of quantum computing as something really esoteric, science fictional, and therefore I think there will be many more corporates that will find themselves within two to three years really unready because people said, you know, the CEO said, Oh, that's not for me, oh I I cannot understand it, or something of that sort. And then it will just be there. And I think the the security threat is far less interesting for the financial world and for the markets than the actual fact that people will solve pharma problems in a way that will make other companies that are not ready just obsolete. Uh, and the same goes for logistics, the same goes for option pricing. Again, it it not all of this will happen in two years' time. It will not be a B2C something like ChatGPT that everybody around the world start using, but it will be a very major development in a completely different way of what the compute is and what we can do with computers.

SPEAKER_01 46:14

Yeah, and I think in the short term, and we are our quantum investment at the moment is a company called Aquark that's doing quantum timing and quantum PNT. That that is probably, from a defense perspective, standfast the the whole decryption challenge. That's probably the most pressing thing. Is Ukraine tells you you should not rely on having GPS satellites to fix the position of your vehicles or your munitions. You've got to find a different way to do it. So I think those those technologies around quantum PNT, they are they're really they're really close, um, they're really powerful. There are some sort of uh parallel technologies around how you synchronize radars or sonars or various other things.

SPEAKER_02 46:54

Yeah, and DBing, positioning, navigation, and time. And timing, exactly.

SPEAKER_01 46:58

So um, so I think being able to that's why we've invested in in Aquark in particular, because it's it's developing this technology very quickly, and that could be very, very important in terms of and you talked about space. That's the sort of that's the domain where we're starting to see challenges we didn't expect to see five or ten years ago. Yeah, it's gonna be a very, very challenged domain. And I think going into a conflict relying on doing everything using your satellites, whether that's communications or positioning, is going to be really, really dangerous.

SPEAKER_02 47:28

Do you think um because there's all sorts of motives to make investments, and certainly for something like NATO Innovation Fund, but from a purely financial perspective, are investments in sensing a sensible thing to do for a VC? Are are are are those the venture-style returns that one can expect from computing? Um and the same question for cryptography and communications are the returns there or are these are these companies solving probably solved and then and then that's it?

SPEAKER_00 47:56

I think that the the returns will most probably be smaller. So I think if you get the right quantum computing company that will come out winning and build the first scalable quantum computer, you surely end up with a company worth trillion dollars, like nothing. Uh whereas if you do a very successful sensing company, it will not get to that point, but you still can have a very uh nice return. And the initial investment and the capital needed will be smaller along the way. Uh, the same holds for communication systems of all sorts, so also encryption, but not only. If you do communication network of any kind, uh you can build great companies, as we did, you know, in the 1990s and the early 2000s. Uh, telecoms and uh military equipment, uh they're all like rather good companies, some of them really big.

SPEAKER_01 48:51

But I do think I mean if I think there is to a certain extent a parallel with space here as well. So 40 or 50 years ago, nobody would have thought that you could build space companies and make big money out of it. But you you look at ISI, you look at Planet, there are there are companies now making really, really good returns. To a certain extent, the the kind of the use case follows the technology on some of this stuff. So I wouldn't be able to predict now where quantum sensing is going to go, but it's been fascinating seeing how valuable it can be to put satellites up and, for example, take infrared imagery of the Earth and work out where factories are. Turns out there's a lot of money in knowing that, turning knowing when they're turned on, when they're turned off, deforestation, other climate stuff. So I I wonder whether the market will kind of develop once a technology is mature enough, as many cases we've seen that in the past.

SPEAKER_02 49:39

Yes, yes. No, I can I can definitely see that. Um we should talk a little bit about China as well, right? And there was some press recently, and you have to get it from the press somehow, and there was even a propaganda-ish uh newspaper, I think, that I that I saw, where they were talking about at least 10 quantum weapons that were being developed in in China, and then you have to second guess whether this is actually a valid claim or this is just yeah, whatever it means, it's hard to say. How do you within NATO again, and if how how do you look at China? How how can you in general know what's going on there with quantum? And how can you indeed know what is going on with quantum and dual use or or defense? How?

SPEAKER_01 50:18

So one of the reasons we were set up is so that we we retain NATO's edge in these sort of technologies, particularly as I'm not sure, this the deep tech side of things, which has historically not been particularly investable. Again, we've seen that change. So we absolutely recognise the fact that we need to be able to keep companies, and from our perspective, they're European companies because of who's invested in the fund. We need to keep them at the cutting edge. Uh, we do worry about China, and I mentioned the protect function earlier. We do worry about China trying to obtain the IP from the companies that we've invested in because they have a history of having done that. So we're very, we're very alive to that. I think you kind of take with a pinch of salt what you sometimes read in this, but um it's extraordinary to see how historically the kind of claim about China was it's basically all stolen IP, there's nothing developed kind of internally. That's absolutely true. And you look at the sort of publications in the scientific journals, it's it's clear that they're motoring ahead. And there are a number of research papers. I think there's one particular Australian institute that measures annually where China is against a whole series of critical technologies, and they just keep chipping away at this and keep making amazing headway on it. So yeah, it is it definitely concerns us. To a certain extent, it's why we exist. So um yeah, we we'll keep trying to find those European companies.

SPEAKER_02 51:37

But you try to be as good as or better rather than second guessing what they might get ahead in, or or is it both?

SPEAKER_01 51:44

To a certain extent, it's so we're driven by both a sort of supply and demand. Um it's push-pull. So part of it is the pull of NATO saying and nations saying we want to be able to do these things. So from the mission platform group side that I run, because we're constantly engaging with militaries and with NATO, we understand where the capability gaps are and we understand the sorts of things that nations want to be able to do in defense security and resilience. That allows us to then feed that back to the investment team. And a perfect case in point is things like uh counter UAS, where we're seeing countering drones is is a really big signal. So we're actively looking at investments in that area. So that's one is that kind of pull from we want to be able to do this, but we also push as well. So we see technology opportunities coming up and we push those into NATO as well. So it's a kind of blend of both, and both of those to a certain extent are going to be informed by what's going in in other parts of the world, whether that's the US or China or wherever else.

SPEAKER_00 52:42

I think in quantum it's very clear the Chinese are on par, or even at some areas more advanced than the West.

SPEAKER_02 52:49

Yeah, but QKD, they seem to be a bit ahead. Yeah.

SPEAKER_00 52:52

You see that in the papers and uh you see that in uh conferences. Uh and at the moment it seems like most of the things are open in terms of how do we know. So the governments have their own intelligence, and I assume they're gathering intelligence on technology as they always did. I think sometimes it's interesting to perceive things through the negative, so through the dark spaces. So remember in the 1940s, early 19, maybe late 1930s, even, there was this thing amongst the physicists where they wanted to keep publishing about nuclear physics, but actually the regulator or the governments stopped that from happening towards Los Alamos and so on. So it's very well-known story historically on how slowly they shut down on all the publications that could be used by other countries to be able to get nuclear weapons. Uh at the moment, it seems that the scientific community is still sharing almost everything. I think as you see, if you will see some scientists disappearing from the public academic publications, you may start to suspect that maybe something is happening by the government behind the scenes, Chinese or otherwise. Um the logic of the Western markets now is very different from the 1940s. So I think most of it is still happening with private companies, uh, and then some public companies like Google, IBM, Microsoft, and so on. Uh with the Chinese side, I'm I'm not sure. Um, but I think as you see some people disappear from the public arena, uh you may take care to see what they're doing and what they're up to.

SPEAKER_02 54:39

Yeah, very interesting. We haven't seen that.

SPEAKER_00 54:42

I haven't seen it, but I'm not following the Chinese community to that extent. I'm sure there are other people whose job is to do that.

SPEAKER_02 54:50

Should be, yes. Okay. Um is there a deep seek moment possible in that regard? In in the quantum space? Like something coming out of China that that all catches us open-mouthed and flat-footed?

SPEAKER_00 55:07

Um look, the main challenge for the next five years is to scale the computers. In terms of sensing, yeah, you can do sensing on anything with a smaller, more precise particle. So I don't see major surprises there. It's exciting and amazing, but I think in quantum, both on the algorithmic and the hardware side, there's still a there is still a lot of space for innovation. I think we have no clue what a quantum computer of 30 million physical qubits could do. And as you put such a hardware in the hands of the developers, I'm so I'm sure there will be many surprises. And also I personally believe because we learn how to control these particles, I think we will also have some major scientific breakthroughs on the real physics of it. You know, for example, entanglement. We know how to operate, and we we're able to, you're able with your laptop to do some entanglement of particles on the IBM computer from the internet. But we still, foundationally speaking, we don't understand what entanglement really is. So I think pouring all this money into the technology will also end up with some scientific breakthroughs. Uh, maybe not in the horizon of a first fund, like in the next decade, but I think in 20, 30 years, I'm sure there will be a lot of innovation and a lot of opening for jaw-dropping kind of uh results.

SPEAKER_01 56:34

It is interesting because it kind of goes back to that previous conversation. I think historically it was easier to close down some of these research areas so that they could be done in secret in government labs, nobody knew about them. I think that's that is genuinely harder for all of those things now, just because of the way the world fits together. It feels, I'm guessing, but I imagine the the sort of disruptive moment will be in around the application of a technology that everyone's broadly got access to, everyone broadly understands, but someone's smart enough to think about the application in a different way. That's where I think it will come. The challenge is to how you retain that edge, because you you get it for a finite period of time, but particularly, and this is this is what Ukraine has proved again, once you use it, your adversary understands what it is, and then it can reverse engineer it or or find a countermeasure. So the kind of the edge you get, this is the challenge for us systemically, is it's it's not just about developing the best technology, it's about having a system agility which then allows you to sustain that edge over time as opposed to having it for a moment, and then everyone's got it and you've lost your edge again.

SPEAKER_02 57:37

How how are you guys thinking about DARPA and the benchmarking initiative they have? How does NATO look at that? How does NIF look at it?

SPEAKER_01 57:45

So we clearly keep a very close eye on what's going there. And the the ecosystem's relatively small. So we see Diana, our sort of cousin organization that I mentioned earlier, that does a lot on the accelerator programs. You'll often find companies that are in the Diana accelerator program. It tends to be a slightly lower TRL than us in the accelerator programs or and also involved with DARPA and potentially with Inkitel investing as well. So there's a a bit of a crossover there.

unknown 58:12

Okay.

SPEAKER_02 58:12

How do you judge DARPA?

SPEAKER_00 58:15

Um, I think the very important player in deep tech, they've always been, uh both in terms of the capital they can give and also in terms of the judgment. So they're very serious people over there. Uh although there's also judgments by the private market and the public markets later on. Uh I think it's a combination of the two. It's not I wouldn't take everything that DARPA is saying on face value. I have my own thesis and judgment, but I think they're a very important player.

SPEAKER_02 58:47

And if you were a quantum startup, you would you would position yourself to get into their program.

SPEAKER_00 58:52

If I could, yeah. Yeah, I think so.

SPEAKER_01 58:55

Or or into ARIA. I think the the UK, ARIA is the UK equivalent, which I think is has starting to find its legs now. And this is a thing you forget, it's kind of DARPA and Inquital have been around for a very, very long time. But ARIA is starting. I mean, I I spoke to them uh a little while back. They're they're looking at some really disruptive opportunities in the future as well. So it's definitely worth and some of our companies that we've looked at have had dealings with ARIA as well.

SPEAKER_02 59:19

Supply chains and regulation, because people often ask us as VCs in quantum, like we are, um, what's the big trend, what's going to happen next year, and and and what's the big innovation. But I'm often afraid that there will be more regulation next year than more innovation, because with all the export bans and the tariffs and all those types of things going on. Um it is a little bit intimidating uh to predict the future from that respect as well. And again, as a as a VC, you do wonder what what happens if indeed a country violates a sanction. Um, if a company imports a computer, anyways, and we go to war over that?

SPEAKER_01 59:58

What happens? I mean, I think there's um COVID was a real shock to the system in terms of understanding just how fragile our supply chains were. I think we also now, again, watching what's going on in terms of things like you mentioned DJI drones earlier, the fact that Ukraine has had to rely on to date a lot of DJI drones and has now realized actually that's not a great thing because of all the software that comes with it.

SPEAKER_02 1:00:24

Which was in the market as a commercial drone maker, but to clearly was immediately jail used now.

SPEAKER_01 1:00:29

But I think so we're starting to see we're starting to see defence customers look really carefully at the supply chain to make sure that it's both secure and resilient so that they can be confident there aren't things inside the component that you don't want there, um system or subsystem. And also that if there's a shock to the system that you don't just lose it. So I think that scalability that you get from having resilient supply chains is is increasingly important. It's something that, frankly, we've not taken seriously for quite a long time. And I think it's it hurts when you realise that you want to start building up production of stuff and there just is not a supply chain behind it. It's kind of one or two very small suppliers who just can't scale in response. It's another reason why dual use is is really important though, because if you've got dual use supply chains, then you can pivot from the automotive industry across to your ground robots, for example. So we've got a company, ARCS, uh, who we've invested in, who are very, very heavily reliant on automotive supply chains, which are really scalable. So it's it's uh it's more and more important, and we're seeing people take it more and more seriously.

SPEAKER_02 1:01:35

Don't know if you want to comment on that, uh Joa?

SPEAKER_00 1:01:38

I just uh firmly agree that uh there needs to be some independence in terms of the supply chain and in terms of the regulation, at least from the Israeli side, it's really crucial that we will be included uh as we usually had been, uh, but also on quantum and AI uh on the same league and uh on par with the Europeans and the and the US and Canada.

SPEAKER_02 1:02:00

I think you are a critical ally in the Genesis uh program. Yeah.

SPEAKER_01 1:02:06

But it's the the difficult thing is you go back to a certain stage, however far back through the supply chain you go, and sometimes it's very difficult to wean yourself of. If you're talking about battery technology, if you're talking about rare earths, yeah. This is where I think there's a real opportunity on the investing side. So company a company that could come along and say, Do you know what? I can remove your reliance on these really difficult to source rare earths that you can only get currently from a Chinese supply chain. I'm going to provide you with an alternative way of doing that, which creates sovereign supply chains which are scalable, secure, and resilient. Yes. Then I think that's a really interesting investment opportunity.

SPEAKER_02 1:02:41

I think it's great you bring that up. I think Jack Hiddery of Sandbooks most recently said something, I think, about creating these materials from from scratch, so to speak, via quantum and AI. Yeah. Whether that can be done.

SPEAKER_01 1:02:50

Or recycling them. Again, we're seeing or recycling, yes, from electronics.

SPEAKER_00 1:02:54

Also the options of a synthetic biology, not only quantum AI.

SPEAKER_02 1:02:59

Exactly. Which is which is super fascinating in its own right. But quantum has its own rare earth issues, but I think Etherbium for iron traps, uh, europium, ironically, for photonics, I believe. Um can we handle it if if if there wasn't its say a China-Taiwan conflict, then we can't get these rare earths out of there anymore?

SPEAKER_00 1:03:21

In quantum, I'm less concerned because I think given the different modalities and the variety of different solutions within each of the modalities, uh, I think they may block maybe one path, but there will be still 15 others. So I don't think this will harm the way of quantum computers from developing. In terms of rare earth and other things, batteries and so on, yeah, that that's a major concern. And therefore, we all should invest in alternative solutions.

SPEAKER_01 1:03:54

And it's particularly on the processing side, that seems to be the bit which feels instinctively like the easiest bit because getting it out of the ground's relatively easy. The reason most of the processing takes place in China is because people won't do it in other parts of the world because it's such a dirty process. So I think people who can come up with really novel ways of processing these rare earths from ores and stuff, that that again feels like a really interesting place to go.

SPEAKER_02 1:04:17

Now we're gonna start wrapping up as well. People talk about a quantum cold war and an international law vacuum. Um it's not untrue, of course, right? I mean, we have some precedent with the nuclear non-proliferation treaty, but that's not the framework particularly valid, I believe, for quantum technology or quantum computing. But what what should be done here? What should be done? Because something ought to be done. It's a vacuum today, and and if the space keeps accelerating, we're gonna get into some trouble of sorts.

SPEAKER_00 1:04:51

Um I I do not, you know, analogies are never identity, so I I wouldn't say the analogy to the nuclear race is the same. Nuclear bombs can kill millions of people uh in one bomb. I don't think a quantum computer could do that. It's a very strategic asset, and the first nation to get a really big quantum computer will be able to do a lot. And as was said before, you know, any technological breakthrough can be used in a positive way or a negative way. Um I do not believe there's an ability to do much more than the regular export control and regulation. And at the end of the day, maybe one nation will be first, but I think quantum computers will be there because of the all different possibilities together and the actual knowledge that had already been built and shared. I think w all nations will have a quantum computer. The race is who will get it first.

SPEAKER_02 1:05:51

But whoever gets there first today is under no legal obligation to declare that they have that capacity to decrypt. There's no such no such law.

SPEAKER_00 1:06:00

I don't think there will ever be like a you know, the history of encryption and decryption is such that uh no one is willingly declaring that they're able to break the code of other nations.

SPEAKER_01 1:06:11

Yeah, and I mean it most of the examples of where we tried to control the technology, it hasn't really worked terribly well. Controlling the use case, I think, is is where we tend to have been more successful. Um that feels and again the analogy might be a bit unfair, but there's the debate around AI and how you regulate that, it feels that regulating the use of it is a more sensible way than trying to regulate the technology itself. I just don't I I can't see how you would do that for quantum, particularly given the potential upsides that you get from getting to a functioning quantum computer. I mean that they're so enormous that slowing it down feels but then I'm kind of I'm I'm slightly a techno-optimist, so I I have to aim off for that, if I'm honest.

SPEAKER_02 1:06:57

No, great. I think uh one final comment. I mean, are we are we blinded by Trump and his executive orders and have we all gotten ourselves into a frenzy around a geopolitically changing world? Is it really changing that fast? Is the world order gone as we know it, or or are we conversely in still some level of denial, even is it all changing even faster if Trump is and Trump is just a symptom?

SPEAKER_01 1:07:22

I I I'll speak from from my perspective inside the fund. The the relationship we've got with our allies across NATO doesn't feel that different. Um I think there has been a useful reset in terms of Europe recognising its role in its own security. Um that has been, frankly, long overdue, and we all admit that. So I think seeing the increases in defence budgets or the commitments to increasing defence budgets, seeing that the nations are recognizing that there are different parts of the tech ecosystem that they now need to rely on to get these cutting-edge capabilities, they feel like positive steps. I still work very closely with my US colleagues. They're still a really important market, they're a really important NATO ally, so that that feels like a constant in all of this, frankly.

SPEAKER_00 1:08:09

Um I think I referred to it earlier, and I still think the main problem here is like what kind of rules, international rules, do we accept or not accept? And I think that's at the moment is changing rather rapidly. And that's the worrying aspect of it. It's less to do with the technology in my mind than with the actual political fact of the matter of what leaders can and cannot do and how.

SPEAKER_02 1:08:40

And and leaders' memory of history and knowledge of history.

SPEAKER_00 1:08:44

Yeah. Indeed.

SPEAKER_02 1:08:46

As a psychiatrist, I am worried about that. I'm also worried about leaders' capacity to hold multiple challenges simultaneously, such as pandemic and pandemic thinking was the thinking three, four years ago. Now you never hear of the pandemic, and it's all indeed AI, and and God knows where it is in two years.

SPEAKER_00 1:09:03

No, I said it's good to refer the audience back to the letter from Freud to Einstein about wars, uh, talking about psychiatrists.

SPEAKER_02 1:09:11

Yes, we will put it in the show notes.

SPEAKER_01 1:09:13

And I just think the the pace at which this stuff is happening feels I mean, I don't know whether it's unprecedented or not, but the the advances in AI, for example, just feel so much faster than things we're used to. And so we're not, as human beings, we're not used to things evolving as quickly as that around.

SPEAKER_02 1:09:31

Yeah, it used to be one technology a generation. Now it now it the cycles are much faster. This is true. Okay, Jon and you up, thank you so much for your time. I really enjoyed the discussion. Thank you very much. Thank you. Thank you.

SPEAKER_00 1:09:42

Thanks, Chris. Yeah, it was great. Thank you very much. Bye bye.