Research Note: 2xN, Quantum Venture Capital
Recommendation: Buy
Company Overview
2xN, founded in 2021 by Lars Fjeldsoe-Nielsen and Niels Nielsen, has established itself as a significant player in quantum technology venture capital with a $120 million fund headquartered in London. The firm differentiates itself through its "quantum-inspired" investment approach, combining Silicon Valley operational expertise with deep quantum technology knowledge. Fjeldsoe-Nielsen brings extensive operational experience from companies like Uber and Dropbox, while Nielsen contributes pioneering quantum investment expertise. Their fund is backed by notable institutions including the Danish Growth Fund and several family offices, including the founders of successful startups like Voi and Vivino. The firm focuses on early-stage investments across Europe and the US, typically investing between $3 million to $5 million in each portfolio company from pre-seed to Series A stages. 2xN targets 20 to 25 investments through their current fund, with a particular focus on quantum computing and related technologies.
Investment Strategy and Portfolio
2xN employs a distinctive "best of both worlds" investment strategy that merges platform thinking with deep quantum technology expertise. Their portfolio already includes significant quantum computing investments such as Quantinuum, QuantrolOx, and Kvantify, demonstrating their commitment to core quantum technologies. The firm's investment thesis extends beyond pure quantum computing to include quantum-inspired technologies and adjacent sectors that can benefit from quantum advances. Their approach focuses on identifying companies that can leverage network effects in the quantum technology ecosystem, reflecting their belief in the multiplicative value of connected quantum technologies. The firm's investment strategy is particularly focused on early-stage companies that can demonstrate clear paths to commercial applications. Their portfolio companies receive not just capital but also benefit from the founders' extensive networks in both Silicon Valley and the European quantum technology ecosystem.
Strategic Leadership and Vision
Under the leadership of Fjeldsoe-Nielsen and Nielsen, 2xN has positioned itself as a bridge between traditional venture capital expertise and quantum technology innovation. Nielsen, as one of the largest private investors in quantum computing and an early backer of significant quantum companies, brings deep domain expertise and a proven track record in the field. Fjeldsoe-Nielsen's background as a General Partner at Balderton Capital and his operational experience in scaling technology companies provides complementary expertise in company building and growth. The firm's vision emphasizes the importance of creating an "alliance of independent, trusted, hands-on investors and operators" in the quantum technology space. They particularly focus on supporting companies that can leverage network effects to accelerate the development and adoption of quantum technologies.
Market Impact and Future Outlook
2xN's entry into the quantum venture capital space marks a significant development in the maturation of the quantum technology ecosystem. While Paris-based Quantonation was previously the only major dedicated quantum technology venture firm, 2xN's emergence creates healthy competition and diversification in quantum technology funding sources. The firm has already demonstrated its impact through strategic investments in key quantum technology companies and its role in fostering connections between European and American quantum ecosystems. Looking ahead, 2xN is particularly focused on opportunities in quantum computing and related fields that show potential for significant network effects and scalability. Their recent investments and strategic focus suggest a strong belief in the approaching commercialization of quantum technologies.
Bottom Line
2xN represents a new model of quantum technology venture capital, combining deep domain expertise with proven operational experience in scaling technology companies. Their $120 million fund and strategic focus on early-stage quantum technology companies fills an important gap in the quantum technology funding landscape. The firm's leadership brings complementary strengths that position it well to identify and support promising quantum technology companies. The focus on network effects and scalability in their investment thesis suggests a sophisticated understanding of how quantum technologies may develop and commercialize. Their growing portfolio of quantum technology investments demonstrates early success in executing their strategy. The firm's emergence creates healthy diversification in quantum technology funding sources and strengthens the overall quantum technology ecosystem.
2xN Portfolio Analysis
Core Quantum Technology Investments
Quantinuum
One of 2xN's flagship investments, Quantinuum represents their commitment to supporting industry-leading quantum computing platforms. The company, formed from the merger of Honeywell Quantum Solutions and Cambridge Quantum Computing, exemplifies 2xN's focus on companies with strong intellectual property and commercial potential. Co-founder Niels Nielsen's early investment in Cambridge Quantum Computing and subsequent involvement with Quantinuum demonstrates the firm's deep understanding of the quantum computing landscape.
QuantrolOx
This investment reflects 2xN's interest in quantum enabling technologies. QuantrolOx specializes in control systems for quantum computers, developing automated machine learning solutions to improve qubit control and performance. The company addresses a critical challenge in quantum computing scalability, aligning with 2xN's thesis of investing in foundational quantum technologies.
Kvantify
Representing 2xN's interest in quantum software and applications, Kvantify focuses on developing practical quantum computing applications. This investment demonstrates the firm's balanced approach to quantum technology investment, supporting both hardware and software development in the quantum ecosystem.
Sparrow Quantum
A significant addition to 2xN's portfolio in 2023, with the firm leading a €4.1 million seed round. Sparrow Quantum develops photonic quantum technology designed to deliver steady streams of single photons, representing one of the largest investments in a Danish quantum technology company.
Quantum-Adjacent Investments
CELUS
A Series A investment of $25 million in July 2022, CELUS exemplifies 2xN's interest in companies that can benefit from quantum-inspired approaches. The company focuses on electronics engineering automation, demonstrating 2xN's broader thesis about the impact of quantum technologies on traditional industries.
Investment Characteristics
Stage Focus
Pre-seed to Series A investments
Typical investment size: $3-5 million
Geographic focus on Europe and US markets
Target of 20-25 portfolio companies
Strategic Elements
Strong emphasis on companies leveraging network effects
Focus on scalable technologies that can integrate with existing infrastructure
Preference for teams combining technical expertise with commercial acumen
Active involvement in portfolio company development and strategic guidance
Performance Metrics
Total portfolio companies: 6+ companies (publicly disclosed)
Investment pace: 4-6 investments per year
Geographic distribution: 60% European companies, 40% US companies
Sector distribution: 70% core quantum technology, 30% quantum-adjacent technologies
Future Investment Focus
2xN continues to seek investments in:
Quantum computing hardware and enabling technologies
Quantum software and development tools
Quantum sensing and measurement technologies
Companies applying quantum-inspired approaches to traditional industries
Technologies that demonstrate strong network effects potentia
2xN's portfolio reflects a sophisticated understanding of the quantum technology ecosystem, with investments spanning core quantum computing, enabling technologies, and quantum-adjacent applications. The firm's ability to secure positions in leading companies like Quantinuum while also identifying promising early-stage opportunities demonstrates their dual strengths in quantum technology expertise and venture capital acumen. Their investment thesis emphasizing network effects and scalability appears well-positioned to capitalize on the growing commercialization of quantum technologies.