Startup technology that can be used in war is hardly noticed by investors in Germany. But banal business models do. This annoys the founder of Quantum Systems.
Ex-soldier Florian Seibel founded the drone startup Quantum-Systems in 2015.
During the Ukraine war, questions about arms deliveries from large armaments companies dominated public debates. But not the question of what role startups can play in defending Western values. And that annoys Florian Seibel, founder of the Munich drone startup Quantum-Systems. He sees a structural problem behind it. "More investors are needed in Germany who are willing to invest in defense technologies," he says in an interview.
He accuses the VC scene of greed for billions in ratings and multiples in sectors that serve meals on wheels but do not contribute to a country's security. "What are gorillas and Zalandos worth to us if we lose in the war against Russia?" he asks. In his opinion, more defense startups belong in the portfolios of well-known VC firms. According to the founder, the state should also invest more in young companies that develop and build innovative security technologies.
The state does not know how many orders it awards to startups
Before that, a brief explanation: Defense startups are companies that develop products and solutions that can be used in the field of national defense. Examples include deep tech, space, and cyber startups. According to media reports, those startups did deals with the US Department of Defense worth 445 billion US dollars in 2020. The federal government, on the other hand, does not know how many orders it is awarding to startups. That came out of a request from the FDP, as Business Insider found out last year.
Seibel, who himself served in the Bundeswehr for 16 years and trained as an army pilot, among other things, is not surprised. "It's almost impossible for a startup to do business with the federal government." He describes the public procurement procedures as too bureaucratic and lengthy. America, England and Holland handle this much faster, says the founder, who has long been delivering his aircraft to all three countries. It was only in March that the US Department of Defense bought drones from Munich worth the equivalent of around seven million euros.
Ukrainian oligarchs order Quantum Systems drones
Ukrainian multi-millionaires also ordered some surveillance drones from the Munich startup in April. They should help Ukraine during the war to be able to better control large-caliber artillery such as tanks in battles. According to the founder, the first aircraft are already in use in the eastern Ukrainian city of Dnipro.
Soldiers from the Ukrainian military with the drone of the Munich startup Quantum-Systems.
The deal between Quantum Systems and the Ukrainian oligarchs is said to have come about through political contacts, as Seibel explains. Accordingly, Reinhardt Brandl, CDU politician and member of the German Bundestag, and the Ukrainian consul in Munich are said to have engineered the whole thing.
After all this, the Ministry of Defense went along with it and ordered eight drones from the Munich startup last week.
Aircraft can also be used in crisis areas
The high-tech drones from Quantum-Systems should be versatile and can be used in both civil and military contexts. They can be used in the landscape, in mining or in the construction industry, for example to measure fields or properties from the air. But you can also fly as a surveillance drone over crisis areas such as the Ukraine and create situation images in order to identify new dangers such as approaching tanks in good time.
The special thing about the drone is that it is a mini helicopter and mini airplane in one. So it should be able to take off vertically – and in the air its rotors can tilt forward like a propeller plane. The device should be able to remain silently in the air with its flight carriers on the left and right for up to three hours. That's important, because you don't want to attract attention in crisis areas, explains Seibel.
The images from the drone can be transmitted in real time and in encrypted form via a minicomputer. And the drone can be controlled. Quantum-Systems developed the necessary software itself.
Cost per drone: between 150,000 and 180,000 euros. The costs vary depending on how the aircraft are equipped. The quality of the built-in camera, for example, plays a role here. Or whether the drone is equipped with a laser pointer to mark spots on the ground.
The software is included in the price – and sometimes also the drone training. For military customers, the courses are more extensive, so extra fees apply. The training usually lasts two weeks. "In the Ukraine, we did it in one day," says Seibel. The founder does not want to reveal whether startup employees traveled to Ukraine for this purpose.
WWF or the World Food Program are also customers
According to the founder, Quantum-Systems generated sales of ten million euros last year. Also and with predominantly non-military customers such as the nature and environmental protection organization WWF or the World Food Program of the United Nations.
The startup based in Gilching in Upper Bavaria was founded in 2015 by Florian Seibel, Frank Thieser, Tobias Kloss and Armin Busse and now has 120 employees. The founding team met at the Bundeswehr University. The idea of building reconnaissance drones initially met with rejection. They were denied an Exist start-up grant and there was also a lack of support from their university, explains Seibel. In the first few years, Quantum Systems kept its head above water with orders from a Chinese company, among other things.
Well-known scene heads are getting a shit storm for an investment in a military startup
In 2021, the Munich start-up received support from outside: Via 10x Group, scene leaders Felix Haas, Jan Becker, Andreas Etten and Robert Wuttke are investing a mid-single-digit million amount in Quantum-Systems. According to the commercial register, the armaments company ESG, based in Fürstenfeldbruck in Bavaria, is also invested. The electronics company works closely with the Bundeswehr.
Another startup that is the focus of prominent investors is the military startup Helsing from Munich. Last year, the software company received a EUR 100 million investment from Spotify founder Daniel Elk. The startup's program is intended to support military reconnaissance with artificial intelligence by evaluating data from sensors on tanks and reconnaissance aircraft. Helsing announced that the technology would only be handed over to democratic states.
Nevertheless, the Spotify founder received a lot of criticism for his investment in the military startup. Artists and users of the music platform announced that they would cancel their Spotify subscriptions in protest and under the hashtag #BoycottSpotify. Elk did not invest alone: Zalando founder Robert Gentz and his former co-boss Rubin Ritter as well as Flink and Foodora founder Julian Dames and Parity founder Jutta Steiner also invested money in Helsing.
Defense startups have an image problem in Germany
The outrage about such partnerships does not come from anywhere. In Germany, startups that develop military technology have an image problem, says Seibel. Unlike in the USA or Israel, for example, where the relationship between the civilian population, the military and startups is closer. In Israel in particular, almost every founder has undergone military training.
And Germany? "Stand there blank," Seibel quotes a LinkedIn post by Lieutenant General Alfons Mais and Inspector of the German Army. Meanwhile, the US Department of Defense is actively investing millions in startups, most recently in Elon Musk's Space X rocket company or Peter Thiel's data analysis company Palantir.
"It annoys me so much that we have neglected our safety so much in the last few decades," says the founder. “Because of our hesitation, we have put ourselves completely on the sidelines internationally.” He also thinks that the development of deep-tech technologies is concerned. “Gorillas and Zalandos will not protect us from car cats. Security technologies do.”