Podcast Title: The Investor With Joel Palathinkal
Episode: Nardo Manaloto: Qbits Ventures
Release Date: August 9, 2025

Introduction

In this illuminating episode of The Investor With Joel Palathinkal, host Dr. Joel Palathinkal engages in a deep and enriching conversation with Nardo Manaloto, the founder of Qbits Ventures. As a seasoned professional with over 25 years in the healthcare deep tech space and a former head of innovation at Kaiser Permanente, Nardo brings a wealth of knowledge and experience to the discussion, particularly in the burgeoning field of quantum computing and quantum technologies.

Guest Background: Nardo Manaloto

Nardo opens up about his diverse upbringing, having been born in the Philippines and having lived in countries like Vietnam, Papua New Guinea, Australia, and the United States. His academic foundation in computer science laid the groundwork for a prolific career in healthcare innovation. At Kaiser Permanente, Nardo spearheaded numerous AI projects and established Catalyze First, a healthcare innovation ecosystem aiming to bridge investors, technology companies, and corporations for mutual success.

Transitioning from his corporate role, Nardo’s fascination with emerging technologies, especially quantum computing, led him to establish Qbits Ventures three years prior. He states:

“My natural curiosity in emerging technology extended to quantum. So three years ago I started looking into the quantum space, studying that and basically said, okay, well, you know, I need to look at all the different signals within the industry...” (04:14)

Understanding the Quantum Ecosystem

Joel prompts Nardo to demystify the quantum ecosystem for listeners. Nardo clarifies that quantum technologies encompass much more than just quantum computing, emphasizing areas such as optimization, cryptography, AI and machine learning applications, simulation (e.g., protein folding for drug discovery), quantum hardware and software, and quantum sensors.

“Quantum technologies, the first thing they ask is like, oh, when is quantum technology going to be real? Right. So, but exactly, you know, that question really meant when is quantum computing going to be real? Quantum technologies is a much broader subject.” (05:34)

He categorizes investment opportunities into low-hanging fruit areas like quantum applications in optimization and cryptography, and near-term technologies such as quantum sensors for medical imaging and GPS enhancements.

The Technical Edge: Quantum Sensors Explained

Delving into the technical specifics, Nardo elucidates the superiority of quantum sensors over classical sensors. Quantum sensors leverage the properties of atoms, photons, and electrons to achieve unprecedented accuracy and functionality. For instance, quantum-based GPS can determine positions by sensing the Earth's magnetism, enabling offline capabilities—a significant advancement over traditional satellite-dependent systems.

“With quantum sensors, it's looking at the magnetism within the earth itself to actually locate your position. So you can have an offline GPS type of sensor as well.” (08:31)

Additionally, quantum photonics is highlighted as a transformative technology, enabling data transfer speeds a thousand times faster than current methods, which holds immense potential for applications like medical imaging and large data transfers.

Launching Qbits Ventures: From Corporate Innovation to Venture Capital

Joel inquires about the catalyst behind Nardo’s transition from a corporate innovation role to founding his own venture fund. Nardo attributes his decision to the exponential complexity of modern problems and the insufficiency of classical technologies to address them effectively.

“The only way we could get ahead of that is, you have to look at a more exponential technology called quantum technologies.” (04:29)

He underscores the pivotal role of AI and the massive data accumulation across industries as significant drivers for investing in quantum technologies.

Advice for Aspiring Venture Capitalists

When prompted for guidance for individuals aiming to start their own funds, Nardo emphasizes a multifaceted approach:

1. Inventory of Skills and Experience: Assessing one’s background to identify strengths and gaps.
2. Training and Education: Engaging in programs like VC Labs to gain necessary venture capital insights.
3. Building a Community: Creating a network with quantum scientists, engineers, and academic partners to aid in deal sourcing and due diligence.

“You need to make sure that in terms of what you're doing, you can do an inventory of what you've done and what you're currently doing and to see how much of that aligns towards becoming a VC.” (12:22)

Nardo also suggests practical steps such as advising startups, making seed or angel investments, and partnering with individuals managing Special Purpose Vehicles (SPVs) to build a track record.

Sourcing and Evaluating Deals in Quantum Tech

Given the complexity of deep tech and quantum sectors, Nardo details his strategies for sourcing high-potential deals:

• Community Building: Maintaining a team of 21 quantum scientists and engineers who act as scouts within the industry.
• Academic Partnerships: Collaborating with universities and quantum foundries to identify promising startups.
• Exclusive IP Rights: Ensuring startups have exclusive rights to their intellectual property to prevent replication and protect their innovations.

“The criteria I use is definitely the team aspect of it is very important. But I also look at the IP… and the people behind the IP and also in terms of if it's Academia, how much exclusive rights do they have.” (18:02)

Navigating Challenges in Quantum Ventures

Nardo candidly discusses the hurdles faced by quantum startups, primarily focusing on:

• Due Diligence Complexity: The intricate nature of quantum technologies makes thorough evaluation challenging for investors.
• High Valuations: Quantum companies often command steep valuations, especially at pre-seed and seed stages, posing investment risks.

Despite these challenges, Nardo points to successful exits in the quantum space, including cybersecurity firms and quantum computing companies achieving substantial valuations through mechanisms like SPACs.

“There are three quantum computers that did exits… one did a cybersecurity company worth a couple of billion dollars.” (40:20)

Future Outlook: Quantum Technologies and Beyond

Looking ahead, Nardo envisions the integration of quantum technologies with other frontiers such as quantum biology and artificial general intelligence (AGI). He anticipates the emergence of embedded quantum chips, potentially transforming human interactions with technology—hinting at cyborg-like enhancements.

“It will be all of that. There's definitely a lot of work happening with putting everything down to quantum chip level. So it's going to come to that. It's going to get embedded.” (43:16)

He also addresses the impending impact of quantum advancements on cybersecurity, highlighting the necessity for post-quantum cryptography to safeguard data against the formidable capabilities of quantum computing.

Impact on Cryptography and Security

Responding to a listener’s query, Nardo emphasizes the critical need for post-quantum cryptography to counteract the vulnerabilities introduced by quantum computing in existing security protocols. He underscores the urgency of transitioning to quantum-resistant encryption methods to prevent potential data breaches and cyber threats.

“It's definitely a big area of interest of mine. One of my earlier portfolio companies is in the post quantum cybersecurity space.” (22:33)

Integrating AI in Healthcare: Insights from Kaiser Permanente

Addressing questions about AI applications in healthcare, Nardo shares innovative projects, including virtual avatars for patient interaction and disease monitoring. He discusses the stringent data security measures employed to protect patient information, citing advanced encryption standards like AES 256-bit and adherence to government standards such as FIPS.

“They're also doing things like process automation with the aid of AI and RPA type system… they're using AES 256 bit encryption… and they can go up, all the way up to FIPS.” (24:05)

Adding Value to Deep Tech Startups

Joel probes into the ways venture capitalists can assist complex deep tech startups beyond mere funding. Nardo highlights the importance of supporting the business aspects of these startups, which are often the weak link due to their deep scientific focus. By providing fractional executives, VCs can help manage operations, finance, and IT infrastructure, enabling the technologists to concentrate on innovation.

“The business side of things, the operations, the finance, the accounting and setting up the IT infrastructure, those are the things that they don't really like, but must do.” (29:59)

Patterns in Successful Teams

Nardo outlines the hallmarks of effective teams in the quantum sector:

• Highly Qualified Personnel: Teams typically comprise individuals with PhDs, often with dual doctorates.
• Academic Affiliation: Founders or key team members who are professors or have strong ties to academic research institutions.
• Intellectual Property Focus: A robust portfolio of patents and publications demonstrating thought leadership and innovation capability.

“The other one is like the number of patents and publications that they write on these because you can see their thought leadership.” (29:59)

Exits and Success Metrics

Reflecting on successful exits, Nardo cites examples of quantum companies that achieved significant valuations through strategic exits. These include cybersecurity firms and quantum computing companies that, despite being pre-revenue, secured substantial market valuations via methods like SPACs.

“Quantum computers… doing an SPAC… worth $1.2 billion… another quantum computer that's worth more than $3 billion.” (40:20)

Building a Venture Fund: Learnings and Strategies

Reflecting on his journey, Nardo shares pivotal learnings:

1. Authentic Relationships: Building genuine, supportive relationships within the VC ecosystem is crucial.
2. Community Engagement: Actively participating in VC groups and creating support networks enhances knowledge sharing and deal sourcing.
3. Coachable Attitude: Remaining open to feedback and continuously iterating on investment theses is essential for growth.

“The biggest thing for me is relationship. Make sure that you're authentic about this stuff. Right. So you're authentic, you truly care about what you're doing.” (35:24)

He advocates for creating and participating in support groups with fellow VCs to share insights and assistance, fostering a collaborative environment.

Final Thoughts and Life Advice

Concluding the episode, Nardo imparts life advice centered around ethical considerations and the positive impact of technology on humanity. He stresses the importance of surrounding oneself with like-minded individuals who prioritize moral values and the greater good.

“When you work with exponential technology, I need to make sure that I surround myself with people that think about the good that technology can do… all about humanity, all about good, all about ethics.” (48:32)

He encourages aspiring fund managers to remain genuine, helpful, and focused on leveraging their roles to drive meaningful advancements in society.

Conclusion

This episode of The Investor With Joel Palathinkal offers a comprehensive exploration into the quantum technology landscape through the lens of experienced investor Nardo Manaloto. From understanding the multifaceted quantum ecosystem to navigating the challenges of deep tech investments, Nardo provides invaluable insights and actionable advice for both seasoned investors and newcomers aiming to make impactful ventures in the realm of quantum technologies.

Notable Quotes:

• Nardo on Quantum Technologies vs. Quantum Computing:
  “Quantum technologies is a much broader subject.” (05:34)

• On the Complexity of Quantum Sensors:
  “If you have an electron or an atom as a sensor… you can measure what that atom is getting into.” (08:31)

• Advice for Starting a Fund:
  “You need to make sure that in terms of what you're doing, you can do an inventory of what you've done and what you're currently doing.” (12:22)

• Importance of Exclusive IP:
  “I also look at the exclusivity of the IP and the people coming out of academia as well.” (18:02)

• Future Integration of Quantum and AI:
  “Think of the nirvana of an AI system because it's quantum exponential technology.” (20:19)

• Relationship-Driven VC World:
  “The biggest thing for me is relationship. Make sure that you're authentic about this stuff.” (35:24)

• Ethical Impact of Technology:
  “When you work with exponential technology, I need to make sure that I surround myself with people that think about the good that technology can do.” (48:32)