B2B SaaS start-ups have been a money-making bonanza for many VCs over the years. Now many of them are looking up quantum processing-as-a-service to enter this still evolving deep-tech sector.
Quantum processing is still full of unanswered questions – based on what type of underlying physics will ultimately dominate. But the beauty of quantum-as-a-service is that users do not have to make any of these decisions nor wait for the industry to create a perfectly functioning qubit. Quantum-as-a-service companies take the headache for you.
Distribution of the investment in different types of quantum computer
IBM’s fleet of 18 quantum computers is accessible for access via the cloud: some reserved for members of IBM’s network of more than 100 research institutes and large corporations, and others for everyone to use. Microsoft Azur Quantum and Amazon AWS Braket offer the same types of services.
An IBM Q network user can run quantum software on IBM’s superconducting quantum computers or on captured ions with their partner, Austrian quantum computer maker AQT. Similarly, Pasqal, a French startup developing a cold atom-based quantum processor, is working with Google to provide access to its technology through Cirq, the open source framework that Google uses to access its own superconducting quantum computers.
Last year, Cambridge Quantum Computing, which works closely with IBM, launched a series of quantum software services, such as random number generation and quantum-resistant cryptography keys. Quantum software such as Riverlane’s Deltaflow operating system is portable across at least four of the most important types of quantum hardware.
“The big breakthrough was realizing that while the underlying physics may be different, the hardware works the same way.”
“The big breakthrough for us was to realize that while the underlying physics may be different, the hardware tends to work the same way,” said Steve Brierley, Riverlane’s founder and CEO. “The system sends a signal to qubits, something quant happens, and then you have to get the signal out. The computer is actually a control system. ”
Realizing this meant that Riverlane could develop an operating system that would work across the board with all this hardware.
Companies like Terra Quantum are working to make it easy for companies to use quantum computers – or a simulated version of it – right now. The company develops its own silicon-based quantum platform but also offers quantum-as-a-service for companies.
They specialize in taking client problems and finding the quantum algorithms that work to solve them. As quantum computing develops, these solutions will be better and faster, but companies can begin to reap the benefits of quantum computing immediately without having to wait several more years before the industry reaches quantum advantage. Terra Quantum can also make real money.
“We can talk to companies now and will generate relevant revenue this year,” said Markus Pflitsch, Terra Quantum’s founder and CEO.
The money is flowing in
Since 2012, more than $ 1.9 billion has been invested in quantum tech startups, according to Le Lab Quantique, the French quantum think tank and accelerator.
Expenditure on quantum technology almost quadrupled last year
The time is right to invest in quantum computing, says Stuart Chapman, partner at Draper Esprit, who led the latest Series A to Riverlane.
VCs rarely lose money because the technology does not work. They lose money because they get the wrong timing with five years, says Chapman. Now, however, there is demand from both quantum users and quantum hardware manufacturers for software such as Riverlane that makes the technology easy to use.
When Pflitsch at Terra Quantum talks about being able to start generating income this year, quantum investments start to feel less long and investors’ ears stick out.
We may also be about to see a first IPO Bloomberg reporting that US-based quantum computer company IonQ plans to list via a SPAC, with a valuation of about $ 300 million.
European governments have also begun to spend serious money. Last month, the French government recently unveiled a national quantum strategy in which investments of € 1.8 billion in the sector will be made over the next four years.
[Read the full assessment of the French strategy by Christophe Jurczak, founder of quantum-focused VC Quantonation]
The French strategy follows a promise by the German government in July last year to spend € 2 billion on quantum and EU plans of € 1 billion in investment by the end of 2028. The UK has spent more than € 1 billion on quantum technology since its inception National Quantum Technologies Program during 2014.
Jurczak says countries such as the Netherlands, Spain and Italy could also use their post-Covid-19 economic recovery plans to boost their national quantum industries.
It’s not just the money – state aid also helps raise the industry’s status, says Jurczak.
“When I started evangelizing on the subject back in 2015, I sometimes felt that people thought quantum computing was a scam,” he says.
Can Europe keep pace?
One concern is that the new national strategies may be too slow, says Terra Quantum’s Pflitsch. Breakthroughs are happening so fast in the industry right now that it is time to consolidate a position in the industry.
“A month is a long time in the industry right now.”
“When we file patents, I sweat over the weekend and am worried that I will hear about a similar patent being filed in China before we succeed in getting ours,” he says. “A month is a long time in the industry right now. Talking about getting a lab up and running in three to five years is just too slow. ”
But many people in the industry believe that there are still equal conditions for quantum globally. In fact, some hope that Europe could take a lead in a way that failed in the classical computer.
“Europe has been watching the American cloud hype scales take over the internet for a while. Now is the time for a disruptive technology from Europe to change the rules of the game: Quantum Cloud, says George Gesek – CEO and founder of Novarion Systems, the high-performance computer company.
“We have not come so far that you can not catch the big technology companies.”
Some of the largest quantum computers still exist in the United States. Google and IBM have machines with 50 or so qubits, and IBM has a roadmap to reach 1000 by 2023 – while machines from IQM, on the other hand, only have 5 qubits. But IQ Capital’s Carew advises against simply counting qubits. The entire industry is still looking for qubits that are more reliable and easy to scale. A company that discovers that it can go fast from 5 qubits to 50 and beyond.
“If you come with a scalable system, it’s not so much to move from 5 to 50. We have not come so far that you can not catch the big technology companies,” says Carew.
Investors such as Chapman on Draper Esprit and Jurczak on Quontonation are overall bullish on European quantity.
Europe has finally realized that, although historically it was a heavyweight of quantum R&D, there was a risk that it could be left in the quantum race. The cumulative budgets for the EU and the national plans are very extensive and quantity is clearly identified as a priority now, says Jurczak. “It’s hard to compare for lack of publications, but I would put the United States, China and Europe more or less on the same level.”
This is the third in our series of articles on quantum computing. Read the two previous articles:
Maija Palmer is Sifted’s innovation editor. She covers deeptech and business innovation and tweets from @maijapalmer