Venture capital firms are pouring billions into quantum computing companies, hedging bets that the technology will pay off big time some day.
Rigetti, which makes quantum hardware, announced a $1.5bn merger with Supernova Partners Acquisition Company II, a finance house focusing on strategic acquisitions. Rigetti, which was valued at $1.04bn before the deal, will now be publicly traded.
Before Rigetti's deal, quantum computer hardware and software companies raked in close to $1.02bn from venture capital investments this year, according to numbers provided to The Register by financial research firm PitchBook. That was a significant increase from $684m invested by VC firms in 2020, and $188m in 2019.
Prior to the Rigetti transaction, the biggest deal was a $450mn investment in PsiQuantum, which was valued at $3.15bn, in a round led by venture capital firm BlackRock on July 27.
Quantum computers process information differently way than classical computing. Quantum computers encode information in qubits, and store exponentially more information in the form of 1s, 0s or a superposition of both. These computers can evaluate data simultaneously, while classical computers evaluate data sequentially, simply put.
Theoretically, that makes quantum computers significantly more powerful, and enables applications like drug discovery, which are limited by the constraints of classical computers.
Not just the big players any more
Rigetti and PsiQuantum are startups in a growing field of quantum computer makers that includes heavyweights IBM and Google, which are building superconducting quantum systems based on transmon qubits. D-Wave offers a quantum-annealing system based on flux bits to solve limited-sized problems, but this week said it was building a new superconducting system to solve larger problems.
Quantum computers show promise but still immature, with questions around stability, said Linley Gwennap, president of Linley Group, in a research note last month.
"Solving the error-rate problem will require substantially new approaches. If researchers can meet that challenge, quantum processors will provide an excellent complement to classical processors," Gwennap wrote.
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- Big Blue's quantum rainmaker jumps to room-temp diamond quantum accelerator company
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If quantum ever works, there could be a huge market, hence the VC interest, but the technology is years away from significant revenue, Gwennap told The Register.
Deals by SPAC (special purpose acquisition companies) like Supernova Partners tend to be highly speculative, but the venture firm's due diligence on Rigetti was more around the possible rewards if quantum computers live up to their hype.
Rigetti's quantum technology is scalable, practical and manufacturable, said Supernova's chief financial officer Michael Clifton, in a press conference this week related to the deal.
"Quantum is expected to be as important as mobile and cloud have been over the last two decades," Clifton said, adding, "we were focused on large addressable markets, differentiated technologies and excellent management teams."
Rigetti's quantum computer is modular and scalable with qubit systems linked through faster interconnects. The company's introductory system in 2018 had 8 qubits, and will scale it up to 80 qubit multichip system with high-density I/O and 3D signalling. The company's roadmap includes a 1000-qubit system in 2024 that is "error mitigating," and a 4000-qubit system in 2026 with full error correction features.
Rigetti designs and makes the quantum computers chips in its own fabrication plant, which helps accelerate the delivery of chips. Amazon offers access to Rigetti's quantum hardware through AWS.
IT leaders in non-tech companies are taking quantum computing seriously, IDC said in May.
A survey by the analyst house in April revealed companies would allocate more than 19 per cent the annual IT budgets to quantum computing in 2023, growing from 7 per cent in 2021. Investments would in at quantum algorithms and systems available through the cloud to boost AI and cybersecurity. ®