Recent news reports the demise of Quantum Exponential, a Quantum Investor listed on the London stock exchange that invests in quantum companies. Then, we have seen the failure of Zapata AI, which is still unwinding as we speak.
Further, add the warnings to D-Wave and Rigetti. Their share price is below 1$, which has triggered a valuation warning. It does seem like a bleak time out there in the quantum investment world. Has Quantum technology run its course? Or are we witnessing the beginning of the decline of the first wave of Quantum or Quantum 1.0?
Quantum 1.0
AI has genuinely come of Age.
Artificial intelligence has come of age. It is everywhere, primarily because of companies like OpenAI and its ChatGPT product, which has set the world ablaze. And if that wasn’t enough, we’ve seen demos with technologies like Sora, which turns text into film-quality video.
The Eponymous founder of OpenAI, Sam Altman, unleashed a wave of investment interest. This surge focused on an area that had been promised for years. Consumers and corporations alike have been able to taste the future right now. They are occupied with discovering ways to use the power of LLMs. Busy to integrate them into various products and services. Potential efficiency savings are suggested. Additionally, job losses are anticipated as productivity increases in the working world.
AI Is delivering the Sci-fi Dream.
Innovation is occurring, with dozens of companies launching new LLMs, or large language models. Some of these companies are well-known names like OpenAI, Google, and Meta. Others are smaller players like Alibaba. We have seen the future. We got that little vision of the sci-fi future we once dreamed about—the companion who can understand and respond to our every desire without complaint or frustration. It might take the place of a chatbot currently, but that is just the on-ramp to a range of services that can summarise, extract, explain, tutor, and more.
We do not know what the end game exactly looks like. Yet, we have finally seen that promise delivered. That is the majority of the battle over-with. We are now on an AI ascendancy and our brains can imagine the almost limitless potentials of this new technology.
Quantum Investment
We covered the failure of Quantum Exponential, a company that tested in the Quantum Ecosystem, primarily in the UK. The listed investor had invested in Arqit Quantum, Universal Quantum, and many others. The news will come at a difficult time. The UK government has been busy canceling science projects.
Will technologies like quantum or science actually get the funding they need, as Kier Starmer, the prime minister leader, promises a “painful budget” coming in October 2024? Will technology and basic research get the much needed funding to provide the fundamental research base that can power a Quantum ecosystem?
We simply don’t have enough time to go into what appears to us lack of funding and support in the UK for innovative businesses in deep-tech. No necessarily localised to the UK. But whatever the state it is now, in the worlds of Kier Stamer “It will get worse before it gets better” for UK tax-payers but whether this translates to less funding for science is unkown.
Can we expect a business environment that will be supportive of disruptive technologies such as Quantum Computing, or will a lack of funding and economic climate snuff out the nascent brilliance coming from the shores of the UK?
This isn’t just about the UK; but the UK has developed and birthed several high-profile quantum companies. Those include Oxford Ionics and Cambridge Quantum Computing, which has now become Quantinuum. Riverlane is also building out large components of the quantum stack. Starving these companies of funding and the ecosystem will cause them to wither on the vine.
So, while we won’t go into the details of Quantum Exponential’s developments, we hope that governments, funders, and bureaucrats are listening and ensuring that the quantum ecosystem can remain competitive. If there is no recourse to public funds, a good, healthy private sector will be needed for the nascent quantum companies to have access to capital.
Internet 1.0 Era
Just as the first wave of internet innovation saw companies like Pets.com emerge alongside Amazon.com, many of that first wave of companies fell by the wayside. During the Internet 1.0 era, several pioneering companies laid the groundwork for the modern web by providing key services that allowed users to access and navigate the internet.
Netscape Communications developed the first widely used web browser, Netscape Navigator, which made the Internet accessible to a broader audience. Yahoo! and AltaVista were among the earliest search and directory services, helping users find websites. AOL (America Online) became synonymous with early internet access through its dial-up services, bringing millions online and offering email, chat rooms, and other popular features.
E-commerce also began to emerge during this period with companies like Amazon and eBay, which revolutionized online shopping and peer-to-peer commerce, respectively.
Amazon was founded by Jeff Bezos. It started as an online bookstore and quickly expanded to sell a wide range of products, becoming a leader in online retail. Meanwhile, eBay, launched in 1995, created a platform for users to buy and sell items through online auctions, making it a trailblazer in peer-to-peer transactions.
User-generated content also began to take shape with platforms like GeoCities, which allowed users to create personal websites, and Theglobe.com, an early social networking site. These platforms were precursors to the more interactive, community-driven nature of the internet seen in later years.
While many of these early companies either faded or were absorbed by larger entities, they were instrumental in defining the internet’s initial structure and guiding its evolution.
Quantum 1.0 Era
Are we now be at the end of the beginning of the Quantum 1.0 Era? Multiple public companies have floated on the stock market. Via an SPAC, companies such as IonQ, Rigetti, and D-Wave have sold their shares to end users and institutional investors alike. Companies including Amazon and Pets.com during the first wave of the internet in the 90’s also allowed almost anyone to get a piece of the quantum pie. Is there a parallel here between Internet 1.0 and Quantum 1.0?
But just as pets.com and Netscape disappeared, could the same fate befall these quantum companies? Amazon emerged victorious out of the first wave of innovation. Might we see the complete collapse of those early quantum companies, their share prices trashed, and valuations reset to zero?
The threat is real; unlike AI, which is now finally delivering real value and products that people can relate to; quantum hasn’t shown enough of an visible promise or killer application. That doesn’t mean it has zero value. But it could simply not be prominent enough to sustain investment interest, particularly in the background of a worsening investment climate. Capital will ultimately flow where it can get that return and if the revenues from quantum companies don;t matreialise then expect investor patience to wane.
IonQ has shown that it can generate revenue. It announced a deal worth over $50m, which was a real shot in the arm for the entire sector. The Ion trap specialist saw its share price rise with that announcement.
Both Internet 1.0 and Quantum 1.0 are defined by their foundational nature. In Internet 1.0, early users were primarily researchers, academics, and technologically inclined individuals, with limited tools available for the general public. Similarly, Quantum 1.0—the current phase of quantum computing—remains largely restricted to research labs, specialized industries, and highly technical fields.
Just as Internet 1.0 required expertise to develop and navigate websites, Quantum 1.0 demands a deep understanding of quantum mechanics and advanced computation techniques, limiting widespread adoption.
In both phases, companies and institutions are focused on building infrastructure (just as Riverlane is doing) and proving the viability of the technology. For the internet, this meant developing basic web browsers, search engines, and dial-up connections, while for quantum computing, it’s about creating quantum hardware (qubits, quantum gates) and early quantum algorithms and use-cases These are experimental technologies, and much like the early web faced technical limitations (e.g., slow dial-up speeds), quantum computing today struggles with issues such as qubit stability, error correction, and scalability. But as yet, despite the promise, there is no killer application today. Its close however. Very close. (Not like Nuclear Fusion Close).
Both technologies have long-term transformative potential but are in their early stages. Internet 1.0 laid the foundation for the information-sharing revolution, which would eventually transform communication, commerce, and knowledge access globally.
Likewise, Quantum 1.0 has the potential to revolutionize industries such as cryptography, drug discovery, optimization, and materials science, but it is not yet fully realized. Lots of produce and lots of experimentation. Just as the internet evolved rapidly with the arrival of Web 2.0 and Web 3.0, quantum computing is expected to make similar leaps as it transitions from its foundational Quantum 1.0 stage to more mature phases.
For all the parallels between Internet 1.0 and Quantum 1.0, Quantum is a vastly more difficult technology to understand and interpret. A first-mover advantage should not be underestimated. Those who invest now will gain some advantages today, even if we still await that “Killer App”.
Not Quite the End
Quantum is on a firm footing, and whilst it still is nascent, there is immense value to the techniques and skills transformation that is happening as a result of incorporating quantum computing in select applications. Just as those who understood that this is the beginning of the networked/internet age did well. It means making diversified bets on different technologies.
The world is inherently quantum, with some such as Seth Lloyd even suggesting that the universe is a giant quantum computer. When pared back to first principle, thinking. We must eventually conclude that quantum technology is just the next natural evolution of computation. Technologies, namely Quantum Cryptography and Quantum Computing are almost inevitable due to the march of natural technological progress.
The future is already here – it’s just not very evenly distributed.
William Gibson
