Yesterday’s announcement that Quantinuum a UK-based quantum computing company will get a further $300M in funding, bringing the total funding to over $600M and the value of the quantum company to over $5 billion. Could Quantum Computing Investment be immune from any widespread technology slow-down?
The last couple of years have seen the technological excesses of the COVID era come to an end, meaning less funding and job losses. As the wider tech industry is facing diminished prospects for investment, massive writedowns, and diminished stock prices, is the quantum industry going to weather the storm any better?
Tech firms such as Google, Meta, and other household names have been busy cutting jobs from divisions around the globe citing AI and a push for greater efficiency. It shouldn’t surprise anyone that businesses are keen to address the rapid hiring and spending that happened during COVID and ensure more bang for the buck, so to speak.
Quantum Computing Investment
The Rise of AI
The year 2023 kicked off something truly astonishing in the tech circles, something that caught even the most techno-optimistic off-guard. Open AI developed its ChatGPT to such a level, that it could perform better than (most) humans on a range of tasks from test-taking to answering complex questions.
Many AI pundits were not expecting this level of progress. Sure, Ray Kurzweil has made some bullish statements about the developments of AI, but not many people were expecting an LLM (Large Language Model) to become the killer application for the decade. Killer application isn’t a fair moniker either, as the LLMs developed by the likes of OpenAI, Google, Meta, and more are more of a transformative technology that will underpin a range of tools and other technologies.
The apparent surprise is that even AGI (Artificial General Intelligence) could be with us sooner rather than later, with VC (Venture Capital) funding a variety of deals into companies such as Mistral, Anthropic, and more. Whilst there is growth in AI, we see that the wider sector remains depressed in terms of deal-making. AI is the hot ticket and everyone wants to be at the show!
The Investor Hunt for Transformative and Disruptive Technologies
While interesting, perhaps for a while, the latest dog-walking app fetching millions in investment is not a truly widespread enabling technology. The internet, web, AI, Machine Learning, and smartphones are what are known as disruptive technologies.
The Internet is indeed considered one of the most significant disruptive technologies in history. It has fundamentally transformed communication, commerce, entertainment, and access to information. The Internet’s impact is profound, reshaping industries, changing the way people interact, and altering the landscape of the global economy.
Smartphones are widely recognized as a disruptive technology that has had a profound impact on society, business, and personal communication. Their introduction and rapid evolution have significantly changed how people interact, access information, and conduct business.
Machine learning (ML), a subset of artificial intelligence (AI), is recognized as a disruptive technology that significantly impacts various industries and sectors. By enabling computers to learn from and make predictions or decisions based on data, machine learning is transforming the way businesses and organizations operate.
It should be no surprise that investors are hunting for disruptive technologies in which to deploy capital. One of those amazing disruptive technologies has been AI and Machine Learning.
FOMO: Quantum Computing Investment
It will not be lost on many investors who missed out on the rise of AI, that Quantum Computing and Associated technologies might be the next disruptive technology. Could fear of missing out be driving the investment market?
Quantum computing differs fundamentally from classical computing in its approach to data processing. While classical computers use bits (0s and 1s) for processing information, quantum computers use quantum bits or qubits. Qubits can exist in multiple states simultaneously (a phenomenon known as superposition) and can be correlated through entanglement, allowing quantum computers to perform many calculations at once.
Quantum Computing offers a different computing paradigm. It’s not just a faster processor or a fancy moniker. It’s a disruptive technology in the original sense. That is why despite any slowdown we see in the wider sector, we believe there will still be continued interest in disruptive, transformative, and enabling technologies like quantum computing.
The Role of the Public Markets and Quantum Computing
There are now a few publicly listed companies out there that are pure-play quantum companies. These companies such as D-Wave, IonQ, and Rigetti offer their technology to a range of buyers, from those who want research devices to those who want to solve difficult business challenges. The public quantum stocks are somewhat a bellwether for quantum as a whole and the widespread tech industry. A strange amalgamated beast.
Quantum listed markets will be a pathfinder in showing that there is indeed a market for quantum technologies and a risk appetite no matter whether the companies are profitable. Take IonQ for example, which made a net loss of almost $50M in 2022, down from $100M the previous year, or Rigetti with net losses of around $80M in 2022. Despite that, there is general comfort in increasing revenue which will excite those investors who will recall it can take years to develop a business model that generates profit from early innovations.
So the backdrop is there, quantum companies will continue to attract interest and investment as interest in the technology continues.