Analyst(s): Dr. Bob Sutor
Publication Date: October 23, 2024
It’s been 12 years since the University of Bristol made a 2-qubit photonic quantum computer openly available and 8 years since the global commercial company IBM put a 5-qubit superconducting quantum system on its cloud. Nevertheless, we still have not reached Practical Quantum Advantage. Is it still worth investing in quantum technologies? We discuss two companies that appear to be going strong and one that reached the end of its business life.
What is Covered in this Article:
- Quantum computing company QuEra gets an investment from Google AI, but details are missing
- Australia-US quantum company Q-CTRL gets a Series B investment boost
- Former quantum software company Zapata AI went public via a SPAC and died the same year
The News: QuEra, a neutral-atom quantum computing company based in Cambridge, MA, USA, announced on October 15 that it had received an investment from “key strategic partner” Google Quantum AI. The organizations did not announce financial details. Earlier in the month, Sydney-Los Angeles quantum control software company Q-CTRL stated that it had received an additional US $59M in its Series B investment round. Another company that started life as a quantum software company but pivoted to AI and went public via a SPAC, Zapata AI, declared on October 7 in a US SEC 8K filing that it was ceasing operations after it failed to be able to pay Sandia Investment Management LP as part of a Forward Purchase Agreement.
Quantum in Context: Money Plus or Minus – QuEra, Q-CTRL, Zapata AI
Analyst Take: Although it may seem clichéd, the opening of Charles Dickens’ 1859 novel A Tale of Two Cities is not a bad way of describing the quantum industry today:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us …
In this note, hope wins two-to-one over despair, and no, I do not think we are in a quantum winter.
Google AI Invests in Quera
In a terse and somewhat cryptic press release, QuEra announced that Google Quantum AI, the part of Alphabet that develops superconducting quantum computers and software, is now a strategic partner and investor. This differs from GV (Google Ventures), the venture capital organization with Alphabet as its sole LP.
What is meant by a strategic partner? Although the details are missing in the press release, typically, the term is reserved for companies in the same industry whose working together has greater value than simply a return on a financial investment. For example, can their collaboration accelerate their individual roadmaps toward getting a quantum-plus-classical computing system that significantly outperforms classical systems alone? Having a big name like Google among its investors might encourage additional players to join the next round, presumably a Series B, since the last announced Series A funding was in January of 2023.
Alphabet makes its next quarterly earnings statement on October 29, so we may get more details and comments from its executives afterward. In the meantime, here are some questions we curious analysts would like to be answered:
- How much money did Google invest in QuEra?
- Will there be a synergy between the two different quantum modality approaches the two companies are currently taking?
- Is Google abandoning its superconducting effort or giving itself a Plan B?
If the investment is substantial, at least $20M, this could bolster the hopes for other neutral atom quantum computing companies as they seek additional funds.
Q-CTRL Gets USD $59M in New Series B Investments
Q-CTRL, with offices in Sydney and Los Angeles, makes software for quantum technologies, particularly quantum computers, to run better. Quantum systems are prone to noise and errors from their operating environments because nature itself is quantum mechanical. Other factors can cause problems, including manufacturing defects and how you control qubits to perform their intended operations.
Through techniques of quantum error suppression (stopping problems from happening) and error mitigation (fixing little problems as they occur), Q-CTRL’s products improve the accuracy and performance of quantum computers and sensors. The company was in the inaugural set of vendors stocking the IBM Qiskit Functions Catalog.
Many elements beyond the core hardware will go into the promised eventual success of quantum computers. Both classical and quantum application software will sit at the top of the stack, but optimized control software is required just above the hardware that gets every last bit of performance out of it. Q-CTRL’s investors realize this and continue to fund this essential technology.
Zapata AI Goes Out of Business After Going Public via a SPAC
Depending on which authority’s numbers you trust, 67% to 90% of startups fail. Conversely, you have a 10% to 33% chance of success. The reasons can be mismanagement of people and finances, academic founders failing to transition to becoming business leaders, lack of funds, lack of talent, failure to meet deadlines, and market misjudgments. The core product idea may just be a bad one.
While some may argue that deep tech should enjoy a longer ROI grace period, the economics of private investments and public markets can kill companies before they have time to succeed. Whatever the reasons, some quantum companies may fail. It’s sad, especially for the employees, but it should not surprise you.
Earlier this month, Zapata AI went out of business. It began its life in Boston in 2017 as a quantum software company but pivoted to AI and went public via a special purpose acquisition company (SPAC) on April 1 this year. The news from the beginning wasn’t good, as the stock price dropped 60% on the first day. Ultimately, it did not have the assets to meet its financial obligations, fired almost all the employees, and closed up shop.
Quantum companies should think carefully before taking any route to going public, even if it seems like attaching themselves to AI could bring riches. We may be in an AI investment bubble, and the uncertainty of when we will see powerful enough quantum computing systems in production further darkens the immediate outlook.
What to Watch:
- What are the details of Google’s investment in QuEra, and when will we get a more precise definition of a “strategic partner”?
- Has QuEra gotten other investments, and will it hit its 2023 roadmap target for this year?
- What other quantum or software companies, private or public, will cease operations in the next six months?
For additional details, see:
- the “QuEra Computing announces investment from key strategic partner to accelerate development of large-scale, fault-tolerant quantum computers” press release
- the “Q-CTRL Sets Global Quantum Technology Fundraising Record, Increasing Series B to USD $113M, Led by GP Bullhound” press release
- the “United States Securities and Exchange Commission Form 8K – Zapata Computing Holdings Inc.” document
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. Bob Sutor is a former employee of IBM and has an equity position in the company. The analyst has no equity position in any other company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other Insights from The Futurum Group:
Quantum in Context: IBM’s New Qiskit Functions Accelerate Development
Quantum in Context: Government Money Pours into Private Firms
Quantum in Context: Quantum Companies Rotate in New Leaders
Quantum Computing Benchmarks – Too Soon?
Quantum in Context: A Qubit Primer
Author Information
Dr. Bob Sutor is an expert in quantum technologies with 40+ years of experience. He is the accomplished author of the quantum computing book Dancing with Qubits, Second Edition. Bob is dedicated to evolving quantum to help solve society's critical computational problems.
