Deals to three companies — D-Wave, Cambridge Quantum Computing, and Quantum Biosystems — dominate funding. But newer players are emerging.
Quantum computing is an increasingly hot area for research and investment, with corporations like IBM, Google, Alibaba, Intel, and Lockheed Martin launching quantum computing projects aimed at bringing the technology — meant to speed up the process of solving complex equations — to commercial viability.
In tandem with company investments, the European Union, US, and Chinese governments, among others, are also backing projects aimed at building commercial quantum computers. In the US, NASA, the NSA, and the Los Alamos National Laboratory are all involved in quantum computing projects. And in August this year, China launched the world’s first quantum satellite in the quest for more secure communications.
However, there are only a small number of private companies in the industry that have been able to raise over $1M, which suggests that commercial application of quantum computers — for both hardware and software — is nascent at this point, despite the hype. CB Insights data shows that for private quantum computing companies, funding is sparse. The overall ecosystem supporting the development of these companies is still emerging.
To inform our analysis (in Exhibit A), we used the Trends tool on the CBI Platform, which analyzes millions of media articles to understand the rate of adoption of emerging technologies and innovations.
Exhibit A: Quantum computing is emerging — but it’s still niche
The first graph above for the term “quantum computing” highlights that the technology is an increasingly talked about trend in the media (the upward sloping blue line represents the increase in the number of media mentions beginning in mid-2015). However, when we compare “quantum computing” against a more well-known trend — “machine learning,” in the second graph denoted by the orange line — it’s apparent that “quantum computing” is in fact a young tech trend, which still hasn’t quite emerged from the Discovery Phase. That is, niche scientific journals and enthusiast bloggers are writing about the technology alongside occasional mentions in some major news outlets.
These folks are early adopters or enthusiasts or innovators, and tracking what they are talking about is a great predictor of the next important technology trend.
Exhibit B: Deals and dollars are scarce except for a few private companies doing all the raising
Since 2012, there have been fewer than 40 funding deals to private quantum computing companies for a total of $196M invested. Deals peaked in 2014 at fewer than 15 and fell below 10 in 2015. Last year saw quantum computing startups reach their highest recorded level of total funding yet, at $101M invested.
Through the end of this year, quantum computing companies are projected to see far less investment, with roughly $17M put into the category.
It’s important to note that over the 5-year time period, deals to three companies — D-Wave Systems, Cambridge Quantum Computing, and Quantum Biosystems — accounted for 88% of the industry’s total funding. Likewise, in 2015 those three companies took 98% of the total money invested in private quantum computing companies. Therefore, it is possible that one or more mega-round(s) could boost the industry’s funding total through 2016 above the run-rate projection.
D-Wave is the most well-funded private quantum computing company with $137M raised to date, followed by Cambridge Quantum Computing ($50M), and Quantum Biosystems ($25M).
Exhibit C: The ecosystem is growing; albeit around a few companies
The data underlying these images comes from CB Insights Business Social Graph — a tool for analyzing thousands of relationships between companies and their investors to uncover strategies, trends, industry consolidation, etc.
Click on the image below to enlarge.
Key takeaways from Exhibit C (above):
- D-Wave Systems has been at the center of the commercial quantum computing ecosystem for the last sixteen years.
- Ecosystem connections between companies and investors proliferated in the most recent period from 2012 to 2016 year-to-date (9/23/2016).
- Companies are rising in the ecosystem, including Rigetti Computing, Qubitekk, Cyph, QxBranch, Post Quantum, and Quintessence Labs.
- Mainstream VCs along with other investors are already betting on private quantum computing companies, including Y Combinator, Goldman Sachs, Draper Fisher Jurvetson, etc.
- Targeted funds have emerged with a mandate to invest in quantum computing startups, including Quantum Wave Fund and Quantum Valley Investments.
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