Quantum computing remains a holy grail in the world of technology, but with some important breakthroughs in the last several months, investors are betting on the more promising startups in the space to make the concept of super-efficient particle- and electron-based computing a reality. In the latest development, Quantum Machines, an Israeli startup that provides quantum control solutions to others in the field, has raised $170 million.
Led by PSG Equity with participation from Intel Capital, Red Dot Capital Partners and existing investors, this all-equity Series C round is one of the biggest to date for a quantum computing company.
One reason for the size of the round is because of the startup’s business funnel. Quantum Machines’ technology is now used by more than half of all the companies in the world working on quantum computers and quantum computing, according to Dr. Itamar Sivan, the CEO who co-founded the company with CTO Dr. Yonatan Cohen and chief engineer Dr. Nissim Ofek.
“We serve every category of company in the field,” he said in an interview, “large corporates, startups building quantum computers, national labs globally, and universities.”
Quantum Machines’ hardware may be best known for its traction with customers and partners like Nvidia to reduce errors in their own quantum computing research — a critical role in the wider ecosystem as researchers get closer to building functional, super-fast quantum computers that do not fall over with high fail rates.
But Sivan — who declined to name any specific customers — said that its hundreds of clients also include companies that are not owners or developers of quantum computers themselves, but banks and others that are running research on third-party machines, in the cloud, and use Quantum Machines to keep that work on track.
Sivan would not disclose the valuation of the startup, but he confirmed it was raised with a “significant uplift” compared to previous rounds. For some more context, when we and others first heard about the round earlier this year, the value was pegged at $100 million. In the event, the fundraise was oversubscribed.
Quantum computing had a burst of cold wind in January, when Nvidia CEO Jensen Huang made a public prediction that the technology was still “decades away” from being useful (despite his company’s work with Quantum Machines, Google and others). It was a statement that sent quantum stocks tumbling.
Yet in the wake of that, we’ve seen several positive developments that might pave the way for a different timeline. Sundar Pichai, the CEO of Google — which unveiled a quantum chip it called Willow in December — earlier this month said a realistic timeframe for “useful” quantum computers was five to 10 years from now.
Microsoft followed that up just last week with the unveiling of its own quantum processor, built using what it described as “a new state of matter” called the Majorana particle. Some have raised questions about Microsoft’s claims due to a lack of evidence, but it’s still an important development that underscores the work that is being done.
Meanwhile, a number of startups have been raising large rounds. They’ve included Alice & Bob in France raising $104 million and Google-backed QuEra raising $230 million in a debt round.
There remain question marks over the best approaches in the space — right now those working in the space are building along a few different different theoretical trajectories — but as Sivan points out, this is what makes Quantum Machines effective: bypassing those questions, it positions itself as agnostic to all those approaches, a mediator reducing noise.
This is one reason why Quantum Machines has attracted the investment that is has, said Rotem Shacham, a director at PSG.
“In the last few years the pace of tech breakthroughs in Quantum Computing have increased significantly,” she said in an interview. “We’re getting closer to end user values. We don’t like to invest decades away. But with Quantum Machines the market is already there.”
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