January has started with a frenzy of deals for quantum technologies, with European quantum companies raising $96m, nearly half of last year’s investment total in just the first month of the year. If investment carries on at this pace, 2022 will be a bumper year.
There is a sense that quantum computing is finally becoming real. Some say a truly useful quantum computer won’t arrive until the end of the decade. But many quantum software companies claim to already be producing some value and advantage to real customers — for very specific problems in areas like pharmaceuticals research and calculating banks’ investment portfolios.
All this makes the need to roll out post-quantum cryptography more urgent. Quantum computers will be able to break current cryptography standards, and if we are close to creating a useful machine, it’s time to shift to better — quantum-proof — algorithms.
The key deals in January reflected all those concerns.
Post-quantum cryptography gets urgent
UK-based PQShield raised a $20m Series A led by Addition, with existing investors Crane and Oxford Science Enterprises participating, that signalled a coming of age for the post-quantum cryptography industry.
The arrival of quantum computers will spell disaster for the public key infrastructure (PKI) that secures just about everything online, from confidential emails to online banking. Quantum machines happen to be very good at solving the complex mathematical problems that underpin PKI, so they would be easily able to hack any secured data.
The threat is serious enough that in 2016 the US National Security Agency started a process of developing standards for a next-generation set of quantum-resistant cryptographic standards.
So far no quantum computers have existed that could really hack PKI security. But we are not far off, says Ali El Kaafarani, cofounder and CEO of PQShield.
“In 2016 no one was talking about 100-qubit machines or quantum supremacy — a lot has happened since then,” he said. (Google declared quantum supremacy in 2019 and IBM unveiled a quantum machine with more than 100 qubits last autumn.) “It is more than enough to mandate a change of algorithm.”
The White House seems to think so too: in January it issued a memorandum to all the US defence and intelligence agencies instructing them to start migrating to new cryptographic standards.
PQShield, which has a staff of 15, mostly mathematicians and engineers, is in a good position to benefit as more governments and companies begin to switch over to post-quantum cryptography. The US National Institute of Standards and Technology (NIST) has shortlisted seven algorithms to potentially become the industry standard for post-quantum cryptography, and PQShield has developed two of them.
PQShield is already working with some corporate partners to test the technology.
“We are at the inflexion point where some partners will start to announce plans,” El Kaafarani tells Sifted. Within two years, he says, we could start to see web browsers that support post-quantum cryptography.
HQS raised €12m as pharma companies explore quantum simulations
HQS Quantum Simulations, a German startup that provides software for complex quantum simulations, raised more than €12m in a Series A funding round led by quantum VC fund Quantonation. Existing investors UVC Partners, btov Industrial Technologies and High-Tech Gründerfonds also took part in the round.
HQS is expanding its operations in response to two things. One, Germany’s quantum computing ecosystem is growing rapidly as the country begins to distribute €2bn that the government has earmarked for the sector. Places like the Leibniz Supercomputing Centre are building quantum computing labs — taking quantum machines out of university labs and into commercial facilities. It is an opportunity for software providers like HQS.
Customers are also increasingly able to use quantum computers for real problems, despite the fact that machines have very few qubits and a high number of errors, Michael Marthaler, HQS’s cofounder and CEO, tells Sifted.
They’re able to solve quantum mechanical problems, such as modelling the properties of materials at a quantum level. HQS already works with customers including Merck, BSF and Bosch on projects around organic semiconductors and studying magnetic materials, and Marthaler believes that the software will have many other applications in the pharmaceuticals industry, for example helping model proteins.
Quantum computing for financial services
Another quantum software company that claims it can help clients get value from quantum computing already is Spain’s Multiverse Computing. The company announced the launch of its “Fair Price” solution which leverages quantum computing to deliver value to financial professionals right on their PC, in the form of faster and more accurate asset valuations.
There is growing excitement about quantum computing being used in financial services — and a growing suspicion that some banks may already be using quantum machines to gain an advantage. In November, IBM Research and Goldman Sachs published new research demonstrating how quantum algorithms can be used to better compute the market risk of financial derivatives. This accelerates the process while also reducing the resources required.
The next trend: quantum hardware/software mergers?
Pasqal, the French developer of neutral atom-based quantum technology, and Qu&Co, the Dutch quantum algorithm and software developer, announced a merger. The companies are hoping that by knitting hardware and software together, they could make quantum computing useful for customers faster.
Qu&Co already works with clients such as Covestro, BMW, Airbus, Johnson & Johnson and LG to help them investigate the uses of quantum computing.
Pasqal’s quantum machines are based on neutral atoms — an alternative approach to superconducting and trapped ions — and the company is aiming to create a 1,000-qubit quantum computer by 2023. It has secured more than €40m so far, from investors including Quantonation, the Defense Innovation Fund, Runa Capital, BPI France, ENI and Daphni.
It remains to be seen whether quantum hardware and software companies merging becomes a trend. Last year, for example, Honeywell bought quantum software company Cambridge Quantum Computing in order to help accelerate the next phase of making quantum computers more useful.
Terra Quantum raises $60m
The biggest raise of the month was the $60m Series A round pulled in by Terra Quantum, the Swiss quantum-computing-as-a-service company. It's the largest round raised so far by a Europe-based quantum company, if you don’t count last year’s $70m Spac by Arqit, the quantum security startup.
Next-generation fibre and satellite networks based on quantum
While a lot of the recent excitement has focused on the quantum computing sector, quantum sensing technology that could one day revolutionise our communications networks is getting some investors’ attention as well.
Sheffield University spinout Aegiq raised a £1.8m seed round from an investor syndicate led by High-Tech Gründerfonds, with participation from Deepbridge Capital. Aegiq is developing a quantum photonics platform based around being able to create and measure single photons of light.