Quantum computing (2023)

1. Europe’s funding gap

   Raising late-stage quantum money is hard. Oxford Quantum Circuits CEO Ilana Wisby recently told Sifted that her company, which raised £38m in Series A funding in 2022, would need to look to the US to raise funds for its Series B. Several quantum startups, including PsiQuantum and Cambridge Quantum Computing, have already relocated to the US. In terms of the projects VCs are eyeing, hardware is still attracting the big bucks. Last year, Finnish hardware provider IQM raised a hefty €128m round, cementing it as Europe’s best-funded quantum computing startup.

   A notable funding push is the EU’s €1bn quantum programme, which recently concluded its initial phase. Software development remains in its infancy: from the €152m distributed by the EU quantum pot so far, a mere 2.9% has gone to software projects. And in the realm of private investment in Europe in 2022, only 14.5% was channelled into quantum software, according to data from Inside Quantum Technology News.

2. Quantum islands

   Europe has a relatively high number of quantum researchers, but talent remains at a premium globally. According to research by McKinsey, there’s only one qualified quantum candidate available for every three quantum job openings. By 2025, the consulting firm predicts that less than 50% of quantum computing jobs may be filled.

   Moreover, research efforts in Europe are fragmented, with several small research centres across different countries, whereas China and the US have set up large-scale centres. But Munich Quantum Valley — the Bavarian hub including three universities and several key research facilities that launched in 2022 — is a step in the right direction and should help create a more interconnected ecosystem.

3. The quantum cloud grows

   A McKinsey report predicts only 5k operational quantum computers by 2030, emphasising the need for rentable quantum cloud computing resources.

   Startups like PASQAL and Oxford Quantum Circuits are working on such systems but face stiff competition — again, a common theme — from American players, as we see companies like JP Morgan Chase using Amazon Braket to help with portfolio allocation decisions and pharma giant Biogen using Microsoft Azure Quantum to accelerate drug discovery.

4. A sword and a shield

   Later generations of quantum computers may pose a serious cybersecurity threat, as hackers use them to break commonly used cryptographic codes. But quantum could also provide new defensive answers. So-called quantum key distribution is a type of cyber defence that financial institutions, for example, think could help protect trillions of dollars in the future. Switzerland’s Terra Quantum and Cambridge-based Quantinuum are two cybersecurity startups to watch.

Who early stage startups are up against