Toronto startup Xanadu Quantum Technologies Inc. has raised US$100-million led by U.S. venture capital giant Bessemer Venture Partners as competition intensifies to bring quantum computers to market.
The financing, first reported by The Globe and Mail this month, is also backed by Canadian billionaire Jeff Skoll’s Capricorn Investment Group and U.S. investment giant Tiger Global and past investors Georgian, OMERS Ventures and U.S. venture capitalist Tim Draper. The funding values Xanadu at US$400-million post-transaction.
Notably, BDC Capital and In-Q-Tel, the U.S. Central Intelligence Agency’s venture arm, also backed the deal. Both have invested in Burnaby, B.C.-based D-Wave Systems, which sold the first commercially available quantum machines. Despite 20 years of development and US$300-million of funds raised, D-Wave has struggled to commercialize its technology; last year it stopped efforts to sell hardware to focus on offering online access to its machines and completed a refinancing that wiped out most of the value of some investors.
“D-Wave’s technology is Quantum 1.0 and the rest of us are Quantum 2.0,” Xanadu chief executive Christian Weedbrook said in an interview. “I think there has been somewhat of a passing of the torch.”
With the financing, Xanadu cements its status as one of the leading upstart companies in the global race to develop the world’s most powerful computers by harnessing the power of subatomic particles to perform calculations that would take current supercomputers millenniums to run. Industry players believe quantum computers could eventually offer powerful new ways to help with drug discovery, materials science, financial risk modelling and other applications.
Xanadu, alongside U.S. startups PsiQuantum Ltd., IonQ Inc. and Honeywell International Inc., are bringing newer approaches to a field that also includes global giants Microsoft, Google, Intel and IBM.
D-Wave and many rivals, including IBM, are developing machines that contain quantum chips that must be cooled to temperatures colder than deep space to function.
Xanadu and PsiQuantum are trying to draw their computing power from light. Xanadu uses a process called “squeezing light” by firing lasers that enable light particles to generate quantum effects on thumbnail-sized chips. IonQ and Honeywell, by contrast, are developing “trapped ion” technology that would draw power by creating charged ions from a rare-earth metal.
Xanadu’s method, based on Mr. Weedbrook’s PhD thesis at Australia’s University of Queensland, happens at room temperature, and he believes with further development he can cut out supercooling, which is still required for a part of the process, altogether.
Without supercooling – an elaborate undertaking – Mr. Weedbrook says Xanadu can develop machines quicker and cheaper than other quantum computers and eventually shrink its chips enough that they could fit in small devices. By contrast, D-Wave’s computers are housed in shed-sized boxes.
Mr. Weedbrook said Xanadu has managed to increase the number of “qubits” – which replace the 1 and 0 “bits” of conventional computing and can simultaneously hold a mix of values and interact with each other in complex ways – tenfold to 40 per chip in the past two years. He said Xanadu’s goal is to increase the number of qubits used to power its computers to one million. “That’s where you can start solving a customer’s problems and start making an impact,” he said.
The company wouldn’t do that on a single chip, but by networking together many chips through fibre optics within new quantum data centres Xanadu hopes to eventually build. As with cloud computing, users would be able to access the technology over the internet to do their complex calculations. By distributing computing power across many chips, Mr. Weedbroook believes the company can correct for errors generated by the quantum computing process that experts have long identified as a major hurdle for developers.
Quantum computing is still early in its development. Some skeptics believe it will take many years and billions of dollars to develop functional, commercially successful machines that live up to their hype. “If [Xanadu’s] invention becomes a reality, it’s the most important company in the country,” Michael Hyatt, a Toronto tech entrepreneur and Xanadu investor, said.
For now, Xanadu is offering a handful of clients online access to its early machines and has created open-source software tools for developers to work with quantum computers. It is also designing and selling quantum computing hardware to universities, government labs and corporate customers to help fund its development. Mr. Weedbrook estimated the company was five years away from reaching a significant commercial scale. “Our investors … know [our technology] can really change the world and they take a long-term view.”
Bessemer partner David Cowan, whose firm has also backed quantum computing startup Rigetti Computing, said in a statement, “Xanadu impressed us as the leading contender to develop the first commercially valuable, photonic quantum computer. BVP is betting that in this decade quantum computers like Xanadu’s will make the conventional supercomputer look like an antiquated abacus.”
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