Xanadu Lands $100 Million as Investments Pour Into Quantum Computing
Silicon Valley’s Bessemer Venture Partners led the funding round for the Toronto-based startup.
Xanadu Quantum Technologies Inc., which aims to commercialize quantum computing using particles of light, has raised $100 million in new funding as investor interest in the industry heats up.
On Tuesday, Xanadu announced a Series B funding led by Bessemer Venture Partners, one of Silicon Valley’s oldest such firms. Funding to date for the five-year-old company now totals $145 million, said Christian Weedbrook, founder and chief executive of Xanadu.
Quantum computing has the potential to solve some problems many millions of times faster than a conventional computer, which is why major technology companies and startups are working to commercialize it using various approaches.
Traditional computers store information as either zeros or ones. Quantum computers use quantum bits, or qubits, which represent and store information in a quantum state that is a complex mix of zero and one.
Xanadu, which is headquartered in Toronto, is using particles of light, or photons, to represent qubits, which store data needed to make a calculation. Its chips work at room temperature, unlike those of Alphabet Inc.’s Google, International Business Machines Corp. and Rigetti Computing, which need supercooling to achieve quantum mechanical effects.
Xanadu’s approach is somewhat similar to that of Palo Alto, Calif.-based PsiQuantum Corp., which is also developing a quantum computer that uses photons as qubits and raised more than $200 million in funding last year. IonQ Inc., based in College Park, Md., is also working to commercialize a machine that works at room temperature, based on atomic particles called trapped ions.
A commercial-grade quantum computer has yet to be built, but companies such as Google and IBM have recently announced developments and set milestones for the technology in the next few years.
And more money is being plowed into the sector. In March, IonQ said it plans to go public through a special-purpose acquisition company in a deal that values the combined entity at about $2 billion.
Last year, investors poured $557.5 million across 28 venture deals for quantum-computing companies based in the U.S. and Canada, according to PitchBook Data Inc. That was more than three times the $171.2 million reached in 2019, in nearly the same number of deals—27.
Globally, quantum-computing companies landed $779.3 million across 77 deals in 2020, surging from $288.3 million in 69 deals in 2019, PitchBook said.
Quantum-computing companies require large amounts of funding because they typically have to manufacture qubits at scale in partnership with chip foundries, which may need to make customized hardware, said Chirag Dekate, vice president analyst at technology research firm Gartner Inc. If not, they may need to build chip foundries themselves.
“You do need deep investments in these arenas to develop those sorts of manufacturing partnerships, so you can actually take these proof-of-concept technologies, demonstrate that they work and then manufacture them at scale,” Mr. Dekate said. Xanadu’s quantum computer could be smaller and overall more affordable than its competitors because of its photonic-based approach, he added.
Xanadu designs its chips in-house and then sends the designs to foundries to be manufactured with existing silicon components, Mr. Weedbrook said. The company’s qubits are created by using lasers that get injected into specialized chips that then create light fields that represent its qubits. Specialized hardware called detectors can count the number of photons that come out of a chip, which ultimately reveals the answer to a calculation, he said. The detectors do need to be supercooled.
Xanadu is already generating millions of dollars in revenue from researchers and companies experimenting with its early-stage quantum-computing service over its cloud, Mr. Weedbrook said. The company has 70 employees and is aiming to grow to 100 by the end of the year, he said. Its customers include Oak Ridge National Laboratory in Tennessee and several Canadian banks.
Xanadu’s new funding will be used primarily to grow its quantum computer to about 1 million qubits networked together into a computing system by 2026, up from a 40-qubit chip now. Once its machine reaches 1 million, it could perform large-scale calculations without errors, Mr. Weedbrook said.
David Cowan, a partner at Bessemer Venture Partners, said Xanadu is the firm’s second quantum-computing investment. Last year, it put money to work in Rigetti Computing.
Mr. Cowan is interested in quantum computing’s potential to take up questions intractable to today’s computers, like speeded-up calculations in biology, material sciences and traffic optimization.
“Quantum computing promises to completely change the capabilities of what computers can do,” Mr. Cowan said. “It’s as important an innovation as the transistor of the last century.”
He added: “By the end of this decade, quantum computers will be a trillion times more powerful than the most powerful supercomputer on earth today.”
Published on May 25, 2021