Quantum computing has the potential to generate productivity gains and end user value between $450 and $850 billion over the next 2-3 decades, and Corporate engagement and Corporate Venture Capital is bridging the gap to scale Quantum.
We have seen over many years waves of new technology which are impacting business models and creating what we term Innovative New Value Chains. Examples include the dot com first wave of internet creating online retail, and efficient supply chains. We have also seen mobile devices creating new mobile services, Internet of Things (IoT) impacting health care, Artificial Intelligence (AI), New Electric Vehicles (NEV) and many more changing industries. There has been the rise of new ventures dominating the new value chains and these include Alibaba, Alphabet / Google, Amazon, Apple, NVIDIA, Tencent, Tesla and many more that are larger than the incumbents.
Corporate Investment and Commercialisation
It is now believed that Quantum has reached the point where it is now going through the phases of scaling with corporate investment and commercialisation.
Corporate Venture Capital (CVC) is corporates investing minority stakes in start up ventures. These can have the purpose of the exploring ‘frontier’ technologies and business models which are outside the scope of corporates’ traditional core business. In the first half of 2021 according to a CB Insights report, CVC investments reached a record $79 billion investment and 2,099 deals. A Silicon Valley Bank survey published in Aug 2021 showed 54% of average CVC check sizes were less than $5m and 74% of investment were in seed and early stage investments’.
An example is MSD (Merck) Global Health Innovation Fund and Prem Tumkosit who invested in Zapata Computing. Quantum was one of the key areas which MSD GHI Fund wanted to explore from 2019. They invested to gain insights on Quantum applications and workflows plus it gave the opportunity to share with the venture understanding on how the new tech can impact the development and use of new health and pharmaceuticals.
Quantum Ventures scaling
In 2020 we have seen more forward thinking strategic investors being involved as they can see it will be impacting their businesses. This has also built hype in 2020 / 21 and investment has risen from millions to tens of millions as understanding and strategies are progressing. We have seen this evolution in other technologies like Electric Vehicles where we first saw tentative investments and installing charging sockets at petrol stations to now large scale industry investment and change. There are other examples in tech and business model such as Internet of Things in applications such as industrial, health and consumer solutions.
Quantum has reached the stage of development of trials and investment in the potential solutions to major business and society challenges. Investment is growing from strategic corporate venture units. Quantum ventures need to understand and engage with corporates and their venture units.
The National Quantum Computing Centre was launched in September 2020 and seeks to address the challenges of scaling and accelerate the quantum computing roadmap towards commercialisation of the technology.
The pathway to commercialisation is lengthy; hardware development costly and systems integration challenging. Although quantum computing is expected to be a disruptive technology with wide economic impacts across all high-value sectors of the economy, broad commercial applications of quantum computing may remain several years away.
Despite this long term outlook and the need for patient capital there is no need for pessimism, the UK already has 43 quantum technology start-up companies that have raised over £135m between them, employing over 370 people, of which the majority are in quantum computing. According to NQCC research, of the key quantum computing end-user industry sectors; UK financial services, chemicals, pharma and energy contributed over £260bn to the economy with sector growth drivers of exports and internal R&D investments.
Quantum computing is upon us as time scales shorten. Tech start-ups will need to have clearer commercial models with identified market drivers in order to stand out from the rest.
At Infintec, we understand the type of support ambitious tech start-ups need – ongoing and practical help in funding and scaling.
We don’t signpost, we deliver.