European Seed Investment: Quantum Applications

Patrick Gilday
Apr 30, 2019 · 5 min read

It is still unusual to see articles about Quantum technology, even if you are a bit of a techie and when you do, it is almost always about Quantum Computing milestones — something discussed recently in the MIT Technology Review. Unlike the usual articles, I am going to steer mostly clear of Quantum Computers and instead will provide an accessible insight into Quantum Computing applications from the perspective of a seed-stage investor in Europe; reviewing four key areas of interest and the current investment landscape.

Hardware

As you probably guessed this area focuses on the quantum computer itself which will be used by all industries discussed below. Key players here include D-Wave, IBM and Rigetti. For more info about the actual computers, time-frames and key issues (number of qubits, logical qubits, noise disruption, error correction, etc.) please read this excellent post by Ewan Munro of Entropica labs.

Encryption and Communication

Quantum Encryption exploits quantum mechanical properties to complete cryptographical tasks thought to be impossible with classical communication. Not only is is impossible to copy quantum-encrypted data, but attempting to read such data causes the quantum state to be changed, allowing easy detection of eavesdropping. Quantum Key Distribution (QKD) is the most well-known application of quantum cryptography, allowing two parties to encrypt data in the quantum world, sending the photons down the fiber optic cable in superposition — securely transmitting data, without using traditional public key encryption, denying the possibility of third-party access.

Information Processing 1 — Quantum algorithms and Machine Learning

Quantum algorithms may be applied to cryptography, search and optimization, simulation of quantum systems and solving large systems of linear equations. The most famous are Shor’s efficient factorization algorithm — implying that current cryptography is insecure against a quantum-based attack and Grover’s algorithm — which speeds up the classical algorithm for unstructured search, one of the most basic problems in computer science.

Our classical computers are really good at machine learning when classifying on 2D planes (classifying between two different classes), but this becomes too difficult to do with nth dimensional classifications (classifying between different classes). Essentially, quantum machine learning provides a computational boost to tackle problems too complex for traditional computers, something explained well in the MIT Technology Review. The real world applications here are particularly exciting including mapping our brain circuitry, new drug/material discovery/design and building a complete infrastructure of connected security with biometrics and IoT devices.

Information Processing 2 — Quantum Chemistry and Simulation

Quantum chemical calculations allow the more accurate prediction of properties and spectroscopic behavior of atoms and molecules currently not possible. In practice, this can make patient-specific gene therapy (personalized drugs at scale) possible. Quantum simulation helps with this, as it does for new material discovery — simulating how a material might behave under certain real-world conditions.

Current Investment Landscape

There has been a lot of focus on governmental spending in quantum technology. What is more interesting for a seed stage VC is the growth of private corporation interest and spending in the sector. Recent activity here suggests a tipping point is being reached, moving quantum out of the purview of academic theory and into a practical business. I mentioned D-Wave and IBM above, the latter intends to open cloud-based QC to those who can’t afford a QC of their own.

Unsurprisingly, other tech giants are also moving in this space. Amazon recently announced Simone Severini, professor of physics of information at University College London, as their AWS’ Director of Quantum Computing, something Satya Nadella also highlighted as a key investment focus for Microsoft. Perhaps leading the charge for Big Tech in Quantum’s Deep Tech is Google who recently announced a partnership with NASA to reach quantum supremacy. Many have doubts over Google’s ability to act upon their announcement, however, what is undoubtedly is that the desire to plant the flag of in the sector is there.

Timeline: recent European investment in Quantum Technology

At the Quantum Flagship event, I attended in October one popular school of thought was that whereas the state might drive funding in China, matched by the Big Tech players in the States, in Europe grassroots funding would be crucial to driving quantum innovation and this is where venture funding comes into play. Among some very nice funding rounds including; a £2m seed round for KETS Quantum Security, $5.5m seed round in Quantum Machines, $18.8m funding for Cambridge Quantum Computing (both looking at quantum algorithms), a 10.$m Series A for Post Quantum, the stand out was the 2018 $65m acquisition of network encryption focused ID Quantique by SK Telecom. The increasing weight of the industry is exemplified by the recent establishment of Quantonation — a purely Quantum focused early stage fund in Paris and the International Quantum Computing Business Conference also in Paris.

Indeed, I recently oversaw a Cambridge University project delivered by 5 Judge Business School students which highlighted over 35 promising startups within European Quantum Computing across the aforementioned categories. Much of Quantum is still a long way off — important QC milestones currently stretch into the 2040's and beyond.

But at a European venture level and particularly for us at Speedinvest, Quantum is already here. We would like anyone interested in the space, be it a founder, researcher or investor to get in contact with us and see how together we can bring the potential of Quantum to life!

Email: marcel@speedinvest.com

5 focused investment teams. 20 in-house, operational experts. 100% committed to your success.

Patrick Gilday

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Speedinvest
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