PsiQuantum raises $450 million to build its quantum computer

Quantum computing startup PsiQuantum has landed a $450 million investment led by funds and accounts managed by BlackRock, amid increased investor interest in the next-generation computing technique.

The funds will be used to expand its team, which currently has about 150 people, and to build a 1 million-quantum-bit machine, said Jeremy O’Brien, co-founder and chief executive of the Palo Alto, Calif.-based company. “Within this decade, we’ll be seeing the world-changing applications of that technology,” he said. Such commercial-grade quantum computers don’t yet exist, but eventually they could solve problems many millions of times faster than a conventional computer and potentially solve problems a regular supercomputer could never solve.

PsiQuantum has raised $665 million since its founding in 2016 and its Series D funding brings its valuation to $3.15 billion, Dr. O’Brien said. The investment is validation of the company’s approach to building its quantum computer, which will use particles of light to store information, he said. The company is building the machine with help from GlobalFoundries, one of the largest specialist chip-production companies, Dr. O’Brien said.

Investors and corporations have been betting heavily on quantum computing over the past three years, according to Boston Consulting, a management consulting firm. The technology is expected to generate up to $850 billion in annual business value by 2040, for use cases ranging from fraud prevention to drug discovery and portfolio optimization, according to the consulting. The term business value includes both increased revenue and cost savings.

Globally, quantum-computing companies landed $779.3 million in venture financing across 77 deals in 2020, surging from $288.3 million in 69 deals in 2019, according to research firm PitchBook Data.

This year, quantum-computing companies raised $262.8 million through July 23, according to PitchBook, which means PsiQuantum’s deal increases total funding so far in 2021 to more than $700 million.

By harnessing quantum physics, quantum computing has the potential to sort through vast numbers of possibilities in nearly real time and come up with a probable solution. 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.

PsiQuantum plans to build its machine using photons, or particles of light, as qubits. One of the advantages of this method is that it could help the machine perform reliable calculations without errors, said Peter Shadbolt, co-founder and chief strategy officer. The company’s other two co-founders are Mark Thompson, who is chief technologist, and Terry Rudolph, chief architect. All of the founders have doctorates and backgrounds in either researching or teaching physics and electrical engineering.

One of the challenges that PsiQuantum will need to overcome is that it will need to introduce new, higher-performance components into its existing manufacturing process. One example of such a component is a more efficient waveguide, which is used to route photons inside the chip. “We’re putting new devices into the chip that we don’t have,” Dr. Shadbolt said.

PsiQuantum struck a deal with GlobalFoundries, announced in May, to build its quantum chips at GlobalFoundries’ manufacturing facilities. GlobalFoundries sells chips to more than 250 customers globally, including the U.S. Defense Department and companies such as Qualcomm, Broadcom, Bosch and Intel. The Wall Street Journal recently reported that Intel is in talks to buy GlobalFoundries for about $30 billion.

Other companies, such as International Business Machines, Alphabet Google and IonQ are building quantum computers using different technological approaches.

PsiQuantum has a unique advantage compared with its peers because it is partnering with a chip foundry to manufacture its quantum processors using the latest semiconductor equipment, said Chirag Dekate, vice president analyst at technology research firm Gartner. Some other companies need to build their own chip-fabrication facilities.

PsiQuantum doesn’t have an early-stage quantum computing prototype yet that customers can test.

However, the startup says it has customers in sectors ranging from healthcare to electronics and transportation that are paying the company to identify use cases and algorithms for quantum computing. PsiQuantum declined to identify the customers.

Tony Kim, managing director at BlackRock, said in a statement that PsiQuantum’s technological approach is the “most promising” the firm has seen to date. The firm declined to make executives available for an interview.

Other investors in the Series D round include asset manager Baillie Gifford and Microsoft venture fund M12. Samir Kumar, managing director at M12, said PsiQuantum is the venture firm’s first quantum computing investment.

PsiQuantum’s semiconductor engineering talent was one of the main motivations for investing in the startup, Mr. Kumar said. “They have advanced to the state of being an engineering-driven company. This is not a science project,” Mr. Kumar said.