Private investment into quantum tech plummeted last year

30 Jan 2024

Image: IQM/OpenOcean/Lakestar/The Quantum Insider.

A new report claims private investment fell by roughly 80pc in the US, but that quantum technology is still on a positive trajectory thanks to government contracts and commitments.

Private investment into quantum computing start-ups saw a steep decline last year, raising concerns for the future of early-stage companies in this sector.

That’s according to a new report analysing the global quantum sector last year and the outlook for 2024. The State of Quantum report claims venture investments into quantum technology soared to more than $2bn in 2022, but fell by roughly 50pc worldwide in 2023.

This report was developed by IQM Quantum Computers, OpenOcean and Lakestar, in partnership with The Quantum Insider. It claims that quantum technology is moving beyond theory and that start-ups are transitioning from the lab to the market. More quantum research centres have been founded, showing a growing interest by governments into this technology.

The State of Quantum report suggests that the decline in private investment does not mean there is a “quantum winter” and attributes the drop to a general slowdown in venture capital and the deep-tech market.

“Quantum technology remains a niche sector, accounting for less than 1pc of total VC funding,” the report said. “So, while the quantum technology industry is adjusting after a period of heightened investment, it is not entering stagnation and industry insiders maintain a cautiously optimistic outlook for its future trajectory.”

George Gesek, the CTO and co-founder of QMware, said this is “nothing like a quantum winter” and does not compare to the “quantum ice age a decade ago when very few investors would go near quantum technology”.

“Now we are in an era where investors recognise the opportunities available with quantum and are rushing to back the tech, anxious about missing the arrival of a quantum spring,” Gesek said.

Despite the positive outlook of the report, some interviewees have concerns that early-stage quantum start-ups will struggle as they progress to series B funding rounds and beyond.

The report also claims that the decline in private investment is being “picked up” by government-backed funding commitments and contracts, which are “bridging the gap in investor apprehension”.

The analysis claims that governments have committed more than $40bn into quantum technology over the past 10 years. Ireland is also taking a greater interest in quantum technology, as it revealed a national strategy last year that aims to harness research across the country to create a competitive advantage over other global players in this field.

“As governments adopted an increasingly critical role in quantum technology, so did quantum national labs and research facilities across Europe, North America and beyond, advancing its development from theoretical quantum research to initial practical application,” the report said.

In terms of private investment, the report claims that the US saw the biggest decline, with 2023’s venture funding being roughly 80pc less than it was in 2022. The report noted that 2022 was a “significant year for quantum technology investments” in the region.

The Asia-Pacific region saw a decline of roughly 17pc last year, while Europe, the Middle East and Africa was the only region to have a boost in overall private investment, being roughly 3pc higher last year than in 2022.

10 things you need to know direct to your inbox every weekday. Sign up for the Daily Brief, Silicon Republic’s digest of essential sci-tech news.

Leigh Mc Gowran is a journalist with Silicon Republic