From an investor’s perspective, the gargantuan potential of quantum computing is magnetic, but there are some very good reasons to stay away. Rigetti, the poster child of quantum startups, raised $64m in highly syndicated rounds from large investment funds, each limiting their exposure to very small proportions of their funds. The high syndication an indicator that the capital needed to develop quantum hardware is very high. The small proportions because whilst the potential is enormous, so is the risk.
At the UCL Tech Fund we’re used to backing technologies at the leading edge of development with high levels of uncertainty. However, as a £50m fund we’re looking for investments that have a capital efficient route to commercial success. Quantum computing didn’t seem to fit with that, until we met Phasecraft - a software developer not looking for huge amounts of capital to build futuristic hardware and with a plan that made sense for a fund like ours.
Even so, despite its enormous potential to change the world in unimaginable ways, quantum computing has so much technological risk. The emergence of NISQs has not yet proven quantum computing for useful applications, but what it has done is opened up the possibility that it might be proved. There would need to be a compelling reason for us to want to invest.
With Phasecraft it was the team
These guys are genuinely world class and in the small community of quantum theorists and algorithm developers they are leaders. There was a real buzz from their peers about the idea of them forming a company at this critical moment in quantum computing. If any team could crack the massively complex problems that lie ahead, they have the best chance possible. This was an opportunity to back a superb team, genuine leaders in their field, working on extremely hard problems. Quantum computing has the potential to solve real world problems in superconductor development, drug design, chemistry and more. It could be that great people can unlock that potential over the next few years.
As investors we know that the best people attract the best people. By starting with a super-talented core team, we believe that Phasecraft can attract the world’s best talent and grow into a best-in-class software developer for quantum computers. By investing in Phasecraft, we’re backing them to be the company that solves the hardest problems with the best people. A lot can go wrong with this type of investment, and the risk is very high, but we’re backing a world leading team and as an investor that’s a super position to be in!