Weekly Update #218: Quantum Computing - will Microsoft's market entry lead to VC investment?

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Hello Investors,

Quantum Computing - will Microsoft's market entry lead to VC investment?

Yesterday, Microsoft made a handful of announcements related to quantum computing, the bulk of which will make quantum computing more readily accessible to end users.

What is quantum computing? For a good review, I highly recommend a piece by Andrew Schoen, a Principal at VC firm New Enterprise Associates ("Quantum Computing: Time For Venture Capitalists To Put Chips On the Table?"). But in short, Quantum Computing could solve complex math and data problems that currently require substantial time and computing power.

Microsoft plans to not only release a programming language for their quantum computers, but may also make the computing power available via the Microsoft Azure cloud service. For example, an Azure customer could upload a large dataset onto the cloud, and execute some algorithm or analysis that would in turn be calculated by a remote Microsoft quantum computer.

The sector is nascent, from a venture capital perspective. Schoen argues "The capital intensity, long timeline, and risks associated with an investment in quantum computing are not appropriate for an average-sized VC firm with typical fund dynamics. However, for VC firms that meet a certain set of characteristics, investing in quantum computing could be an interesting opportunity as part of a thoughtfully constructed portfolio." The current list of VC-backed is quite short. There appear to only be three quantum computing startups that have raised meaningful venture capital:

Source: Crunchbase, EquityZen estimates

With Microsoft leading the charge of making quantum computing available to the masses, however, the time may coming soon.

In other news...

Phil Haslett
Founder + Head of Investments, EquityZen


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