Finnish startup IQM, which is developing quantum computing hardware, has raised an €11.45m seed round from a group of investors including Maki.vc, MIG Funds, OpenOcean, Tesi (the Finnish industrial investment fund), and Vito Ventures.

It is one of the rare VC investments in quantum computing in Europe. Most of the big fundraising in this sector has tended to be in the US and Canada, and one promising quantum company, PsiQ recently announced it was moving to Silicon Valley to raise money.

“Clearly this is a moonshot. The risks are extremely high when investing in quantum.”

IQM, a spinout from Finland’s Aalto University and the VTT Technical Research Centre of Finland could, however, be the start of a wave of investors taking the plunge.

“Quantum is now at the stage where it could really start to take off,” says Ilkka Kivimaki, partner at Maki.vc, which has a €80m fund focused mainly on early-stage deeptech investments.

“Clearly this is a moonshot. The risks are extremely high when investing in quantum, but out of all the possible investments this was the one we felt was closest to being able to commercialise the technology,” he says.

A recent analysis by BCG suggests that the quantum industry could be worth $2-5bn in the next five years, rising to $50bn within a decade.

But while governments have pledged large sums of money to quantum research (including a €1bn EU project, a $10bn project in China and $1.2bn in the US) venture investors have been slower to get involved.

“For Europe in general, the challenge is to find enough investors interested in the sector, who understand the specificities… it’s about whether within the next 2 or 3 years there’s going to be enough investors who are ready to put significantly more money into the field, that’s going to keep companies on track here,” said Christophe Jurczak, CEO of Quantonation, a French early-stage venture fund in a recent interview published by Science Disrupt.

Quantum is a difficult sector for investors to judge, not least because there are several rival technologies being tried out for quantum computing and it is not yet clear which of these will become predominant.

Click here for Sifted’s quick guide to quantum technologies. 

IQM’s works, for example, includes breakthroughs in thermal management that allows quantum computers to work faster and with greater accuracy. Many of the big technology companies such as Google and IBM have focused on superconducting circuits, and this is where some of the biggest funding rounds have been raised (see below). IQM’s technology also falls into this camp, and Kivimaki believes this branch of quantum has the highest probability of being able to build commercial quantum computers.

However, a number of rivals technologies are also gaining attention, most notably using trapped ions as qubits, or the building blocks of quantum computers. Honeywell, the engineering conglomerate, is building quantum computers based on this technology.

Other research groups, including PsiQ, have had promising results from photon-based technologies.

Some of the main quantum technologies and the companies developing them:

Superconducting chip

• D-Wave Systems (Canada) has raised €80.4m to date
• Rigetti Computing (US) €65.4m to date
• Quantum Circuits (US) has raised €16.4m to date
• Google (US)
• IBM (US)
• Oxford Quantum Circuits (UK)

Trapped ions 

• IonQ (US) has raised €18.2m  
• AQT (Austria) Undisclosed amount of pre-seed funding, less than €1m. 
• Honeywell (US)

Photon

• Xanadu.ai (Canada) has raised a total of €35.2m
• PsiQ (UK) The British group recently moved to Silicon Valley to raise money

Silicon

• Silicon Quantum Computing (Australia) has raised $60m

Topological qubits

• Microsoft (US)

Neutral atoms

• Atom Computing (US)

Many of the recent funding rounds have gone to companies developing software for quantum computers rather than to hardware makers:

Quantum software funding

• Cambridge Quantum Computing (UK) has raised a total of €59.6m
• 1Qbit (Canada) has raised €32.7m
• Zapata (US)  raised $21m in a Series A round 
• QC Ware raised €5.9m to date 
• Riverlane (UK) has raised €4m to date
• Strangeworks (US) raised a $4m seed round

More on the emerging quantum ecosystem.

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