Quantum Defies Investment Slowdown

Investment in quantum remains strong despite a global economic slowdown, with government backing now exceeding venture capital (VC) investment, according to a new industry report.

The OpenOcean–IQM–Lakestar State of Quantum 2024 Report found that while there had been an overall decline in technology investing in the U.S., quantum investments remained steady. Elsewhere, government funding via national quantum programs bolstered a dip in private investment.

The report found there had been a 50% drop in VC invested in quantum startups from $2.2 billion in 2022 to around $1.2 billion in 2023 globally. The U.S. saw a dramatic 80% decline and the APAC region 17%. Investment in Europe, the Middle East and Africa grew by a modest 3%.

However, the overall decline was counteracted by government quantum funding commitments that represent double the quantum VC investment in 2022. More than 30 governments have committed to more than $40 billion in public funding to quantum technologies that will be deployed in the next 10 years. Of these governments actively involved in quantum technologies, more than 20 have formulated coordinated policies, funding and roadmaps.

Organizations are prioritizing quantum readiness by developing internal quantum expertise, notably in the financial services and pharmaceuticals sectors, according to the report. It also found that most businesses are looking to quantum hybrid systems to deliver short-term value.  

Related:How To Overcome a “Quantum Winter”

AI, notably generative AI, and quantum could offer mutual benefit for many use cases, including developing novel chemicals and digital twins. However, the report warns that investors need to exert caution not to buy into the hype surrounding AI to the detriment of quantum.

According to the report, despite quantum advantage being years away, more than 300 organizations in sectors including health care, financial services and material sciences are exploring use cases and building quantum readiness. But quantum end users need to prepare for the long haul.

“2023 was a year of steady technological progress resulting in larger qubit counts and initial error correction, as companies successfully published and followed quantum roadmaps. We also saw real systems deployed in national labs, steadily crossing into practical applications as we continue the journey to full-scale commercial problem-solving,” said IQM Quantum Computers CEO and co-founder Jan Goetz.

“However, the algorithmic side remains less predictable. While scaling processors is largely an engineering challenge, estimating timelines for software improvements is more dependent on hardware progress. Still, in 2023, we observed more contributions from non-quantum experts like systems engineers, bringing valuable real-world experience and bringing us closer to solving the talent bottleneck.”

While earlier fears of a quantum winter have for the most part been allayed, there has nevertheless been a cooling in quantum investment.

The report collated insights from vendors and research institutions, including HSBC, Dell, Federal Reserve and Citi & Moderna. It was produced by quantum computer manufacturer IQM Quantum Computers, VC firm OpenOcean and technology investor Lakestar, in association with The Quantum Insider.