A Toronto startup aiming to build the world’s most powerful computer by harnessing the quantum properties of light has raised $32-million from leading early stage financiers in Canada and the United States.

The financing for three-year-old Xanadu Quantum Technologies Inc. was led by Ontario Municipal Employees Retirement System (OMERS) and backed by Canada’s Georgian Partners Inc., Radical Ventures and Real Ventures, American billionaire venture capitalist Tim Draper and Silicon Valley Bank.

They add to the surge of investment in quantum computers, an emerging class of technology that many scientists, corporate leaders and investors believe will have transformative effects on the sector. If the technology proves to be viable, quantum machines stand to perform far more complicated calculations, at exponentially faster speeds, than conventional computers.

Xanadu joins giants Google, Microsoft Corp., Intel Corp., IBM Corp., NEC Corp., Fujitsu Ltd. and Alibaba Group Holding Ltd., plus well-financed startups including Rigetti Computing and D-Wave Systems Inc., in the race to build the first machine that demonstrates “quantum supremacy,” by outperforming classical computers. Meanwhile, China and the United States have committed billions to quantum-computing strategies, while the Canadian government in April committed $41-million to domestic quantum projects.

Several developers say quantum supremacy could be achieved within one to five years. While the machines won’t be at their full potential, they could be powerful enough for customers to start using.

Xanadu represents the first quantum bet for OMERS and Georgian, two of Canada’s largest venture-capital investors.

“This is one of those few investments we’ve come across that literally changes almost every aspect of technology we deal with today,” said OMERS Ventures managing partner Sid Paquette. “Think of the monumental technologies – the internet, mobile. We think quantum will be one of those as well.”

It’s also a rare early stage investment for Georgian, which usually backs software companies already generating millions of dollars in revenue. Quantum is more familiar territory for Mr. Draper; the venture-capital firm he co-founded, Draper Fisher Jurvetson, backs Burnaby, B.C.-based D-Wave, the most advanced player in commercializing quantum computing.

What sets Xanadu apart is its approach. Many quantum computers require shed-sized chambers where specialized chips are cooled to just above the coldest possible temperature, minus 273.15 Celsius, so subatomic particles in the chips experience the quantum mechanical effects that are needed to unleash their computing power.

Xanadu, which raised $9-million in a 2018 financing also led by OMERS, instead uses a process called “squeezing light,” by firing lasers that enable photons to generate quantum effects on a thumbnail-sized chip. The method, based on Australia-born founder and CEO Christian Weedbrook’s PhD thesis at University of Queensland, happens at room temperature. That means Xanadu – which achieved light-based quantum effects on a chip last September, a feat that no one else has accomplished – believes it can develop its quantum computer much quicker and cheaper than others.

“From an architectural point of view you can imagine all the electronics that don’t have to be in [our computer to make it] colder than outer space,” Dr. Weedbrook said.

But Xanadu needs to take “three giant steps,” before it can fully commercialize its technology, said Massachusetts Institute of Technology mechanical engineering and physics professor Seth Lloyd, a leading expert in quantum computing who advises the startup:

“They need to improve the squeezing by a significant amount and show they can get many pulses of this squeezed light into their device, and then control these pulses … [then] show you can actually do something that’s useful to people with the device. Given what they’re trying to do, they’re on schedule. Any one of those things could fail, which is the nature of science and life and being a startup.”

Meanwhile, the output from Xanadu’s chips still needs to go through a supercooling state, but Mr. Weedbrook says he believes that can be engineered so it too happens at room temperature, allowing chips to be embedded in customer devices. Other startups including PsiQ and IonQ are also developing quantum computers that don’t require supercooling.

Xanadu is looking to generate revenue in the short term with proof-of-concept projects for a few customers including Bank of Montreal, and by offering cloud-based software that customers can use to test out not only its quantum technology, but that of its competitors. Lawrence Wan, chief architect and head of enterprise platforms with BMO, said Xanadu’s approach “looks to be more commercially viable and scalable” than others.

The Globe and Mail, June 24, 2019