At the end of September, Rigetti reported $212 million in assets and a net loss of $49 million for the year to date. The SPAC deal was originally expected to raise $458 million, raising Rigetti’s valuation to about $1.5 billion, but after some investors pulled out, it raised little more than half the expected amount.
Quantum computing is a particularly precarious investment area. The technology, intended to speed up computer processing by using quantum mechanics to solve complex problems, probably won’t be widely usable for years to come. Standards in pricing and business practices have yet to be solidified. And while companies like Volkswagen are experimenting with quantum computing, products and demand are not yet well established.
“In a sense, SPACs are ideal for a company that has tremendous potential but will take some time to mature,” D-Wave CEO Alan Baratz told Fast Company of the August 2022 merger. a SPAC you are able to tap into the funding sources in the public markets to accelerate your growth and do so based on the future potential.” At the end of September, D-Wave reported $39 million in assets and nearly the same in net losses for the first nine months of 2022, but the company has signed a deal with an endowment fund to provide an additional $150 million over three years. given on this story.
Companies stick to the SPAC paths they’ve taken and some have significant reserves. Peter Chapman, president and CEO of IonQ, says the company merged with a SPAC to raise the “substantial” capital it needed. The company reported that it had $556 million in cash in September and investments and losses of $30 million for the year to date.
“IonQ is making excellent progress at a time when other companies in our field are slowing down,” Chapman told WIRED in an email. The company is still looking for dozens of positions, has worked with Dell and GE, and has enough cash to keep going, Chapman says. “Based on our performance to date, we continue to believe that the money we raised last year will fund IonQ for the foreseeable future.”
Quantum computing projects at giants like Alphabet and IBM can benefit from revenue from their established companies. But smaller companies going all-in on quantum need other sources of funding to ensure their long-term survival. SPACs have been an attractive source of money, but some companies that tapped them could face the consequences.
“The unfortunate thing about SPACs is that they allowed companies to rush into the public markets before they should have,” said Charles Kane, a lecturer in international finance and leadership at the Massachusetts Institute of Technology. “All SPACs aren’t bad, but a lot of them were bad because they should never have been public to begin with.”
Kane says this could spell trouble not only for those who bought stocks, but also for the prospects of companies trying to develop expensive, labor-intensive technologies. “Their access to capital is more limited once they are a publicly traded company,” says Kane. “That has consequences for their ability to develop further.”