D-Wave quantum computer venture to go public with $1.2B valuation

Burnaby, B.C.-based D-Wave Systems, the quantum computing company that counts Jeff Bezos among its investors and NASA among its customers, has struck a deal to go public with a $1.2 billion valuation.

The deal involves a combination with DPMC Capital, a publicly traded special-purpose acquisition company, or SPAC. It’s expected to bring in $300 million in gross proceeds from DPMC’s trust account, plus $40 million in gross proceeds from investors participating in a PIPE arrangement. (PIPE stands for “private investment in public equity.”)

Quantum computing takes advantage of phenomena at the quantum level, processing “qubits” that can represent multiple values simultaneously — as opposed to the one-or-zero paradigm of classical computing. The approach is theoretically capable of solving some types of problems much faster than classical computers.

Founded in 1999, D-Wave has focused on a type of technology called quantum annealing, which uses quantum computing principles and hardware to tackle tasks relating to network optimization and probabilistic sampling.

Although physicists have debated whether D-Wave’s Advantage system should be considered an honest-to-goodness quantum computer, it’s included among the cloud-based quantum resources offered by Amazon and Microsoft. D-Wave also has its own cloud-based platform, known as Leap.

The SPAC deal has already been cleared by the boards of directors for D-Wave and DPCM Capital. If the transaction proceeds as expected, with approval by DPCM’s stockholders, it should close by midyear. The result would be a combined company called D-Wave Quantum Inc. that would remain headquartered in Burnaby — a suburb of Vancouver, B.C. — and trade on the New York Stock Exchange under the QBTS stock symbol.

“Today marks an inflection point signaling that quantum computing has moved beyond just theory and government-funded research to deliver commercial quantum solutions for business,” D-Wave CEO Alan Baratz said in a news release.

Among the investors involved in the PIPE transaction are PSP Investments, NEC Corp., Goldman Sachs, Yorkville Advisors and Aegis Group Partners. Other longtime D-Wave investors include Bezos Expeditions as well as In-Q-Tel, a venture capital fund backed by the CIA and other intelligence agencies.

In what was described as an innovative move, the SPAC deal sets aside a bonus pool of 5 million shares for DPCM’s non-redeeming public stockholders.

D-Wave says it will use the fresh funding to accelerate its delivery of in-production quantum applications for its customers, and to build on a foundation of more than 200 U.S. patents. The company is aiming to widen its offerings beyond quantum annealing by developing more versatile gate-model quantum computers.

Emil Michael, DPMC Capital’s CEO, said the total addressable market for quantum computing services could amount to more than $1 billion in the near term, and rise to $150 billion as applications mature.

“While quantum computing is complex, its value and benefits are quite simple: finding solutions to problems that couldn’t be previously solved, or solving problems faster with more optimal results,” Michael said. “D-Wave is at the forefront of developing this market, already delivering the significant benefits of quantum computing to major companies across the globe.”