IQM–OpenOcean–Lakestar State of Quantum 2024: Quantum resilient to investment slowdown with widespread government backing

London, UK, Espoo, Finland, 30 January 2024‍

Today, IQM Quantum Computers, a global leader in building quantum computers, OpenOcean, a leading European venture capital firm, and Lakestar, the leading European technology investor, have released the OpenOcean–IQM–Lakestar State of Quantum 2024 Report, in association with The Quantum Insider (TQI). The report shows that quantum computing has been resilient to overall downturns in the global economy, with continued growth backed up by strong government backing and continued investment momentum in Europe.

This investment pullback is attributed to an overall decline in technology investing, and not to falling interest in quantum technology. Outside the US, quantum investments showed resilience in 2023, and governments are picking up the slack with major new national quantum funding commitments. This report draws insights from in-depth interviews with a wide range of enterprise end users, vendors and research institutions, including HSBC, Dell, Federal Reserve, Citi & Moderna. It analyses investment data from TQI and tracks the continued progress in national quantum computing centres across Europe and North America.

The report aims to provide clarity on key themes around the traction of quantum computing use cases and national quantum strategies, the interplay with AI, and recommendations for developing quantum-readiness.

The latest TQI data reveals several notable year-on-year comparisons:

• A 50% drop occurred in venture capital invested into quantum startups from $2.2 billion in 2022 to around $1.2 billion in 2023 globally – Europe, the Middle East and Africa grew by 3%, the United States saw an 80% decline, and the APAC region declined by 17%.
• Over 30 governments have committed to more than $40 billion in public funding commitments to quantum technologies which will be deployed in the next 10 years.
• Of these governments actively involved in quantum technologies, over 20 have formulated coordinated policies, funding, and roadmaps.
• National labs and quantum computing centres have accelerated practical applications with dedicated quantum computing centres and hubs emerging.
• Annual government funding commitments to quantum represent an estimated 2x the quantum VC investment peak in 2022.

Key themes from interviews with thought leaders across the quantum value chain:

• Developing internal quantum expertise and readiness is becoming a top priority for leading organisations across sectors like financial services and pharmaceuticals.
• Experts are aligned on the short-term importance of quantum hybrid systems, recognising their potential to unlock immediate value for businesses.
• There is not a quantum winter, but the investment landscape is certainly colder. Start-ups need to be realistic, and manage their funding roadmaps carefully.
• Governments are important sources of patient capital to provide long-term backing for quantum, and overcome the high initial costs of Research & Development.
• Artificial intelligence and quantum computing are technologies that can benefit from each other, with lots of early research into use cases like generative chemistry and digital twins. However, Investors should take care that the hype around AI does not cannibalise attention on quantum.

Preparing for the quantum era

Over 300 end users across sectors like healthcare, financial services, and material sciences are already exploring use cases and strategically building quantum readiness. With quantum advantage potentially years away, these leading organisations are taking steps, today, to prepare for the long runway towards commercial quantum computing.

Dr. Jan Goetz, CEO and Co-founder of IQM Quantum Computers

"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.

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.”

Ekaterina Almasque, General Partner at OpenOcean

“While venture funding temporarily cooled, our research confirms the steady momentum towards the quantum era. The findings signal that 2024 can become a year of growing confidence in quantum computing's potential, despite still a relative lack of private capital flowing into that space. Significant use cases emerging to unlock its commercial promise. Having said that, achieving widespread adoption requires a full quantum technology stack to evolve.

We have a chance to establish trillion-dollar quantum software leaders, but only by ensuring hardware, algorithms and interfaces serve particular real world use cases. As macro conditions evolve, pragmatic innovation focused on quantum-business fit will be key. Many industries that are not preparing for the quantum era would risk falling behind in the quantum future.”

Stephen Nundy, Partner & CTO at Lakestar

“The quantum hype cycle climbed quickly and has recalibrated back closer to reality. But the greater collaboration emerging between software and hardware players on bridging immediate needs reaffirms that quantum-readiness remains an inevitability.

To fully realise quantum's potential, we must take a strategic, full-stack approach - ensuring hardware, software, interfaces and talent develop in harmony. This requires actively partnering with corporate end-users to understand commercial needs and co-create domain-specific solutions. If we can come together to solve these engineering challenges, the chance remains to build the next era's leading multi-billion dollar quantum corporations.”