D-Wave Systems, a Canada-based quantum computing technology developer backed by IT equipment producer NEC, agreed to a $1.6bn reverse merger on Tuesday with special purpose acquisition company DPCM Capital.
Founded in 1999, D-Wave produces full-stack quantum systems supporting hardware, post-processing software and developer tools.
The deal values the company at $1.2bn pre-merger and the merged business, D-Wave Quantum, will take the New York Stock Exchange listing acquired by DPCM in a $300m initial public offering in late 2020.
The deal is backed by $40m private investment in public equity financing provided by NEC, investment bank Goldman Sachs, PSP Investments, Yorkville Advisors and Aegis Group Partners.
The transaction is the third large reverse merger agreed by a corporate-backed quantum computing technology developer in the past year, after IonQ in March and Rigetti in October.
Corporate-backed deals in quantum computing over the past decade were originally slow, according to Pitchbook data. That changed over the past couple of years, however, with an explosion both in terms of deal count and investment volume.
In 2019, there were seven rounds representing a total of $27m of funding raised, but the following year there were 18 deals representing a total of $469m. The amount of corporate-backed capital into quantum technology rose higher in 2021, to $750m across 14 rounds.
The largest round in the sector over the past year was for quantum computing technology developer PsiQuantum, which hauled in $450m through a July series D round featuring software provider Microsoft’s corporate venturing subsidiary, M12.
Other notable deals in 2021 included rounds for Quantum Machines, which received $50m in a September series B round led by electronics manufacturer Samsung, and QC Ware, which secured $25m from investors including Samsung and chemical producers group Koch Industries and Covestro the same month.
Alan Baratz, D-Wave’s chief executive, said: “Today marks an inflection point signalling that quantum computing has moved beyond just theory and government-funded research to deliver commercial quantum solutions for business.
“D-Wave, along with DPCM Capital and our new and long-term investors…collectively believe that this is not a moment of hope or science. Instead, we believe this event represents a moment of practical value creation for customers and for investors.
“We are working with our customers to identify applications with high likelihood of quantum value and to translate those problems to run on the quantum computer and then validate that value. We expect this ‘value creation and validation’ to accelerate as an increasing number of diverse use cases emerge – creating a robust cycle of product delivery, application development and market growth.”
NEC had invested $10m in D-Wave in 2019 following approximately $202m in earlier funding from backers including investment and financial services group Fidelity, Goldman Sachs, In-Q-Tel, PSP Investments, DFJ, BDC Capital and Bezos Expeditions.
