D-Wave has fallen short of financial targets and only had a handful of buyers for its expensive, shed-sized computers.
One of Canadas most heavily funded early stage technology companies, quantum computer developer D-Wave Systems, undertook a costly refinancing this year that wiped out most of the value of some long-time investors, including the U.S. Central Intelligence Agencys venture capital arm, Amazon CEO Jeff Bezos and fund giant Fidelity Investments, according to public filings and three sources.
The US$40-million financing, including US$10-million from new investor NEC Corp., came as part of a capital restructuring that cut D-Waves valuation to less than US$170-million before the receipt of funds, down from about US$450-million, the sources familiar with the company said. The Globe and Mail is not disclosing their identities as they are not authorized to speak on the matter.
Existing investors who participated including Montreal-based Public Sector Pension Investment Board (D-Waves top shareholder, with $100-million-plus invested to date), Business Development Bank of Canada and Goldman Sachs maintained their relative stakes, limiting the writedown of their holdings. Those that didnt, including the CIAs In-Q-Tel arm, Mr. Bezos and Fidelity, saw their stakes significantly devalued, by upward of 85 per cent in some cases.
Story continues below advertisement
The funding was undertaken during a transformational year for Burnaby, B.C.-based D-Wave, the leader in a global race to develop computers whose chips draw their power by harnessing natural properties of subatomic particles to perform complex calculations faster than conventional computers.
Despite raising more than US$300-million from investors to date, D-Wave has fallen short of financial targets and only had a handful of buyers for its expensive, shed-sized computers, which were mainly used by researchers to tinker with cutting-edge technology. D-Wave has generated just more than US$75-million of customer contracts in its 21 years.
Meanwhile, newer quantum computer startups are attracting buzz and financing, while giants including IBM, Intel and Google continue to develop their own quantum computers.
This year, D-Wave promoted Silicon Valley veteran executive Alan Baratz to chief executive officer, replacing Vern Brownell, to step up efforts to commercialize its technology. It parted ways with several other top executives, including its chief financial officer and senior vice-president responsible for applications and technology. Long-time board members Steve Jurvetson, a Silicon Valley venture capitalist, and ex-Cisco executive Don Listwin also left.
Mr. Baratz has earned praise from investors for shifting D-Waves strategy away from selling computers, which listed for US$15-million, in favour of offering internet access to the machines. With the recent launch of its latest processor and updated software and service offerings, D-Wave says it can help companies solve real-world business problems and deliver business value.
The company has never looked better," said Rick Nathan, managing director with Kensington Capital Partners, a D-Wave investor. "After all this time, it now feels like [D-Wave] has achieved real product market fit and is scaling with its customers. This is new, and as a long-time investor, it is great to see.
But D-Wave is still not financially self-sustaining. It was on the verge of raising significant funds from a Chinese investor that backed out when Canadian authorities arrested a top executive of Chinas Huawei Technologies in 2018. Existing investors subsequently injected US$30-million in 2019 to tide D-Wave over, but after it struggled to find new backers other than NEC, they stepped up again at the much reduced valuation.
Story continues below advertisement
D-Wave declined to comment. But evidence of the financial hit surfaced in recent public disclosures by some investors.
Regulatory filings from PenderFund Capital Managements Working Opportunity Fund show D-Wave dropped to its 11th largest investment as of June 30 from its second-largest before. The fund didnt say why, but separately disclosed it had cut the carrying value of one of its private holdings, likely D-Wave, by $22.6-million after the unidentified company did a significant equity financing at a lower [valuation] level" than prior financings.
Fidelitys annual report shows three funds that had invested $18.3-million in D-Wave valued their combined stakes at $3.1-million as of June 30, down 85.6 per cent from a year earlier. A Fidelity spokesman declined to comment.
Meanwhile, U.S. fund manager 180 Degree Capital cut the value of its D-Wave stake to US$1.2 million from US$7.7 million on Dec. 31. The U.S. fund manager paid US$5.7-million for its stake from 2008 to 2014. In a call with 180 Degree investors on Aug. 11, president Daniel Wolfe said the writedown was directly related to a financing event that repriced the company. Also, 180 Degree further revealed that D-Wave in April consolidated all outstanding shares into one class of preferred stock in a new holding company, DWSI Holdings Inc., and completed a 1-for-5 reverse stock split.
Mr. Wolfe said D-Wave has not performed, and its value has dropped materially and that fundraising has been very difficult. Sales have been difficult. But he added he was very bullish on Mr. Baratzs ability to lead [D-Wave] to the next level.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
- Global IT giant to partner with U of C on quantum computing centre - Calgary Herald - June 2nd, 2021
- A Computer Memory Based on Cold Atoms and Light - Physics - June 2nd, 2021
- Quantum Chip Market by Trends, Dynamic Innovation in Technology and 2027 Forecasts Covid-19 Analysis The Manomet Current - The Manomet Current - June 2nd, 2021
- Quantum Blockchain inks deal with cryptography expert to optimise Bitcoin mining operations - Proactive Investors UK - June 2nd, 2021
- ColdQuanta Named to IBM Quantum Network to Help Research Quantum Computing Applications - ExecutiveBiz - May 28th, 2021
- Big bang theory: Maryland company moves ahead in quantum space race - The Star Democrat - May 28th, 2021
- Quantum internet: The race is on to build an unhackable online world - New Scientist - May 28th, 2021
- Getting The Big Banks To Confront The Quantum Challenge - Forbes - May 28th, 2021
- Want to study Quantum Science? Check out the research and job opportunities, salary, job roles in this field - India Today - May 28th, 2021
- Top 10 Trends Influencing Digital Transformation in 2021 - Analytics Insight - May 28th, 2021
- RSA conference highlights 'scourge' of ransomware and takes aim at quantum computing - Verdict - May 28th, 2021
- Quantum Computing: The Chronicle of its Origin and Beyond - Analytics Insight - May 18th, 2021
- Google I/O 2021: Everything Google is announcing at this year's virtual keynote right now - TechRepublic - May 18th, 2021
- 6 'crackpot' technologies that might transform IT - CIO - May 18th, 2021
- IBM just solved this quantum computing problem 120 times faster than previously possible - ZDNet - May 16th, 2021
- Quantum computings imminent arrival in Cleveland could be a back-to-the-future moment: Thomas Bier - cleveland.com - May 16th, 2021
- Precision Is Natures Gift to Technology - The Wall Street Journal - May 16th, 2021
- Protecting Powerlines And Pipelines: The Quantum Solution - Forbes - May 16th, 2021
- Quantum Blockchain Technologies could help transform the digital economy as we know it - Proactive Investors UK - May 16th, 2021
- Aehr Test Systems Appoints Technology Industry Veteran Fariba Danesh to its Board of Directors - GlobeNewswire - May 16th, 2021
- Researchers confront major hurdle in quantum computing - University of Rochester - May 5th, 2021
- GCHQ boss is right to be keeping his eye on quantum computing - Verdict - April 27th, 2021
- IonQ Announces Full Integration of its Quantum Computing Platform with Qiskit - CIO Applications - April 27th, 2021
- Meet the Barclays MD working to transform finance through distributed ledgers and quantum computing - Business Insider - April 27th, 2021
- These Emerging Technologies Interest Developers the Most - Dice Insights - April 27th, 2021
- Australia and India team up on critical technology - ComputerWeekly.com - April 22nd, 2021
- NEC, D-Wave and the Australian Department of Defence Collaborate on Quantum Computing Initiative - StreetInsider.com - April 22nd, 2021
- Graphs, quantum computing and their future roles in analytics - TechRepublic - April 9th, 2021
- 615 Million Euros Awarded to Quantum Delta NL for Quantum Research in the Netherlands - HPCwire - April 9th, 2021
- The World Awaits the First Powerful Quantum Computer - Analytics Insight - April 8th, 2021
- Quantum computers, like one coming to Cleveland Clinic, can help create medical breakthroughs but still are i - cleveland.com - April 8th, 2021
- Know about How to build a Probabilistic Computer and more! - Analytics Insight - April 8th, 2021
- IBM, Cleveland Clinic Team Up on Quantum Computing and a Healthcare Discovery Accelerator - Morning Brew - April 8th, 2021
- QCI Expands Sales and Marketing Team to Accelerate Growth and Advance Enterprise Adoption of Quantum Computing - GlobeNewswire - April 8th, 2021
- Quantum Week 2021 Unveils the Latest in Quantum Computing and Engineering - PRNewswire - March 24th, 2021
- What is a quantum computer? | New Scientist - March 24th, 2021
- Quantum supremacy: Google says its computer did a 10,000 ... - March 24th, 2021
- Texas Warned Us What Quantum Computers Will Do To The Power Grid - Forbes - March 24th, 2021
- Japan's first leading-edge quantum computer to be installed this year - The Mainichi - The Mainichi - March 24th, 2021
- Crucial Milestone for Scalable Quantum Technology: 2D Array of Semiconductor Qubits That Functions as a Quantum Processor - SciTechDaily - March 24th, 2021
- Global Artificial Intelligence in Military Market (2020 to 2025) - Incorporation of Quantum Computing in AI Presents Opportunities -... - March 24th, 2021
- What is cloud-based quantum computing and How does it work? - Medium - March 24th, 2021
- Will Quantum Computers Break Bitcoin and the Internet? Heres the Outlook From Quantum Physicist Anastasia Marchenkova - The Daily Hodl - March 24th, 2021
- UAE To Add A New Milestone by Building Its First Quantum Computer - Al-Bawaba - March 24th, 2021
- Quantum AI & Quantum Brain: The Imitation Game Of The Future - Analytics Insight - March 24th, 2021
- Novel Thermometer Leads to Quantum Leap in Future Computing, Thermodynamics - Science Times - March 24th, 2021
- Are quantum computers good at picking stocks? This project tried to find out - ZDNet - March 21st, 2021
- Quantum computing is finally having something of a moment - World Finance - March 21st, 2021
- How and when quantum computers will improve machine learning? - Medium - March 21st, 2021
- After the Govt's Big Allocation on Quantum Technologies in 2020, What Next? - The Wire Science - March 21st, 2021
- Quantum computing: Honeywell just quadrupled the power of its computer - ZDNet - March 14th, 2021
- After merger, College Park startup IonQ plans to go public with $2 billion valuation - The Diamondback - March 14th, 2021
- Quantum computing company D-Wave Systems secures $40M in government funding - IT World Canada - March 14th, 2021
- Europe moves to exclude neighbors from its quantum and space research - Science Magazine - March 14th, 2021
- After year of reset expectations, D-Wave secures $40-million from Ottawa for quantum computing - The Globe and Mail - March 14th, 2021
- Can Photonic Computing Solve The Rising Cost & Energy Issues Of AI? - Analytics India Magazine - March 14th, 2021
- Cambridge Quantum Computing's entanglements are at the heart of a new technological era - Cambridge Independent - March 8th, 2021
- Explainer: What is a quantum computer? | MIT Technology Review - March 8th, 2021
- What is Quantum Computing | Microsoft Azure - March 8th, 2021
- UK Research and Innovation Initiative to Invest 153M in Quantum Tech which will Significantly Impact Financial Services - Crowdfund Insider - March 8th, 2021
- Quantum Computing & Technologies Market Expected to Grow at CAGR 32.5 % and Forecast to 2027 KSU | The Sentinel Newspaper - KSU | The Sentinel... - March 8th, 2021
- NC Central University is added to IBM's HBCU quantum computing program - WRAL Tech Wire - February 24th, 2021
- Global Cryogen Free Dilution Refrigerators Market Expected to Reach USD 211.4 Million by 2027 With A CAGR Of 9.1% | Growth Market Reports - PRNewswire - February 24th, 2021
- IBM adds 10 historically Black colleges and universities to quantum computing center - TechRepublic - February 22nd, 2021
- bp joins the IBM Quantum Network to advance use of quantum computing in energy - Green Car Congress - February 22nd, 2021
- How researchers are mapping the future of quantum computing, using the tech of today - GeekWire - February 22nd, 2021
- Physicists Need to Be More Careful with How They Name Things - Scientific American - February 22nd, 2021
- The vital, the obvious and the hopeful: Tech trends to watch in travel - PhocusWire - February 22nd, 2021
- Experience: With a PhD, the plan is to expand human knowledge - The Guardian - February 22nd, 2021
- IBM and ExxonMobil are building quantum algorithms to solve this giant computing problem - ZDNet - February 14th, 2021
- Kangaroo Court: Quantum Computing Thinking on the Future - JD Supra - February 14th, 2021
- New EU Consortium shaping the future of Quantum Computing USA - PRNewswire - February 14th, 2021
- Quantum Computers May Steal Bitcoin by Deriving Private Keys once Advanced Enough in 5-30 Years, Experts Claim - Crowdfund Insider - February 14th, 2021
- 2020 Quantum Communications in Space Research Report: Quantum Communications are Expected to Solve the Problem of Secure communications First on... - February 14th, 2021
- A Swiss company claims it used quantum computers to find weakness in encryption - HT Tech - February 14th, 2021
- Analysis: Opportunities and Restraint of the Quantum Computing Market KSU | The Sentinel Newspaper - KSU | The Sentinel Newspaper - January 31st, 2021
- Physicists Are Reinventing the Laser - Gizmodo Australia - January 31st, 2021
- Quantum computing research helps IBM win top spot in patent race - CNET - January 14th, 2021
- Error Protected Quantum Bits Entangled: A Milestone in the Development of Fault-Tolerant Quantum Computers - SciTechDaily - January 14th, 2021
- You can find a $180K solar-powered car, qubit controls, and breathing tips at the NL Tech Pavilion at CES 2021 - TechRepublic - January 14th, 2021