What Defines Quantum Computing Startups and Why is this Important?

With hundreds of quantum computing companies working to build the next generation of technology, it’s no surprise to see the industry continue to grow. Part of this growth comes from the many quantum computing startups that are emerging from around the globe. While a majority of these come from academia or research institutions, they all offer unique visions and designs for cutting-edge quantum technology. As the quantum ecosystem continues to expand, it may be difficult to distinguish between quantum computing startups and small businesses. knowing the difference can not only clarify more about a particular company but the quantum landscape as a whole.

What is a Startup?

While the definition of a startup is quite fluid, it usually applies to a company within its first stages of funding and operations. There are many qualities that characterize a business’ startup “identity,” including the founder financing their own company, funding from family or friends, or funding from government grants or loans. Every large Corporate we interact with today once started as a startup, comprised of a group of initial entrepreneurs. At the outset, the founders may hold many positions. Some are technical, such as a CTO, and some are from a more commercial background, typically taking a CEO role. Startups are typically able to move fast and try new approaches and technologies, offering unique advantages for customers as well as potential partners and employees.

What is the Difference Between a Startup and a Small Business?

There are no strict rules distinguishing a startup from a small business, which means it may be hard to identify one from the other. However, small businesses have their own characteristics that can help make them more definable, such as having a larger staff, not needing major investments, being self-sufficient, or having a less dynamic business model. Startups and small businesses have their own visions for whatever industry they are in. Startups plan to penetrate and take over a particular market using a more dynamic business model that can scale up with the company. In contrast, a small business plans to just stay within the appropriate market and be self-sustaining and permanent.

Because of their differences in visions and goals, these two different types of companies attract different types of investors, partners, and employees. This allows them to survive alongside each other, making the ecosystem richer and more diverse.

The Importance of Quantum Computing Startups

Quantum computing startups make up a significant percentage of the quantum industry. While many are evolving into small businesses or larger companies, the startups continue to expand the ecosystem. This is important for investors or venture capitalists, as the diversity offers more options of technology and ideas to invest in. For example, investors may look to invest in Aqemia because of their vision to impact the drug development market with quantum technology; or they may invest in Quantastica, which provides quantum simulation and algorithm software. Each of these startups, along with the rest, helps increase the richness of the quantum industry, as more individuals are adding their own knowledge and perspectives to developing this next-level technology.

Who is More Likely to be a Quantum Computing Startup?

While it may be easy to assume that all quantum computing startups are software-based, this isn’t actually true. Our quantum market data suggests the number of software-based quantum computing startups is somewhat higher than hardware-based startups, but not by much, and it depends on how many hardware players you include across the value chain. From the outside, it may look like an easier route to develop a software-based startup, as the business can harness the technology of other businesses (such as IBM or Amazon Braket), and is less capital intensive, but hardware-based companies acting as suppliers in the value chain are already demonstrating revenue-generating business models. Some examples of software-based quantum startups include QuThought, Aqemia, and Classiq Technologies. Some examples of hardware-based quantum startups include Quantum Brilliance, Qblox, and Qilimanjaro. Each has its own challenges and advantages, and without the development of both, the quantum industry wouldn’t be nearly as far advanced as it is today.




Kenna Hughes-Castleberry
Kenna Hughes-Castleberry
Science Communicator at JILA

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