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Globe and Mail Reports D-Wave May Be Facing Cash Crunch

D-Wave

In the latest setback for quantum technology companies that recently listed on major stock exchanges, the Globe and Mail is reporting that D-Wave, a quantum computing pioneer based in Canada, may be facing a cash crunch just six months after going public.

The company, which has raised over $350 million from investors and received millions in aid from the Canadian government, has spent almost a quarter century years developing quantum computers. Despite revenue from 63 clients, including huge customers such as Mastercard, Deloitte, and Save-On-Foods, D-Wave is not producing significant revenue to cover expenses, according to the Globe and Mail.

Experts speculate the setbacks across quantum may mean that quantum tech startups may have went public too early, or that they simply fell victim to terrible timing by listing during one of the toughest economic period that included soaring inflation and tighter monetary policies. D-Wave also faces stiff competition with companies developing machines that could surpass D-Wave’s capabilities.

“There’s going to be a rush to the exits by some and who knows what happens to the price then,” said former D-Wave director Michael Brown, told the Globe and Mail.

D-Wave’s key funding source is a line of credit with Lincoln Park Capital Fund, which permits the company to draw up to $150 million in exchange for the issuance of shares. However, there are limitations to this funding source, as D-Wave can only access a limited amount of cash daily and Lincoln Park can only own up to 9.9% of the company. Additionally, if the stock falls below $1 per share, D-Wave is prohibited from using the credit line. With shares closing at $1.58 on Friday, it remains unclear how many unlocked investors might sell and what impact this could have on the stock price.

The Canadian government has already shown a keen interest on D-Wave’s continued contributions to the nation’s robust quantum potential. The government bolstered D-Wave with a $40 million investment in 2021 and the company plays heavily in the country’s quantum strategy, the paper reported.

Revenue — and large streams of it — are necessary to avoid the crunch, experts told the newspaper.
“They need a strategy to show they can pay their bills and how they’ll survive” and create shareholder value, Daniel Wolfe, president of Montclair, N.J.-based 180 Degree Capital, a D-Wave investor, told the Globe and Mail. “This company has a liquidity issue.”
In response to questions about its finances, CEO Alan Baratz stated that the company is exploring “additional financing while we continue to focus on growth.”

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Matt Swayne

With a several-decades long background in journalism and communications, Matt Swayne has worked as a science communicator for an R1 university for more than 12 years, specializing in translating high tech and deep tech for the general audience. He has served as a writer, editor and analyst at The Quantum Insider since its inception. In addition to his service as a science communicator, Matt also develops courses to improve the media and communications skills of scientists and has taught courses. [email protected]

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The Future of Materials Discovery: Reducing R&D Costs significantly with GenMat’s AI and Machine Learning Tools

When: July 13, 2023 at 11:30am

What: GenMat Webinar

Picture of Jake Vikoren

Jake Vikoren

Company Speaker

Picture of Deep Prasad

Deep Prasad

Company Speaker

Picture of Araceli Venegas

Araceli Venegas

Company Speaker

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