Quantum - hype vs. traction | a look at the data

Insights into the Quantum Tech ecosystem

“Maybe it’s true that customers are cooling down somewhat. But what is more important at this stage of the industry is that investors are excited.”, wise words by a Quantum Tech founder & CEO friend of mine! Are investors excited about quantum?

Key takeaway

I’ve been talking about hype vs. facts for 3 years (sorry for the broken record). The question of quantum winter keeps coming up, and it is either right ahead of us or just behind us depending on who you ask. Most companies that I talk to seem to feel pretty good, many having secured new funding or customers in 2020.

So let’s break down where we truly stand.

Hype in itself does not have to be bad, it’s a tool used for a certain purpose, which is very useful as long as it is well understood. The key is in the nuances, for which you need to look beyond your own horizon and combine various perspectives. Who is driving the news in quantum tech? What is their purpose?

A great conversation with Mehdi Namazi, Co-Founder & CSO at Qunnect in NYC (full convo in the comments of this LinkedIn post) was our attempt at exploring that question. And my, emotional, answer was that yes we do have too much hype as investments into QC (minus the tail ends) does not justify current excitement and other QIS applications have been suffering from the lack of spotlight.

Gartner made the technology hype cycle famous and it is still one of the best tools out there to remind us of the bigger picture and reach a more sober judgment.

And that picture is crystal clear.

Large OEMs are pushing forward aggressively along the hype cycle in the hopes of creating the next large line of business. This is a valid and laudable attempt - without them, most of us would not exist.

It also leaves many others in a dust tail of quantum entanglement that makes it very difficult to assess where the rest of the ecosystem stands in terms of technological and commercial maturity. But one thing is clear, we are well beyond the peak of the “innovation trigger” - the media, large corporations and investors are in on the quantum game thus placing us somewhere along the “through of disillusionment” for the skeptics or the “slope of enlightenment” for the optimists… quantum is now an unfair race where not everybody is competing on the same speedway anymore. This does not predict a winner, though, it does not leave much room for followers.

What will determine if this is a race against the wall or for the finish line?

Qualitative vs. quantitative information.

Advances around higher qubit count or volume are great and needed - we love to read those press releases. What is more important is to look at how the ecosystem progresses beyond just these numbers.

As such it is equally important to keep an eye on basic research. Recent announcement around new potential hardware breakthroughs or the first QC OS are indicators of a healthy, growing industry. This trend seems unabated, with one notable exception - quantum algorithms.

Importantly, quantum tech users deserve more attention. If customers don’t see value in the technology then it’s not a market. This is where we should be most cautious, as new announcements by corporations using quantum tech are far and few in between and can too often be confined into the PR corner.

Incentives vs. abilities.

Who drives the news is a perspective our community needs to always be thinking about.

You have newsletters, like mine, that are great but, let’s be honest, not very important in the big picture of quantum progress. Same for the media organizations out there dedicated to quantum. And while we all hope that you find our articles, thoughts, data and facts useful, interesting or entertaining, it is our job to grab your attention. So please just ignore us!

The likes of IBM need to build the next billion dollar business. So yes, they need to make a lot of noise. And that is good, as again, without some of the large OEMs who made huge upfront investments into quantum tech, most of us would not be here today. But, do understand that they make up only a share of the market and probably a smaller one than you might think. No offense, still love you big blue.

Now that you’ve tuned out these two constituencies, who remains when it comes to driving quantum tech news? A few universities and research labs, the occasionally famous scientist, and a handful of ambitious founders. Make a list, it’s not very long. They certainly have incentives - from engaging investors to regulators and customers - to make the news. They also do have the ability.

Tracking this group you will quickly notice a different picture emerging. And while they do make bold, loud statements, more often than not they are busy building and remain quiet up until the point of a new research accomplishment, of which we continue to see many.

Adoption rates.

The crux. We don’t have good data on this, only anecdotes based on hundreds of conversations. And while the adoption rate curve plotted along a y/x axis clearly slopes upwards it surely is no hockey stick.


We’ve discussed IBM. But when is the last time you’ve heard from Google? Microsoft? Intel? Alibaba? Fujitsu?

Honeywell is still making the news. As is Amazon. Let’s be honest, though, without IBM it would be awfully quiet on the OEM quantum front.

And don’t misunderstand me, we expect more big announcements from many of them. But what does it mean when you barely get any news updates from 90% of the large vendors on a regular basis?

Let your imagination roam…


To heed the words of my founder friends from the very top of this newsletter, none of this matters just as long as investors are still excited. I think that is a fair point, though it depends on your very personal assessment on where on the maturity curve quantum tech truly falls.

In my opinion, it is, by the very behavior of the large vendors who push products, marketing and communities into the market, further along than many scientists might want to recognize.

In that light, I believe there is a misalignment between current investor interest and the offering & growth of the collective quantum tech ecosystem.

But how excited are investors currently? Our company Interference Advisors just published an analysis of investments in 2020 to date and the response is… it’s complicated (details below).

A few large deals are driving overall record numbers but if you peel back the onion individual indicators are much less promising. My view is that many large, professional investors have placed the majority of their chips on the table and while there is still some action to be had, and always the chance of the drunken uncle walking into the casino, new sources of capital will need to be tapped in order to sustain the current growth curve.

From talking to vendors, founders, CEOs, investors, academics and government officials daily, as well as above data and analysis, it is my view that:

  • Government support globally is unequivocally generous and sustained.

  • Overall sentiment across founders and vendors is slightly positive.

  • Overall customer traction is hitting a wall.

  • Investors are excited but have made most of their bets and seem to be entering a holding pattern, at least as far as large, professional VCs are concerned.

  • The technology is maturing. Algorithms aren’t.

My bottom line: Facts outweigh the hype and support a positive growth message when it comes to commercializing quantum technologies if we continue to innovate not just when it comes to the tech but also with respect to go to market channels, business models and community efforts. Oh yeah, and quantum algorithms.

The biggest shift that I am still waiting to see is for the industry to stop selling products and technology, and finally adopt a typical enterprise solution selling mindset. In my eyes this is the basis, no matter the maturity of the technology, to deliver further growth, keep investors excited and engage customers with new, larger projects. And while some talk about it, so far, very few are doing it - this is very hype and facts meet corporate reality.

What the money says

😀 Record investments globally into #quantum#tech for 2020.

🤒 Driven by two large deals PsiQuantum & XtalPi Inc. - the data paints a much more modest success for the rest of the ecosystem without them (remember those down-rounds?). Time to check our temperature.

🤔 Overall, deal count and average deal size is trending upwards. We see fewer grants and seed rounds, with a lot more A and B round raises. #venturecapital is getting professional.

😀 #QuantumComputing HW & SW takes the bulk of the money. If you separate algorithm focused ventures out they take the top spot, which is important for our overall success.

😢 All other QIS apps, even #qkd are being eclipsed. Hype alert?

😢 Top sources of capital are the USA, Japan, Europe and UK, with Israel rising fast. More depth and diversity needed.

🤔 Top targets of capital are the USA, China, UK, Finland and Israel as runner up. Europe lacking due to fewer, mature startups.

I couldn’t be prouder about our OneQuantum community efforts, especially the “Women in Quantum” chapter, which is growing beyond anything we imagined possible.

Our third WIQ Summit is on Dec 14 - 16th with the usual, awesome speakers and a special guest - Anisha, the 15yrs old founder of Q-munity, a quantum high school association with 1,500 members.

⚠️ Free RSVP at https://www.runtheworld.today/app/invitation/9041 ⚠️

Also take note of our Quantum Africa chapter - Small. Mighty. Growing fast. Maria Schuld from Xanadu will be speaking next week, contact Farai for details.

Our startup chapter continues to provide one on one mentoring for quantum tech founders. Details here and reach out to me if interested.

We have a couple new conversations up on our Weekly Quantum World Detangled website (or follow me on YouTube) - don’t miss what Whurley has to say on the quantum ecosystem, JIL on quantum in Singapore and David Bacon on software at IonQ.

If you’ve been forwarded this free edition of our Quantum Tech newsletter, you should subscribe so as not to miss the next ones.