Canadian quantum computer maker D-Wave Systems Inc. is merging with a blank-check firm created by former Uber Technologies Inc. executive Emil Michael in a transaction giving the combined company an implied market value of as much as $1.6 billion.
The transaction includes $300 million from DPCM Capital Inc., a special purpose acquisition company, according to a statement Tuesday that confirmed an earlier Bloomberg News report. The deal also provides additional funding of $40 million from a private investment in public equity, or PIPE, from investors including Goldman Sachs Group Inc. and Canada’s PSP Investments.
Shares of the new company, to be called D-Wave Quantum Inc., are expected to trade on the New York Stock Exchange under the symbol QBTS. Alan Baratz will remain as chief executive officer of D-Wave.
D-Wave plans to use the proceeds from the deal to further develop and commercialize its quantum computers.
The company was founded in 1999 and has concentrated on a quantum-computing technology known as annealing, which is more limited than a full, gate-based quantum computer. That has allowed D-Wave to gain early success with large optimization problems that standard computers can’t handle.
We’ve got a first-mover advantage right now, Baratz said in an interview. We really want to sign up those customers and help them with more than just one application. We’re going to focus very heavy on go-to market activities in addition to our R&D program.
Although D-Wave has revenue now, it won’t be cash-flow positive for several years as it spends on product development and adding customers, Baratz said. The technology has advanced to the point where it has attracted paying customers such as Volkswagen AG, GlaxoSmithKline Plc and Spain’s Banco Bilbao Vizcaya Argentaria SA.
D-Wave, based in the Vancouver suburb of Burnaby, announced plans last year to also build a gate-based quantum computer.
Quantum computers are advancing rapidly beyond experimental machines to being able to solve some limited real-world problems, even though the industry is at a very early stage of its development. That has emboldened startups, including IonQ Inc. and Rigetti & Co., to to go public through SPAC transactions.
IonQ’s shares are up about 27% since completing its merger in October. Supernova Partners Acquisition Co. II is little changed since it announced on Oct. 6 that it would combine with Rigetti.
D-Wave provides access to its customers through the cloud and offers a full range of services, from assisting companies in identifying problems they can solve to helping them write the quantum applications.
Its computers harness the same principles of quantum physics that Albert Einstein called “spooky action at a distance.” Rather than storing information in either zeros or ones like traditional computers, quantum machines rely on “qubits,” which can be both zero and one simultaneously. That increases exponentially the amount of information that can be encoded.
Michael, a former chief business officer for Uber, is chairman and CEO of DPCM. The Miami-based SPAC raised $300 million in an initial public offering in October 2020. In July, DPCM and Jam City Inc., a California-based mobile entertainment company, called off their plan to merge, citing market conditions.
Michael said he was attracted to quantum computing because the potential market is enormous as the technology tackles a myriad of problems that strain current computing power. The machines, which are still error prone and require super cold temperatures to operate, are improving to become “less of a science project and more of a deployment project,” he said.
It really is starting to become the golden age of quantum making a difference in its use cases, Michael said.