TLDR:
- Private funding for quantum computing has dropped due to the growing hype around generative AI, according to The Quantum Insider’s State of Quantum report.
- VC funding for quantum technology decreased by 50%, reaching $1.25 billion in 2023 compared to previous years.
Private funding for quantum computing technology has seen a significant decrease in recent months as venture capital firms turn their attention to the rapid growth and potential of generative AI. The Quantum Insider has released its State of Quantum report, which reveals a sharp decline in VC funding for quantum technology, dropping by around 50% to approximately $1.25 billion in 2023 compared to the historic peaks in 2021 and 2022. One reason for this shift in funding is that generative AI is viewed as more enterprise-ready than quantum computing, with the ability to deliver near-term results. Quantum computing, on the other hand, remains an extremely early-stage technology, and VC spending on it in 2021 and 2022 may have been out of sync with its true operational potential. The decreased funding is likely to impact some quantum computing startups, but it is important to note that government expenditures on quantum computing significantly surpass private sector investments due to the technology’s future strategic importance in areas such as national defense, climate change, and materials science.
According to IDC research manager Heather West, most quantum computing systems today are only suitable for experimentation and proof-of-concept rather than live problem-solving. However, some quantum technology, like D-Wave’s quantum annealer device, is slowly making its way into operational use, particularly in large enterprises and government agencies for solving complex optimization problems. While the current progress may not be at the exponential speed-up that is ultimately desired, it is still performing at a significantly faster pace than classical compute standards.
Gartner Research vice president and analyst Chirag Dekate explains that while portfolios are shifting toward generative AI in the near-term, long-term strategic bets are still being made around quantum computing. Generative AI’s ability to be deployed in an operational sense is a key driver for its increasing funding, as it can deliver practical results in the short term. However, it is important to manage expectations and avoid hype around quantum computing as it is a nascent technology that requires further research to realize its full industrial advantage.
Overall, while the decline in VC funding for quantum computing is notable, the government’s substantial investments in the technology indicate its crucial role in solving complex challenges of international importance in the future, such as climate change, national defense, and materials science.
