Vancouver-based quantum computing firm Photonic has raised $180 million in a new round backed by major Canadian names like RBC, Telus and British Columbia Investment Management Corporation.

Planet First Partners, a sustainability-focused investor based in Luxembourg, led the round, and its managing partner Nathan Medlock has joined Photonic’s board. Other investors in the round include Microsoft, which previously led a US$100 million round in November 2023. 

“This was the round to take us to commercialization,” CEO Paul Terry told The Logic. Photonic will also use the money to add 70 technical and business staff to its 152-person team. 

Founded in 2016, Photonic is one of several firms trying to build useful quantum computers, machines that employ the principles of quantum physics to solve problems that conventional hardware can’t, or to do it much faster. 

The firm’s technology focuses on the property of quantum entanglement between different particles. Photonic can already produce chips with lots of qubits—the base unit of quantum computing—and network them together, said Stephanie Simmons, Photonic’s chief quantum officer. “We don’t need to go back to the drawing board to scale further,” she said. The company is now building systems that can control all those qubits and apply them to useful tasks.

Terry said Photonic currently has low single-digit millions of dollars in annual revenue from large firms learning how quantum computing works in preparation for when it becomes truly useful. He projected that the company could reach hundreds of millions of dollars in sales by 2029.

Photonic’s business plan is to sell quantum computing to “the 10,000 companies that need it,” rather than one quantum computer at a time to “the 100 companies that can afford them,” Terry said. The firm will primarily provide access to its technology via Microsoft’s Azure cloud service, letting large and mid-sized firms buy processing power without needing to house their own hardware. Some potential clients, like national security agencies, may still choose to buy machines, Terry said. 

Canada has a competitive advantage in quantum computing investment and adoption because of the long track record of public and private investment in the technology, according to Simmons. Corporate giants like RBC and Telus are “quantum-familiar in a way that many places around the world aren’t,” she said. “They just see what’s coming.” Large firms that can afford their own quantum teams in sectors like financial services, agriculture or telecom will help develop algorithms and tools that smaller companies can then adopt, she predicted.

Photonic is one of three Canadian companies selected for two major programs in the U.S. and Canada designed to advance and prove out quantum computing. In the U.S., Photonic is through to the second round of the U.S. Defense Advanced Research Projects Agency’s (DARPA) Quantum Benchmarking Initiative, which requires participating firms to show that their chosen approach to the technology can solve real-world commercial and industrial problems at a reasonable cost by 2033. Companies that make it through all three stages can earn up to US$316 million in direct funding from DARPA. 

In Canada, the firm is enrolled in the Canadian Quantum Champions Program (CQCP), designed to help firms develop one of the technology’s key building blocks and keep them in the country long term. Ottawa launched the initiative last month, amid concerns that the DARPA program would lure promising Canadian quantum computing firms across the border. 

Photonic and the other three participants—Montreal-based Anyon Systems, Sherbrooke, Que.-based Nord Quantique and Toronto-based Xanadu—are receiving up to $23 million each in the first round of the CQCP; Ottawa has promised as-yet undisclosed further sums if the firms meet benchmarks that are under development. The federal Quantum Advisory Council—which Simmons co-chairs—had recommended a $1-billion program to match the DARPA scheme.

Simmons and other Canadian quantum founders had predicted that the DARPA program would help attract capital to participating firms, since the U.S. agency is conducting the kind of deep due diligence on their technology that investors might struggle to do on their own. 

Terry said the US$130 million announced Tuesday gives Photonic enough money to become cash-flow positive. Photonic is still in discussions with investors to raise further financing, and funds from Canada, Europe, the Middle East, the U.K. and the U.S. have expressed interest in participating, Terry and Simmons said.

The firm originally set out to raise as much as US$250 million in the current round, two sources familiar with the financing told The Logic. The sources were granted anonymity because they were not authorized to discuss the matter publicly. Terry confirmed that figure, saying it represents a “hard limit” on the round.

Corporate filings show the new financing significantly increases Photonic’s valuation, with the firm’s shares in this latest round priced at US$44.6, up from US$14.6 at its last round. Terry declined to provide an exact valuation, but confirmed it was a “significant up round.”

Photonic has now raised $375 million to date. It’s not the only firm in the two programs that’s recently raised significant new funding. In November, Xanadu announced it would go public via a merger with blank-cheque firm Crane Harbor Acquisition. The SPAC deal could bring in up to US$225 million, depending on how many shareholders withdraw their funds. Xanadu has also lined up US$275 million in private investments from backers including BMO, CIBC and Planet First Partners, Photonic’s new investor.