The federal government is providing $40 million in funding for D-Wave, a Burnaby, B.C.-based quantum computing firm, part of a national strategy currently under development to support the sector. The Logic has learned Ottawa is planning to roll out further support for quantum companies and research to build on the promise the country has shown in a field in which the U.S., China and other countries are spending billions.  

Quantum technology promises much more powerful computers capable of handling huge data sets and more complex algorithms, new forms of encryption, as well as more precise sensors. Canadian researchers and startups have made some significant early advances in the field.

The $40-million repayable contribution from Ottawa’s flagship Strategic Innovation Fund (SIF) will go toward D-Wave’s $120-million effort to develop its hardware and software systems. The firm has also committed to spending $480 million on R&D. The company sold the world’s first commercial quantum computer in May 2011 and now offers a cloud-based service, but has reportedly faced challenges raising new financing.

“This is about commercialization,” said Innovation Minister François-Philippe Champagne at Thursday’s announcement. “It’s about making quantum computing available to small- and medium-sized businesses.” He cited potential applications of the technology such as faster and cheaper drug and vaccine discovery and improved online security.  

Researchers, university administrators and industry executives have said Ottawa needs to provide targeted funding and policy to help inventors and startups commercialize early discoveries and scale up to compete internationally. In a December 2019 proposal first reported by The Logic, universities and companies called for a national quantum strategy, including $460 million over five years for research projects, business financing and other programs. 

Innovation, Science and Economic Development Canada is “in discussions” with proponents about further support for the sector, a senior government official told The Logic on Thursday. The Logic is granting the official’s request not to be named because they are not authorized to speak publicly. Future announcements will include more funding for quantum companies as well as research projects, the official said. 

“We have skilled people and the beginning of an industry in Canada … but it’s also very easy for that advantage to be eroded,” said the official, citing other countries’ quantum investments. The European Union set up a €1-billion program in October 2018, while that December, the U.S. National Quantum Initiative Act allocated US$1.2 billion over five years for new research centres and projects. The Chinese government is reportedly spending billions on quantum science and infrastructure.  

Ottawa has taken a similar approach in AI. The 2017 federal budget allocated $125 million for a new Pan-Canadian Artificial Intelligence Strategy to hire academics and support development. The SIF has funded startups using the technology, including auditing-software firm MindBridge Analytics and warehouse-robotics company Attabotics. 

The government is in discussions over the next phase of the AI strategy, according to the official, but is now looking to take a similar approach to quantum as it prepares to unveil a budget this spring. The sector still requires “substantial funding,” the official said. “AI has reached a point where it is commercially viable, quantum has not.” The federal government has spent nearly $1 billion on quantum science since 2009 through academic-granting agencies and business-support programs, according to a January 2020 ISED memo The Logic obtained via access-to-information request. 

D-Wave has pivoted from selling computers to a cloud-based service model, allowing developers and corporate clients to get time on its machines to solve their complex math and data problems. The company has “over 50 paying customers,” CEO Alan Baratz told reporters at Thursday’s announcement, although he declined to disclose revenues.   

The firm has raised nearly US$200 million since its 1999 founding, according to PitchBook data, with major backers including the Public Sector Pension Investment Board and the Business Development Bank of Canada. But in October 2020, The Globe and Mail reported D-Wave’s valuation had dropped by two-thirds after it struggled to obtain new financing amid increasing competition from new startups as well as technology giants like IBM and Google. The government official who spoke to The Logic insisted the SIF contribution is not a bailout, noting the company has raised money from major institutional investors and is farther along in the development of its technology than other firms.

Researchers and IP lawyers have warned that Canada is far behind in the race for quantum patents, and risks losing its early progress without targeted measures to retain IP and companies. In the U.S., quantum computing, sensing and encryption are likely to be added to the purview of the Committee on Foreign Investment in the United States, which reviews corporate deals involving critical technologies.

Asked by The Logic whether he was considering similar measures, Champagne said Thursday the government is “coordinating and consulting with our Five Eyes partners,” referring to the security network that includes the U.S., U.K., New Zealand and Australia. “We’ve invested significantly and we want to make sure, in the data economy, IP protection and everything around that is front and centre,” he said, citing quantum’s disruptive potential.