In the last two years, AI advancements like ChatGPT have showcased how rapidly technology can transition from theory to a transformative force that reshapes daily life and captures public and business attention. Similarly, quantum technology, though less visible today, is on the brink of a revolution that will fundamentally alter industries. Just as AI’s impact became clear only when it was fully upon us, the effects of quantum computing are poised to emerge quickly, making collaboration between the private sector and government essential.
Quantum technology, arrived via early 20th-century breakthroughs by giants like Planck and Einstein and is poised to redefine the 21st. Pioneering work in the 1980s on quantum computing and cryptography, helped by supportive government policies, has laid the groundwork for a technological revolution with far-reaching impact.
From exponentially faster drug discovery to unbreakable encryption and ultra-precise sensors, quantum technology promises transformative advancements in healthcare, finance, national security, and beyond.
Empowering Canada’s Quantum Leap with Venture Capital
The widespread impact of quantum technology is anticipated to either echo the rapid integration of generative AI, following a similar transformative path, or chart a completely new course with unprecedented applications and implications we have yet to fully comprehend. While fully operational quantum computers are still not accessible to everyday business use cases, significant advancements are expected within the next decade.
As mentioned by Thomas Park, Vice President of Operations Support and Strategy at BDC Capital, Honeywell estimates the quantum computing market is projected to become a USD $1 trillion industry. According to a McKinsey report, venture capital investments in quantum technology globally surged to $2.35 billion in 2022. Significant investment has continued, as highlighted by the Quantum Algorithms Institute’s 2024 report, which shows that equity investments in quantum startups reached USD $1.71 billion in 2023. These figures underscore the growing financial commitment to this transformative technology. By 2030, quantum technology could become integral across various industries. This timeline is supported by increasing investment from both private and public sectors.
Venture capital funding has played a crucial role in the development of Canada’s quantum technology sector. Investors such as BDC Capital, British Columbia Investment Management Corporation (BCI), Georgian and Inovia Capital have backed Canadian quantum startups, demonstrating the potential of Canadian companies to drive significant technological advancements.
- Xanadu: Founded in 2016 in Toronto, Xanadu pioneers photonic quantum computers and quantum machine learning software. Their flagship product, PennyLane, integrates quantum computing with machine learning, promising transformative applications in fields like finance and pharmaceuticals. With substantial federal and private funding, including significant investments from OMERS Ventures and BDC Capital, Xanadu recently secured $100 million in a Series C round led by Georgian Partners. This funding underscores its pivotal role in Canada’s quantum landscape and its global leadership in photonic quantum computing.
- Photonic: This Vancouver-based company, established in 2016, focuses on scalable quantum computing and networking technologies. Photonic’s significant capital raises, including $100 million from investors like Microsoft and the British Columbia Investment Management Corporation (BCI), highlight its potential to revolutionize quantum communications and computing. Inovia Capital is a major investor, supporting Photonic’s collaboration with tech giants.
- Nord Quantique: BDC Capital co-led a $9.5 million seed investment in Nord Quantique, a Sherbrooke-based startup developing quantum computing technology using superconducting qubits.
- D‑Wave Systems: BDC Capital has also invested in D‑Wave Systems, a pioneering company in the development of quantum computers using a quantum annealing approach. D‑Wave has received substantial funding from various investors, including BDC Capital.
These companies, all supported by investments made by CVCA members, exemplify the strength and potential of Canada’s quantum technology sector.
Canada’s Path to Quantum Leadership
Canada’s venture capital community is uniquely positioned to capitalize on the quantum revolution, backed by a robust national infrastructure and a track record of punching above our weight in innovation sectors like life sciences and AI. The government’s proactive efforts, exemplified by ISED’s National Quantum Strategy, have laid the groundwork for a thriving quantum ecosystem, making Canada the second home to quantum startups after the U.S. In 2015, Canada was recognized as a burgeoning “quantum nation,” well ahead of many global counterparts.
However, despite our early leadership, Canada has recently seen a shift in its global ranking, moving from a top three quantum leader to a position that, while still within the top ten, underscores the need for renewed focus and investment to maintain our competitive edge. Our current investment in quantum is now only a third of what is being committed by other nations. This decline is exacerbated by a lack of a cohesive national strategy to concentrate efforts on winning technologies, underinvestment in bold initiatives, and a fragmented approach to public and private partnerships. Moreover, policy shifts, such as reduced funding to Innovative Solutions Canada and the uncertain transition from Sustainable Development Technology Canada (SDTC) to the National Research Council of Canada, have further eroded capital flows. In this environment, the threat of talent brain-drain looms large, as startups must also navigate increasingly complex global regulatory landscapes. To regain our position, Canada must urgently double down on its quantum investments, ensuring a focused, ambitious, and well-funded strategy that harnesses the full potential of public and private resources.
Amidst these challenges, a thriving quantum industry in Canada hinges on a united front between the private sector and government. By fostering collaboration, we can implement strategic policies that will accelerate innovation and secure Canada’s leadership in this transformative field. Amplified and a more strategic approach to R&D funding would fuel groundbreaking discoveries and expedite the commercialization of quantum technologies. Additionally, implementing tax incentives (and removing existing barriers) will attract private investment and stimulate the growth of quantum startups. Through these collaborative actions, we can unlock the full potential of quantum technology, driving economic growth, creating high-value jobs, and positioning Canada as a global hub for quantum innovation.
The quantum future is not just a vision; it’s a tangible reality waiting to be realized. Canadian investors, in partnership with policymakers, have a pivotal role to play in shaping this future, driving economic growth, fostering innovation, and solidifying our nation’s position as a global leader in quantum technology.
