On February 8, local time, Canadian quantum computing company D-Wave Systems Inc. announced that it had merged with a special purpose acquisition company (SPAC) DPCM Capital Company, with a valuation of nearly $1.6 billion.
Vancouver, Canada-based D-Wave is actively pushing the deal. The company said it expects to raise up to $340 million in total proceeds from the transaction, which includes $40 million in private equity investments involving PSP Investments, Goldman Sachs Asset Management, NEC, Yorkville Advisors and Aegis Group Partners. Other long-term investors include Amazon founder Jeff Bezos' personal investment platforms, Bezos Expeditions and In-Q-Tel. D-Wave plans to use the revenue to expand its own emerging markets around the world and realize more than 200 patents.
Employees at D-Wave's quantum computer processor, picture from D-Wave
The merger transaction, which has been unanimously approved by the boards of directors of D-Wave Corporation and DPCM Capital, is expected to close in the second quarter of 2022, provided that customary closing conditions are met, including approval from DPCM shareholders.
Upon completion of the transaction, the new company formed, called D-Wave Quantum Inc,will continue to operate at its D-Wave headquarters in British Columbia, Canada, and trade on the New York Stock Exchange under the symbol "QBTS."
DPCM Capital's stock price trend in the past 5 days
After the news, DPCM Capital shares rose about 2.45%, from about $9.8 per share to a peak of $10.04, and then remained around $9.9.
Alan Baratz, CEO of D-Wave, said: "Today marks a turning point that shows that quantum computing has expanded from theoretical and government-funded research to providing commercial quantum solutions for businesses." The company and investors agree that this is "a moment to create practical value for customers and investors."
The transaction is expected to cement D-Wave's leadership in commercial quantum computing and accelerate quantum use cases into key customer segments, including manufacturing, logistics, pharmaceuticals, finance, and government.
Founded in 1999, D-Wave was the first company to provide real-time, full-stack quantum systems and the only company in the world to manufacture simultaneous annealing and gate-based quantum computers, providing hardware engineering, post-processing software, and chip manufacturing, with applications in logistics, artificial intelligence, financial modeling, and cybersecurity.
D-Wave's quantum computer, picture from Reuters
D-Wave's different quantum systems are designed to be applied to different types of scenarios: for example, annealed systems are designed to solve complex optimization problems; gate- and annealed systems can solve linear algebraic and factorization problems; gate-based quantum computer programs are expected to generate systems that are best suited for differential equations, such as those in quantum chemistry.
Volkswagen, software company Accenture and defense systems maker Lockheed Martin are among D-Wave's blue-chip customers.
Previously, Volkswagen and biotech startups have solved some complex problems through D-Wave, such as improving traffic flow and identifying drugs.
Image from D-Wave's official website
According to the relevant merger documents submitted to the SEC, D-Wave expects revenue of only $11 million this year and cash consumption of $58 million. By the end of 2022, there will be $230 million in cash left – which is expected to result in $280 million in net transaction fees if the SPAC financing is completed.
D-Wave expects revenue to grow by an average of 163 percent over the next four years, reaching $27 million in 2023 and $551 million in 2026, the documents show. The forecast shows that the company will consume nearly $200 million in cash between 2022 and 2024 before it starts generating operating profits in 2025.
D-Wave's short-term "pains" and optimistic predictions highlight that the field of quantum computing, although in its infancy, will have transformative future developments.
In January 2022, D-Wave built Europe's first quantum computer with more than 5,000 qubits for the Forschungszentrum Jülich Research Center in Germany, the company's most computationally powerful machine to date. The Hulich Research Center says this is an important milestone in the development of quantum computers in Europe.