The quantum computing sector is emerging as a potential growth area for equity capital markets, with an expanding pipeline of companies considering public listings.

As investors become more comfortable underwriting businesses that remain years away from meaningful commercial revenues, private quantum companies are weighing a range of routes to the public markets, two bankers and several venture capitalists said. Institutional investors are also becoming more adept at evaluating competing quantum technologies, laying the groundwork for additional offerings.

Quantinuum’s initial public offering last month generated heightened investor interest, the bankers noted. The Honeywell spinout raised USD 1.68bn through an upsized Nasdaq offering. Its market capitalization has since declined to USD 14.7bn from USD 15.6bn at the IPO’s pricing.

Still, the IPO marked an important turning point for the sector by exposing a broader institutional investor base to quantum computing, the sources said.

One of the bankers, who was involved in that transaction, said investors approached the deal differently from earlier quantum listings, many of which reached the public markets through mergers with special purpose acquisition companies.

Investors sought to understand the distinctions among trapped-ion, superconducting, and other quantum architectures rather than simply buying exposure to an emerging technology theme, the banker said. The process has prompted more investment firms to devote research resources to the sector, with some producing detailed quantum primers as portfolio managers prepare for what bankers expect will become a more robust issuance pipeline.

“The sector isn’t going away. It’s not a fad,” the banker said. Investors are increasingly valuing quantum companies based on where the market could be by 2030 rather than on current financial performance, requiring a longer-term investment horizon, the banker added.

Private companies prepare for public markets

Several privately held quantum companies are positioning themselves for eventual public listings.

A placement agent said quantum computing has been “massively overshadowed” by artificial intelligence over the past two years, but activity in both private financings and IPO preparations has accelerated.

UK-based Universal Quantum, for example, is reportedly considering a USD 100m capital raise and has received approaches from multiple SPACs. The hardware company is a viable public market candidate, according to the agent.

Australia-based Q-CTRL is also growing rapidly and attracting investor attention, the agent said. The company has raised at least USD 133m to date, most recently via a 2024 round led by GP Bullhound. Its investor roster includes Lockheed Martin Ventures and Salesforce Ventures.

Venture capitalists also identified several US-based quantum companies as potential IPO or acquisition candidates, including Google spinout Sandbox AQ; hardware developers QuEra and Qunnect; and infrastructure providers Maybell Quantum Industries and Vescent.

To date, SPAC mergers have been the sector’s preferred route to Wall Street.

Horizon Quantum, Infleqtion, IQM Quantum Computers, and Xanadu Quantum Technologies all completed SPAC mergers and debuted on public exchanges this year. They were preceded by IonQ and Arqit Quantum in 2021, and Rigetti Computing and D-Wave in 2022.

Four additional quantum SPAC mergers have been announced this year and remain pending. Two involve European targets: France-based Pasqal and Switzerland-based Terra Quantum. The other two involve US companies: New York-based SEEQC and California-based EigenQ.

Meanwhile, Israeli quantum software company Classiq and quantum hardware developer Quantum Art are separately exploring US listings through SPAC mergers, according to a recent Calcalist report. Quantum Art is understood to be further along in the process and could complete a transaction before year-end. Classiq is also working with investment banks but may pursue another private fundraising round ahead of a public debut to secure a higher valuation.

An estimated 30 SPACs are actively seeking quantum technology targets, creating a growing pool of potential partners for companies considering Nasdaq and New York Stock Exchange listings.

Venture investors broaden exposure

The growing capital markets activity reflects years of venture investment in the sector.

Anis Uzzaman, founder and CEO of Pegasus Tech Ventures, said his firm began investing in quantum computing long before it became a mainstream investment theme and has backed multiple technology approaches rather than betting on a single architecture. Its portfolio includes Atom Computing, Rigetti Computing, QC Ware, and Xanadu, spanning neutral atom, superconducting, photonic, and quantum software technologies.

Rigetti illustrates the sector’s value creation potential. Pegasus first invested when the company was valued at USD 20m. Today, its market capitalization stands at USD 4.7bn.

Rather than replacing conventional computing, quantum computers are expected to complement existing systems by solving highly specialized computational problems, Uzzaman said.

He expects some of the earliest commercial applications to emerge in pharmaceuticals, life sciences, weather forecasting, and other simulation-intensive industries, while traditional computing will continue to dominate workloads such as large language models.

Nevertheless, leading tech companies including Alphabet and IBM are exploring ways to combine AI and quantum computing, potentially broadening commercial applications over time, he added.

Strategics such as Airbus, Cisco, and Deutsche Telekom have invested in quantum networking startups, too.

Although revenues remain modest across much of the sector, Uzzaman expects quantum computing and photonic technologies to become increasingly important as conventional semiconductor scaling approaches its physical limits.

The sector has also attracted support from governments worldwide. Australia, Denmark, Finland, France, Germany, Poland, Spain, and Switzerland are among the nations backing quantum startups.

More recently, the US government committed USD 2bn in grants to nine quantum computing companies, with the awards structured to include minority equity stakes. The beneficiaries are publicly listed D-Wave, GlobalFoundries, IBM, Infleqtion, Quantinuum, and Rigetti, and privately held startups Atom Computing, Diraq, and PsiQuantum.