Dan Robinson reports via The Register: Quantum companies received 50 percent less venture cap funding last year as investors switched to generative AI or shied away from risky bets on Silicon Valley startups. Progress in quantum computing is being made, but practical applications of the technology are still likely years away. Investment in quantum technology reached a high of $2.2 billion in 2022, as confidence (or hype) grew in this emerging market, but that funding fell to about $1.2 billion last year, according to the latest State of Quantum report, produced by The Quantum Insider, with quantum computing company IQM, plus VCs OpenOcean and Lakestar. The picture is even starker in the US, where there was an 80 percent decline in venture capital for quantum, while the APAC region dropped by 17 percent, and EMEA grew slightly by three percent.
But the report denies that we have reached a “quantum winter,” comparable with the “AI winter” periods of scarce funding and little progress. Instead, the quantum industry continues to progress towards useful quantum systems, just at a slower pace, and the decline in funding must be seen as part of broader venture capital trends, it insists. “Calendar year 2023 was an interesting year with regards to quantum,” Heather West, research manager for Quantum Computing, Infrastructure Systems, Platforms, and Technology at IDC told The Register. “With the increased interest in generative AI, we started to observe that some of the funding that was being invested into quantum was transferred to AI initiatives and companies. Generative AI was seen as the new disruptive technology which end users could use immediately to gain an advantage or value, whereas quantum, while expected to be a disruptive technology, is still very early in development,” West told The Register.
Gartner Research vice president Matthew Brisse agreed. “It’s due to the slight shift of CIO priorities toward GenAI. If organizations were spending 10 innovation dollars on quantum, now they are spending five. Not abandoning it, but looking at GenAI to provide value sooner to the organization than quantum,” he told us. Meanwhile, venture capitalists in America are fighting shy of risky bets on Silicon Valley startups and instead keeping their powder dry as they look to more established technology companies or else shore up their existing portfolio of investments, according to the Financial Times.