{"id":14145,"date":"2023-09-16T17:14:41","date_gmt":"2023-09-16T17:14:41","guid":{"rendered":"https:\/\/mysourcefunding.com\/startups\/building-a-startup-in-the-pre-market-phase\/"},"modified":"2023-09-16T17:14:42","modified_gmt":"2023-09-16T17:14:42","slug":"building-a-startup-in-the-pre-market-phase","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=14145","title":{"rendered":"Building A Startup In The Pre-Market Phase"},"content":{"rendered":"
\n

The truth is, we\u2019re not quite there yet. While the term \u201cquantum computing\u201d trips easily off the tongues of policymakers, business leaders, scientists and engineers, it could be five years or even longer before this new data-crunching technology begins to make any meaningful impact on our lives.<\/p>\n

And here\u2019s the problem? As things stand, companies working in the quantum computing space are engaged in cutting-edge development work at a time when no one can be totally certain what the market will look like in five or ten years’ time. The assumption is there will be customers and use cases but, as things stand, it\u2019s impossible to predict which technologies they will choose to adopt. In the meantime, startups must continue to fund their development work while trying to establish some kind of traction in a market that doesn\u2019t really exist.<\/p>\n

So what does that look like in practice? How are young companies finding their feet in an industry that promises to change the world – but not just yet ? I spoke to two U.K. quantum startups about their progress from drawing board to marketplace.<\/p>\n

Market Confidence<\/strong><\/h2>\n

According to figures published by Markets and Markets, revenues in the sector are expected to come in at around $899 billion in 2023, rising to $4,375 million in 2028. The development of quantum hardware and software is something that governments are keen to encourage. For instance, the U.K. government sees Britain becoming a \u201cquantum-enabled\u201d country by 2033 and has committed \u00a32.5 billion to supporting development over the next ten years.<\/p>\n

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So there is confidence and consequently, there is VC cash available. For instance, Oxford Ionics – a hardware company with 50 people on the payroll – has raised \u00a340 million so far. Phasecraft – a software startup – has secured \u00a317.4 million in equity finance, plus a further \u00a33.7 million in grants.<\/p>\n

Oxford Ionics co-founder and CEO, Dr. Chris Ballance says that despite the risks associated with technologies still under development, it\u2019s difficult to see how machines that perform calculations significantly faster than conventional supercomputers will not have enormous value. \u201cAs a company, we have been willing to take a bet on this and we are asking investors to do the same,\u201d he says.\u201d<\/p>\n

The key, he adds, is to find the right investors – those who understand not only the potential rewards in the market but also the risks. There is, he adds, a need for a certain amount of investor education. \u201cWe are tough with our investors. We will tell them why they shouldn\u2019t invest.\u201d This is not an exercise in gratuitously scaring sources of finance away. It is about ensuring that the investors and the company are aligned.<\/p>\n

And as Ashley Montanaro – CEO and cofounder of Phasecraft – sees it, VC finance has been crucial to enabling his company to develop its software algorithms. \u201cThere are different ways to fund yourself,\u201d he says. \u201cFor instance, some companies offer consultancy. We see that as a distraction. VC finance allows us to focus on the hard R&D.\u201d<\/p>\n

Grant funding has also played a part in the Phasecraft journey. \u201cFinancially, that\u2019s been important but not essential,\u201d says Montanaro. \u201cBut grants are important in enabling collaboration and also in providing validation for what you\u2019re doing.\u201d<\/p>\n

Commercial Viability<\/strong><\/h2>\n

Perhaps the most crucial aspect of attracting enquiry is the ability to demonstrate commercial viability. In the Quantum Computing world, the basic unit of information is the Qubit. Oxford Ionics controls its Qubits – which are individual atoms – using a proprietary system designed to be scalable.<\/p>\n

Ballance says there has been a focus on technology that will scale to meet the demand. The key is the development of reliable hardware that not only provides a sufficient number of Qubits to outperform supercomputers but also a low enough error rate to make the technology useful and workable.<\/p>\n

And In one way or another, that\u2019s what all the quantum hardware companies are working on at the moment. While there are a range of hardware technologies that are proven to offer quantum functionality, the tricky part is ensuring the kind of consistent performance that can be commercially exploited. That\u2019s when the banks, the research institutes, the multinational corporations, and indeed all those who will benefit from the technology will begin to buy in.<\/p>\n

Finding Customers<\/strong><\/h2>\n

But here\u2019s the question. How do those who are developing the technology know what their potential customers are looking for?<\/p>\n

\u201cWe spend a reasonable amount of time talking to customers, precisely for that reason,\u201d says Ballance. \u201cTypically, we\u2019ll be talking to people with PhDs in Quantum computing. We ask them what they need.\u201d<\/p>\n

Styling itself as a quantum algorithm company, Phasecraft specializes in the quantum simulation and analysis of materials with solar panels and batteries being a particular specialism. It is also in regular contact with potential users of its services. \u201cWe have a number of partnerships,\u201d says Montanaro. \u201cThey include Johnson Matthey, Oxford PV and Roche.\u201d These partnerships are helping the company develop algorithms that will solve real-world problems. In addition, it is working with IBM, BT and Rigetti.<\/p>\n

The business models are also being developed. Both Ballance and Montanaro believe the main route into quantum solutions for the majority of organizations will be through a quantum-as-a-service model, using third-party hardware and software. That doesn\u2019t necessarily mean an arms-length relationship with providers. This is a complex area where users and suppliers are likely to work closely together. A few organizations will buy their own in-house systems.<\/p>\n

The adoption of quantum computing will depend on precision engineered hardware that can outperform supercomputers on a reliable basis, something that will in turn feed a specialist software industry. Ultimately, some technologies will win through with others failing to gain traction. But with quantum likely to revolutionize functions such as drugs discovery, materials development or financial modeling, the expected rewards mean that startup capable of demonstrating the viability of their technologies have a fighting chance of securing VC capital.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The truth is, we\u2019re not quite there yet. While the term \u201cquantum computing\u201d trips easily off the tongues of policymakers, business leaders, scientists and engineers, it could be five years or even longer before this new data-crunching technology begins to make any meaningful impact on our lives. And here\u2019s the problem? As things stand, companies […]<\/p>\n","protected":false},"author":1,"featured_media":14146,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[77],"tags":[],"class_list":{"0":"post-14145","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-startups"},"yoast_head":"\nBuilding A Startup In The Pre-Market Phase | Brandiary<\/title>\n<meta name=\"description\" content=\"The truth is, we\u2019re not quite there yet. 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