Quantum computing gains momentum as HSBC backs Classiq Series B

Israeli group’s funding round builds on the developing interest in quantum computing

by | May 17, 2022 | bobsguide

Israeli quantum computing start-up, Classiq, has secured a strategic investment from HSBC, NTT Finance, and Intesa Sanpaolo in a second closing of its series B round.

The financing round reached $36 million altogether, up from the $33 million raised in the initial close.

The first closing took place in February, with the company seeking to use the funds to quadruple its size by expanding the team, opening new offices globally, and developing and patenting new quantum algorithm designs.

“Quantum is poised to be one of the most impactful technology categories of the coming decades, and these companies share our vision of what quantum could deliver and understand the problems that need to be solved to reach that goal,” said Nir Minerbi, CEO of Classiq.

The three new investors join participants from the initial close comprising Hewlett Packard Pathfinder, the venture capital arm of Hewlett Packard Enterprise (HPE), insurance group, Phoenix; Stanford alumni investor, Spike Ventures; Samsung Next, the investment arm of Samsung; and angel investors Lip-Bu Tan and Harvey Jones.

Banks explore quantum computing use cases

The investment in quantum computing technologies comes as financial industry participants explore the potential case uses to improve their operations.

According to the McKinsey report in December 2021, quantum computing’s most promising use cases lie in portfolio and risk management, with fraud-prediction modelling and credit scoring also viable purposes.

“Quantum computing has the potential to overhaul how we operate areas of the bank, like option pricing and risk analysis, which would lead to greater efficiencies and customer service improvements,” said Steve Suarez, global head of innovation, global functions at HSBC, at the time.

HSBC’s investment in Classiq continues the bank’s ongoing foray into quantum computing as it looks to use the technology for pricing and portfolio optimisation.

The bank is part of the EUR4.7 million European NEASQC (Next Applications of Quantum Computing) project, which includes a consortium of 12 European companies and research laboratories examining the applications for quantum computing within the banking industry.

In March, HSBC also joined forces with IBM in a three-year deal to explore applications for quantum computing in financial services.

A month prior, Danish peer Danske Bank announced that it had successfully used quantum communication for secure a data transfer, a first in the Nordic region.

Spanish giant Caixabank has also been active in the quantum space, having already incorporated the technology in 2020 to develop a machine-learning algorithm to classify credit risk profiles.

Earlier this year, the bank also announced that its partnership with Canadian quantum specialist, D-Wave Systems, to calculate investment portfolio hedging, which resulted in up to a 90percent decrease in compute time to solve financial problems.

Quantum computing providers go public with SPAC deals

McKinsey’s report also notes that the private investment volume in quantum computing more than doubled (compared to 2020) in 2021 to $1.7 billion, highlighting the increasing interest in the technology providers.

The figure underscores a series of notable investments in quantum computing start-ups that year.

For instance, IonQ merged with New York-listed SPAC dMY Technology Group III to go public and raise $650 million in gross proceeds. Its pro forma market capitalisation at the time of the merger was approximately $2 billion.

Likewise, full-stack quantum computing group Rigetti & Co also announced a merger with New York-listed SPAC Supernova Partners Acquisition Company that same year. The deal closed earlier this year, raising $261.75 million in gross proceeds.

D-Wave Systems is also in the process of going public after it accepted the merger proposal from New York-listed SPAC DPCM Capital. The transaction is expected to raise $340 million in gross proceeds when it closes later this quarter.

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