Governments Can Invest Well, Too
It may come as a shock to many arch capitalists but on (admittedly rare) occasions, governments can be visionary investors.
One great example was the purchase of the important abstract expressionist painting Blue Poles by US artist Jackson Pollock by the National Gallery of Australia way back in 1973.
The purchase was then so large at US$1.3 million that it had to be personally approved by the Prime Minister, Gough Whitlam, and was widely seen as a terrible waste of public money that cemented Whitlam’s reputation as a great reformer with an unfortunate penchant for reckless spending.
History has shown that it was actually an inspired purchase with the current value ranging anywhere up to $350m or more with the work still attracting visitors to Canberra and occasionally touring important world art galleries.
Investing a Billion in Quantum Computing
A much more recent example of a potentially great government investment is the highly controversial decision by the current Federal Government to pump almost $1 billion into buying a stake in US based quantum computer developer PsiQuantum.
While many people roundly condemned the decision by the Australian and Queensland governments to invest as a futile example of trying to “pick winners”, that investment has perhaps surprisingly already doubled in value.
PsiQuantum now has the attention of many other investors including the world’s most highly valued company, AI chip maker Nvidia.
As well as a contribution towards the latest $1.5b capital raising from Nvidia’s venture capital arm, NVentures, PsiQuantum said it would be collaborating with the chip giant more broadly through other areas including applications, algorithms and hardware integration.
Fans of the prospects for quantum computing are confident that the technology will be hugely influential in developing critical fields such as AI, cybersecurity and medical research.
Unlike traditional computers which rely on silicon chips that work from a foundation of ones and zeroes, quantum computers use unstable “qubits” that can be in both states at once with PsiQuantum claiming to have the best-in-class silicon photonic quantum chips being manufactured in the US in readiness for assembling their quantum computer.
Plenty of Private Money Flowing in
Investment funds linked to existing investors BlackRock, Blackbird Ventures, British fund manager Baillie Gifford and Singaporean state-owned investment firm Temasek also supported the latest funding round.
PsiQuantum’s value has more than doubled in value following the capital raising, with the start-up now valued at $10.6b.
Australian venture capital firm Blackbird Ventures has invested twice, having initially bought in when the company was worth just $US3.15b.
PsiQuantum founders Pete Shadbolt and Australian-born chief executive Jeremy O’Brien are now attempting to build the world’s first quantum computer – a new type of computing that could have transformative commercial and societal implications – in Brisbane.
Like all early-stage investments, the proof will be in the pudding and there is clearly a global race on to build the world’s first quantum computer, which promises to solve complex problems exponentially faster than traditional computers.
The true benefits of quantum computing will only really be found when the first computer is actually built and some of the other new investors which include Macquarie Capital, Ribbit Capital, Morgan Stanley’s Counterpoint Global, and the Qatar Investment Authority will be hoping PsiQuantum is first across the line.
Lots of Competitors in the Race
PsiQuantum is one of a large number of companies vying to become the first to build a working quantum computer, including some big rivals such as Google, IBM, Microsoft, Intel, and Amazon, and a range of specialist quantum firms as well.
Naturally, PsiQuantum claims it is in a good position to be first in the race, with its advanced photonics approach, which is based on harnessing light particles.
It claims to have the chips, switches and scalable cooling technology it needs, along with government and private sector support and a maturing technological base.
Like the Blue Poles acquisition, there has been no shortage of criticism of the Australian Government’s approach, although having effectively doubled their investment in a short time that is likely to become more muted.
Only time will tell, however, if this particular investment turns out to be a triumph even bigger than Blue Poles or yet another case in which governments trying to support innovative industry end up burning through a lot of our money for little end result.
With PsiQuantum now set to start building a 100,000 square metre facility in Brisbane later this year which is due to be finished in 2027, it shouldn’t be too long before we get an answer on the question of whether or not Australia has played a big part in developing an exciting new technology that could place us as a leader in quantum computing.