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B.C. quantum computer maker D-Wave eyes major financing

The quantum computers that can be bought today are made by D-Wave Systems Inc., a 16-year-old Canadian company that has raised $174-million from backers, including Goldman Sachs.

STEPHEN LAM/REUTERS

Quantum computer maker D-Wave Systems Inc. is looking to take advantage of a string of recent positive developments by tapping private investors for what could be the largest tech venture financing in Canada since 2013.

Sources say the Burnaby, B.C.-based tech company is doing the rounds of current and prospective investors to raise at least $20-million – and possibly upward of $100-million – after receiving a recent spate of entreaties from several pension funds and sovereign wealth funds in Canada and abroad. D-Wave has raised $175-million from venture investors to date, bringing in $62-million during its last fundraising effort in 2014.

At least one prospective investor "stepped up and put a draft term sheet on the table," said an informed source, adding that D-Wave will likely do an initial fundraising close this spring at $20-million, while testing the appetite of investors to potentially invest substantially more. Another source said the company is "in the process of trying to figure out how firm that intent is" among investors.

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Shopify Inc. was the last Canadian tech company to hit the $100-million mark with a late-stage private investing round in December, 2013, a year and a half before it went public.

In an interview, newly hired chief financial officer Dan Cohrs – who previously held a similar role at a pair of publicly traded U.S. companies – acknowledged that D-Wave was "in the middle of a financing" but declined to share further details, citing legal reasons. "What I can say is the company is growing, which means we have things to spend money on. We're not yet cash flow positive. We don't need huge amounts of capital but we do need some. We did think it made sense to go out in today's market and raise more capital to give ourselves a longer runway."

Sixteen-year-old D-Wave's technology has garnered increasing attention from theoretical physicists and the global press in recent years. Its customers include a Google/NASA consortium and defence giant Lockheed Martin. Amazon.com founder Jeff Bezos, the U.S. Central Intelligence Agency's In-Q-Tel investment arm and Silicon Valley venture capital firm Draper Fisher Jurvetson are investors, alongside Canada's Kensington Capital Partners and BDC Capital.

D-Wave's quantum computers harness the power of subatomic particles in tiny loops of niobium metal located in their chips – supercooled to reach the coldest temperatures in the universe – to help perform computations that would take the world's most powerful computers millennia to run.

The technology and concepts behind it – including the concept that quantum superconductors can be in multiple states, or "superposition," at any one time – have been contentious and difficult to understand. So has the entire field of quantum mechanics, which famously flummoxed Albert Einstein. "I don't use the talking points, obviously, because they're just so ridiculous when you think about them," chief executive officer Vern Brownell said last year. Some skeptics have questioned whether D-Wave's machines even were quantum computers.

But two landmark tests last December appeared to put the doubts to rest. Google found D-Wave's latest 2X machine performed 100 million times faster than any current computers. That could have wide-ranging implications in a broad range of fields, including artificial intelligence. "The technology has now been proven," Mr. Cohrs said. "The result Google has published has put that to rest. It's impossible to get that kind of performance unless there are quantum effects going on."

D-Wave recently signed the Los Alamos National Lab – where the first atomic bomb was developed – as a customer and signed contract upgrades or extensions with its main customers. Mr. Cohrs said D-Wave is also developing software to operate on top of its basic machine code, enabling developers to subsequently build applications.

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About the Author

Sean Silcoff joined The Globe and Mail in January, 2012, following an 18-year-career in journalism and communications. He previously worked as a columnist and Montreal correspondent for the National Post and as a staff writer at Canadian Business Magazine, where he was project co-ordinator of the magazine's inaugural Rich 100 list. More

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