UK’s Oxford Quantum Circuits snaps up $47M for quantum-computing-as-a-service

Quantum computing has been making quantum leaps of progress in the last several years — going from theoretical concept to multiple testing environments, to help organizations prep for a time when quantum computers, and their unparalleled processing power, become a scaled reality. Now, UK-based Oxford Quantum Circuits is announcing £38 million ($47 million) in funding to fuel the growth of its own contribution to the space — a patented 3D processor architecture it calls Coaxmon, plus quantum-computing-as-a-service that will run on it. OQC says that this Series A is the largest to date for a UK-based quantum computing startup.

“We work at pace, and our systems are being optimized. We’ll continue to scale and reduce error rates,” said Ilana Wisby, OQC’s founding CEO, in an interview. “Our vision is seamless quantum access.”

Lansdowne Partners and The University of Tokyo Edge Capital Partners (UTEC) a deep tech fund out of Japan, are co-leading the round, with British Patient Capital, Oxford Science Enterprises (OSE) and Oxford Investment Consultants (OIC) also participating. OSE and OIC previously led a £2.2 million seed round into the startup, which began life as a spinout from Oxford University and work done there by quantum physicist (and OQC founder) Dr Peter Leek.

The plan will be to use the funding to keep hiring more talent (it’s now at 60 employees), continue improving accessibility to quantum computing for developers interested in working with it, and to continue building out its computing infrastructure, which today is based on an 8-qubit machine. And as you might guess from the investor list, it will also be using some of the funds to expand into Asia Pacific, and specifically Japan, to tap would-be customers there in financial services and beyond.

“Quantum computing promises to be the next frontier of innovation, and OQC, with its state-of-the-art Coaxmon technology, aims to integrate the forefront of modern physics into our everyday lives,” said Lenny Chin, a principal at UTEC, in a statement. “UTEC is honoured to be part of OQC’s mission of making quantum technology accessible to all and will support OQC’s expansion into Asia-Pacific through collaborations with academia including the University of Tokyo, and partnerships with Japan’s leading financial and tech corporations.”

Wisby told me that OQC actually started raising this Series A before the pandemic, back in early 2020; but it opted to shelve that process and go for grants instead to build out the company in its earlier phases.

That got OQC quite far, advancing from a 1-qubit, to a 2-qubit, then a 4-qubit, and now currently an 8-qubit machine.

The startup is also already providing services to a variety of customers who work across either OQC’s private cloud or via Amazon Braket, AWS’s quantum computing platform that also provides developers access to other quantum-as-a-service providers such as Rigetti, IonQ and D-Wave. (OQC notes that its quantum computer, named Lucy, is the first European quantum provider on Braket — a key detail for companies and quantum researchers based out of Europe who need to comply with data protection laws by keeping data and the processing of it local: this gives them a local option.)

Its customers include Cambridge Quantum, which runs its IronBridge cryptographic number generator on OQC’s computer; financial services companies; molecular dynamics researchers; government organizations and large multinationals with in-house R&D teams working on systems capable to be run on quantum machines when they are eventually spun up.

“Eventually” is the operative word here: the real promise of quantum computing is vast computing power, but there has yet to be a quantum computer built that can achieve that at scale without also producing a lot of errors.

But it seems that a lot of the hope these days is not on “if” but “when” that hurdle will be overcome. “We’re well past theory,” Wisby said.

That’s led to a big wave of both large tech players such as IBM, Amazon and Alphabet to get involved, as well as a number of smaller startups, and companies like Rigetti, IonQ and D-Wave that sit between those two poles. While there are some opting to build and sell quantum devices, the economics don’t make sense for most potential use cases, so for now the bigger efforts appear to be around quantum in the cloud: offering it as an infrastructure-free, use-as-you-need-it compute service.

Although Oxford Quantum Circuits’ 8-qubit computer is not the largest in the field, Wisby said that one reason it’s picking up users, and this investment in what has been a tough fundraising climate, is because its platform is better, in that it produces less faults than others.

“We’re all working towards larger scale processes,” Wisby said. But, she added, there is something to be said for better quality and less errors. “We have low error rates, and the funding will enable us to deliver on the next steps.”

Another major fillip in the process is the fact that regions, and countries, are looking to back leaders in the field early on to help cement their respective standing in that next generation of technology, and so backing Oxford Quantum Circuits is seen to be part of that strategy. British Patient Capital is a strategic backer in that regard: it’s the investment arm of the British Business Bank, which is a government-owned bank focused on developing business and industry in the U.K.

“Since launching the UK’s first commercially-available quantum computer, we have continued to be highly impressed with both the technical developments and also the future ambitions of OQC,” said Peter Davies, partner and head of developed markets strategy at Lansdowne Partners, in a statement. “We are very excited to be investing in this innovative and forward-thinking company.”

Forest bags $8M seed round to acquire Japanese e-commerce brands 

Japan has been the birthplace of traditional arts and crafts since ancient times. Craftmanship, meticulous attention to detail and balance of design and functionality have contributed to creating unique Japanese products like pottery, traditional fabrics, washi (paper), woodwork, glasses, bento-boxes and more. 

This craftsmanship continues to be passed along from generation to generation and live on in modern Japan. However, the craftsmen and women, who do not always have the skills or tools to be influential merchants, have often been left behind in the rapidly evolving business environment in the 21st century.

In recent years, a growing number of e-commerce entrepreneurs have started to develop their own products and brands in response to a shift in consumer demand from cheap, mass-produced goods to diversified products that meet one’s unique needs and lifestyle. 

Forest, a Japanese e-commerce aggregator, seeks to identify sustainable, high-quality products and brands that embrace the spirit of Japan and help them grow and enter the global market by using the power of technology.

Forest announced today it has raised approximately $8 million (900 million yen) of seed round led by The University of Tokyo Edge Capital Partners (UTEC) and Nordstar Partners.

The startup will use the new capital to acquire more than 300 Japanese e-commerce brands that have been carefully crafted and curated by entrepreneurs. Forest will apply digital marketing strategies at scale, optimize sales and enhance inventory planning through data analytics, as well as support cross-border e-commerce expansion. 

Forest is currently in the process of finalizing its first acquisition. It will continue to look for brands that generate sales between $1 million and $5 million and target to acquire companies with more than $10 million of sales next year, said CEO of Forest Shingo Yuhara told TechCrunch. 

It also plans to raise around $20 million to $30 million debt and equity capital of Series A, targeting the first half of 2022, Yuhara said.  

Forest looks at marketplaces, including Amazon, Rakuten, Zozotown, Yahoo Japan sellers, Shopify and more. 

Forest, founded in July by Yuhara and COO Masa Mishizawa, will compete with other e-commerce aggregators like Rainforest, Una Brands and Thrasio in the global market. Forest said it is the first pure aggregator dedicated to the Japanese market. Given that Forest initially focuses on the Japanese market, it does not see Rainforest and Thrasio as its pure competitors, Yuhara said. 

Thrasio set up a Japanese office in March to acquire Japanese brands and products sold on Amazon Japan and other e-commerce platforms.  

The Japanese e-commerce market was estimated at $165 billion (19 trillion yen) as of 2020, according to a report by Japan’s Ministry of Economy, Trade and Industry. 

“[The] investment into Forest is one of our largest seed round investments within the IT sector. In my previous life, I managed my family-owned apparel business and personally experienced the pains and limitations of a small business. I strongly believe that Forest can solve these problems and capitalize on the potential of these businesses through the power of technology,” said partner of UTEC Hiroyuki Sakamoto. “We look forward to working with the experienced Founders who seek to challenge this attractive market opportunity and we feel privileged to participate as co-lead investor.”   

“We are excited to be investing in Forest that is well-positioned to take advantage of the large opportunity in acquiring and scaling niche brands in Japan,” said managing partner Ole Ruch of Nordstar. 

UTEC launches a new initiative to help deep-tech founders commercialize their work

The University of Tokyo Edge Capital Partners (UTEC) is launching a new program to address a problem the venture capital fund says many deep-tech founders face. They may raise pre-seed capital from an incubator or accelerator program, but reach a funding gap before moving on to early-stage rounds. Without financial resources, it takes longer to commercialize their technology, no matter how promising.

UTEC, an independent venture fund associated with The University of Tokyo and other academic institutions, created the UTEC Founders Program (UFP) to address that gap. It offers two tracks: equity, which invests up to $1 million with flexible terms, and grants, a non-dilutive donation of about $50,000 (or occasionally up to $100,000) awarded to recipients every six months.

UFP’s applications are open to deep-tech researchers and founders anywhere in the world.

UTEC launched a $275 million fund in May, and typically writes first checks of about $1 million to $5 million. Its aggregated assets under management are about $780 million, which the firm says makes UTEC the largest venture capital fund in Japan for science and tech companies, and one of the largest deep-tech funds in Asia.

After getting feedback from deep-tech researchers and entrepreneurs, the fund’s partners realized that even though they might have developed potentially impactful tech, it might not be immediately ready for seed funding. Many teams would also benefit from swift funding to continue preparing their tech for commercialization, instead of waiting through a lengthy due diligence process.

In an email, UTEC principals and UFP leads Hiroaki Kobayashi and Kiran Mysore told TechCrunch, “Just like entrepreneurs who create new product offerings to cater to unmet market needs, we at UTEC endeavor to be more nimble and offer new investment products to serve science and technology researchers and entrepreneurs. UFP is UTEC’s attempt to channel over 15 years of deep-tech investing experience and learnings into an early-stage technology commercialization initiative.”

The equity track is primarily for seed and pre-Series A startups, and offers flexible investment terms like SAFE notes, KISS and J-KISS (the Japanese version of Keep It Simple Security), convertible notes and bonds, or common stocks. It accepts applications throughout the year, and successful candidates are contacted for a first interview within three days. Mysore said that the entire due diligence and investment committee process will be completed within four weeks of the first interview.

The grant track is aimed at pre-launch or early-stage startups, and the funds can be used for things like prototyping, testing the market and recruitment. Applications are opened every six months, with about five teams selected each time. The deadline for the first batch of applicants is July 31 and decisions will be made in September.

Deep-tech teams who participate in UFP also get access to UTEC’s network of more than 115 Japanese and global startups, academic institutions, government organizations and corporations.

 

UTEC, one of Asia’s largest deep-tech investment firms, launches new $275M fund

The University of Tokyo Edge Capital Partners (UTEC), a deep-tech investment firm, announced the first close of its fifth fund, which is expected to total 30 billion JPY (or about $275 million USD) by June 2021. UTEC currently has about $780 million in total assets under management, and says this makes it one of the largest venture capital funds focused on science and tech in Japan, and one of the largest deep-tech funds in Asia.

UTEC is an independent firm that works closely with universities. It is associated with The University of Tokyo (UTokyo), where it has a partnership with its Technology Licensing Office (TLO) to spin off and invest in companies that originated as research projects. It has also worked with researchers from Waseda University, Kyoto University, Stanford, UC Berkeley, Carnegie Mellon, Cambridge University, the National University of Singapore and the Indian Institute of Technology, among other institutions.

A map showing UTEC's deep-tech investments around the world

UTEC’s deep-tech investments around the world

Broadly speaking, UTEC focuses on three areas: healthcare and life sciences, information technology and physical sciences and engineering. More specifically, it is looking for tech that addresses some of the most important issues in Japan, including an aging population, labor shortage and the digitization of legacy industries.

“UTEC 5 will allow us to provide more funds from seed/early to pre-IPO/M&A stages in Japan and worldwide, on a wider scale and in a more consistent manner,” said managing partner and president Tomotaka Goji in a statement. “I believe this will further help our startups expand to address the global issues of humankind.”

The firm also partners with other funds, including Arch Venture Partners and Blume Ventures, to find investment opportunities around the world.

UTEC’s portfolio already includes more than 80 Japanese startups and 30 startups from other places, including the United States, India, Southeast Asia and Europe. So far, 25 of its investments have exited. Thirteen went public and now have an aggregated market cap of about $15 billion, and 12 were through mergers and acquisitions.

Some of its exits include 908 Devices, a mass spectrometry company that went public on Nasdaq last year; Fyusion, a computer vision startup acquired by Cox Automotive; and Phyzios, which was acquired by Google in 2013.

About half of UTEC’s portfolio are university spin-offs. For companies that originated in academic research, UTEC supports their commercialization by helping hire crucial talent, including executive positions, business development and go-to-market strategies. The firm’s first check size is about $500,000 to $5 million, and it also usually provides follow-on capital.

“We typically double-down on our investment in subsequent funding rounds of the company and can invest up to about $23 million per company over its lifecycle,” UTEC principal Kiran Mysore, who leads their global AI investments, told TechCrunch.

UTEC’s other investments include personal mobility robotics company BionicM, which started at UTokyo and spatial intelligence solution developer Locix, spun-off from UC Berkeley. The firm also helps startups collaborate with academic institutions. For example, Indian biotech Bugworks collaborates with the Tokyo Institute of Technology and Japanese industrial robotics startup Mujin now works with Carnegie Mellon.