Bill Reichert, Pegasus Tech Ventures

Bill Reichert has three decades of experience investing and working in early-stage tech. And now he is venturing into the nascent field of quantum computing.

Reichert, a partner with Pegasus Tech Ventures and a co-founder and managing director of Garage Technology Ventures, has so far invested in two companies in this space: Rigetti Computing, a hardware start-up that closed a $79 million Series C round in early August, and QC Ware, a developer of algorithms and applications for quantum computers.

While no real-world use cases of quantum computing exist yet, and a quantum computer that consistently performs better than a classical computer is still a long time away, recent advancements are showing promise.

And venture capitalists, such as Reichert, are beginning to bet on this unproved field, which holds the potential to facilitate breakthroughs in anything that requires complex calculations, including biotech, chemistry, security and material science.

Venture Capital Journal recently spoke with Reichert about his decision to invest in a sector that still has a lot of technological and commercial uncertainty.

This field is very nascent. How did you get interested in quantum computing?

I have been tangentially familiar with quantum computing for 20 years. I was introduced to D-Wave Systems by Steve Jurvetson, who through DFJ was an investor in Garage Technologies. D-Wave is different from quantum computing people work on now, but it was the first wave of quantum hardware percolating up.

Then several years ago I noticed that there is a lot of chatter about quantum computing. Intel, Google and Microsoft were all working on it and acquiring talent from universities. It was clear something was happening, and we should revisit the sector.

What evidence is there for this momentum?

Corporations such as Airbus are suddenly taking a lot of interest in this field.

For example, we are seeing tremendous growth in corporate attendance at Q2B, one of the largest conferences on quantum computing. Only 25 corporations showed up to Q2B’s first conference in 2017. By the third conference in 2019, 200 corporations came to the event.

Also, what I understand from key academics in this field is that there are only 1,000 to 2,000 people in the whole world that truly understand quantum computing and matter to the development of this technology. But this number has doubled recently, and it is expected to continue to grow rapidly. More experts can make a big difference.

There are many difficult tech issues with quantum computing. What gives you comfort that these problems will be resolved in about 10 years, a lifespan of a typical VC fund?

I cannot pretend that I can explain or fully understand this technology. I rely on a network of relationships, so I can hopefully be one-degree of separation from the smartest person in this industry.

Getting to true quantum supremacy, or developing a machine that can solve problems that no classical computer could, will take a lot of time. You’ll need millions of qubits for that. [A qubit is a metric that indicates the computational power of a quantum computer. IBM recently announced that it has achieved 64 qubits, which is double the 32 qubits it attained last year.]

It may not be absolute quantum supremacy, but we will likely have a standard and reliable machine, which is an equivalent of an IBM 360 (a mainframe) by some time in the 2030s, though experts disagree significantly on the timing of this forecast.

But we’ll probably have some form, albeit not ideal, applications sometime this decade. To get there, we need hundreds of qubits and have magnitudes of improvements in error corrections, which is a big issue for the viability of quantum.

So does this mean it may be possible to extract economic value from quantum computing start-ups in this decade?

The value of quantum computing assets will increase the closer we get to an application that is commercially viable.

Software companies in this field, including QC Ware, Zapata Computing and Cambridge Quantum Computing are not very risky investments. There is a lot of excitement about the field, and it is hard to imagine the interest in quantum computing algorithms diminishing.

On the hardware side, which includes companies such as IBM, Google, Microsoft and Rigetti, will likely end up with only one winner. But very few of these efforts will die without bearing fruit. These companies are filing many patents for these technologies and these patents will eventually be acquired offensively or defensively.

In short, our quantum computing thesis is that while we hope Rigetti wins, it does not matter who does as long as there is a hardware platform that reaches quantum supremacy.

Rigetti raised $71 million in backing. This sounds like a very small sum for developing something so revolutionary. Will they need more capital?

We invested in Rigetti when they launched out of Y Combinator in 2014. We got in at a very good price and it forced us to be paying attention to quantum computing.

Rigetti is a step more advanced than competition like IBM, which could give them an advantage.

If Rigetti can get to a functioning quantum computer, even if it does not have supremacy yet, they will have hundreds of teams from around the world wanting to try their algorithms on it. Rigetti will be able to charge some nice dollar amount for an hour’s access to this computer. If they start generating revenue, this will mitigate the total capital requirements, which are multiples of what has been invested so far.

But overall, I would bet that it will take less money to achieve commercial success with quantum computing than with autonomous vehicles.