To a large extent, this is simply due to the industry expanding. According to another analysis from consultant McKinsey, quantum computing startups have increased from a handful in 2013 to nearly 200 in 2020.
And with growth has come a clearer timeline for when quantum computers might start delivering on their extraordinary promises. Last year, IBM led the way in unveiling its roadmap for quantum computing and teased a 1,121-qubit processor for 2023, which the company sees as a tipping point to overcome the hurdles limiting the commercialization of quantum systems.
Smaller companies have also made similar announcements. US-based startup ColdQuanta, which is building a quantum processor based on cold atoms, launched a 100-qubit processor this year, which it hopes to upgrade to 1,000 qubits in the next three years.
PsiQuantum, another US-based quantum company, has for its part committed to building a full-scale quantum computer by 2025.
Investor money isn't far behind those developments. "Quantum computing has been around since the 1980s, but over the past few years, we've come closer to both scaling the technology to a point where it can be used in real life as well as identifying initial use cases," Itzik Parnafes, general partner at Battery Ventures, tells ZDNet.
Quantum computers are built with qubits -- the quantum version of the bits that are currently found in any traditional computer. Qubits are capable of storing huge amounts of data, equipping quantum computers with exponential amounts of compute power that could enable them to carry out calculations that would be impossible to resolve with current machines.
That is, in principle. Qubits are extremely difficult to manipulate. Most companies in the space are still working on building a quantum computer that actually works at a large scale, meaning that there is very little that the technology has proven so far.
Most scientists agree that a fully-fledged quantum computer is still over a decade away, but this isn't stopping companies from investigating how the technology might boost their business outcomes once it is mature enough to be commercialized.
"While a so-called fault-tolerant universal quantum computer might be years away because we need more science to reach this point, we already have quantum computing architectures that will solve problems of interest for end-users in this time frame," Christophe Jurczak, managing partner of deep physics venture fund Quantonation, tells ZDNet.
"We should think about these processors as special purpose co-processors, a little bit like GPUs or AI chips in the high performance computing world. They will solve problems, not all of them but many of practical interest," he continues.
Jurczak sees those co-processors starting to play a role in fields like drug design in a couple of years, which is contributing to aggressive VC investment in the field. According to Quantonation's estimates, the total capital invested in quantum computing by the end of 2021 could reach up to $3 billion, when including announced SPACs and IPOs.
The most significant deals feature PsiQuantum, which secured a $450 million round this year to reach a valuation of $3.15 billion. IonQ, which is another contender in the race to build a useful quantum computer, is planning to go public by merging with a SPAC at a valuation of $2 billion. And startups like Zapata Computing, Quantum Machines, Rigetti and Xanadu have all raised multi-million rounds over the past couple of years.
The numbers might seem high, especially for a technology that is yet to do anything useful. Jurczak acknowledges the risk of over-hyping quantum computing, but he also stresses that the industry is at a stage where it most needs VC cash.
Since the future of quantum computing lies in the development of hardware, significant capital investments are needed – and even bigger deals are likely to be announced in the coming years.
"We need more investors and more funding, and also more projects," says Jurczak. "It is just the beginning and referring to the value creation that's expected in the long-term – up to $850 billion according to a recent report by BCG -- I think that we should not be surprised that we see such deals, especially for late-stage companies."
Last June, Battery Ventures participated in a $50 million investment in Quantum Machines, a startup that is developing a "quantum orchestration platform" that makes it easier and more practical to control quantum hardware and software.
With this investment, the VC fund is hoping to grow the wider quantum ecosystem, rather than focusing purely on quantum processors, in a move that the company describes to ZDNet as "taking us closer than ever to utilizing the computing potential."
But despite those encouraging prospects, Battery Ventures is keeping a cool head. "We'll have to wait for the future in order to look back and acknowledge whether quantum is currently over-hyped," Parnafes tells ZDNet. And as the industry grows more, it is likely to become even harder to distinguish quantum computers' promises from reality.