Another exciting week of fear and panic across the globe. Locally, however, things seem to be going pretty well. Plenty of investment activity has happened in the last week, so let’s dive right in.
Last week, twelve companies raised over $91M in Boston
With March upon us, I first wanted to look back and see which Boston investors have been leading the pack in terms of deal count. Here’s an update:
What I’m Reading:
If you’re new to my emails and posts, welcome! My name is Nick Stuart and I write a weekly newsletter on tech VC financing trends in the Boston area. You can learn more about me on my website here and about the micro-VC I help run here.
VC Financing Deals:
Quantum Spotlight: Zapata Computing 🖥️
Boston-based Zapata Computing just received a strategic investment of an undisclosed amount from Honeywell’s venture arm. I was excited to write about this because, in terms of theoretical mind-🤯’s, quantum computing is right up there with dark matter, gravitational waves, and figuring out where that one sock went after you put it through your dryer.
Zapata is building a middle-layer software solution for companies building workflows on near-term quantum computers. Prior to Honeywell’s investment, Zapata’s total raised was $26.4M, following a Series E led by Comcast Ventures and Prelude Ventures in the spring of 2019. Other previous investors include Pillar VC, The Engine, Founders Fund, and several other deep-tech VCs.
The Race to Build the Best Quantum Computer
About a week ago, MIT Technology Review published a piece on The Race to Build the Best Quantum Computer on Earth. It’s about the fierce battle between IBM and Google to be the first to achieve Quantum Supremacy, or maybe it’s Quantum Advantage…it depends on which of them you ask. However, the original article left out another quantum juggernaut that stole the spotlight this week. Honeywell joined the stage, announcing it will soon launch the world’s most powerful quantum computer, in potentially as soon as three months from now — as well as their announcement of an investment in Zapata Computing and Cambridge Quantum Computing.
“Most quantum computers are built around superconducting qubits, which use supercooled circuits. Honeywell’s quantum computer uses a different technology, called ion traps, which hold ions—the computer’s qubits—in place with electromagnetic fields. Superconducting quantum chips are faster, but ion traps are more accurate and hold their quantum state for longer. Honeywell claims its computer will be twice as powerful as IBM’s machine, Q System One, when it launches, although that particular claim is likely to be contested.”
So, who needs a quantum computer? Right now, it’s mostly a breakthrough for companies that have to do massive computations in the material sciences space. However, Zapata has already developed techniques to bring their software solution into other fields such as financial services, aerospace, blockchain, and more. They’re already collaborating with industry heavyweights like Microsoft, IBM, Rigetti, Atos, and Amazon.
To learn more about Zapata Computing, and the quantum race in general, I pulled from the thoughts Russ Wilcox of Pillar VC in his 2018 piece, The Time is Now for Quantum. Pillar invested in Zapata because it has uses a compelling method to develop next-generation algorithms and cross-platform software to support quantum computing. The company’s ability to mix classical and quantum computing techniques for custom applications will help them build a defensible library of practical quantum applications, that can hopefully then be packaged and sold to other enterprises. Other thoughts that I found insightful:
Quantum hardware is built in a vastly different way than classical computers, with Boolean logic at its core. Therefore, quantum software must be designed much differently to effectively process and manipulate information.
Classical computers are still faster than quantum, but not for long. Very soon, we will achieve quantum superiority, where quantum computers can solve any given problem faster than classical computers. This will change the landscape for many industries and make us rethink modern encryption.
There are strong investment opportunities for VCs to back companies building middle-layer applications for quantum computing, intermixing classical and quantum techniques. Additionally, these middle-layer applications will bring opportunities to companies building on the application layer for industry-specific tasks.
The Advantages of a Hardware-Agnostic Approach
Zapata was founded by a team of six Ph.D.’s and is joined by an impressive array of quantum scientists and engineers. One advantage that Zapata has in the quantum race is its agnostic approach to the quantum computing hardware value chain. Even the best and brightest in the space can’t be 100% sure what the hardware landscape will look like in even five years time.
Who Will be the Quantum Software Leader?
Quantum computer and software developer Rigetti Computing made a bid in the software space last summer, purchasing QxBranch for an undisclosed amount. The acquisition “builds on Rigetti's full-stack strategy and expands the company's ability to deliver quantum algorithms, solutions, and services.” However, just this week, it was reported that Rigetti took a $71M down round because quantum computing is…hard.
TechCrunch’s Jonathan Shieber on Rigetti’s down round:
“Financing a company that can achieve a quantum breakthrough is one of those moonshot investments where the return on a successful investment is basically unlimited. There’s so much potential in the technology, and so little viable commercial business, that the first to break through the noise could be a real win.”
I took a look at some of the leading startups building software for quantum computers. The 21-year-old Canadian company D-Wave Computing leads the pack with over $190M in capital raised from a collection of 30 VCs, debt lenders, and corporate strategics. Another software company building enterprise solutions for quantum computers is the UK-based Cambridge Quantum Computing, with $56M raised since its founding in 2014, bringing its last public valuation to $136M. On the same day as the Zapata investment, Honeywell also announced a strategic investment into Cambridge Quantum Computing. Other notable players include:
Q-CTRL - Founded in 2017, Australia-based
QxBranch - Founded in 2014, D.C-based (acquired by Rigetti)
QCWare - Founded in 2014, Palo Alto-based
StrangeWorks - Founded 2017, Texas-based
It’s also worth noting that the majority of these companies have partnered with Rigetti in some way, favoring an alliance approach to building an ecosystem rather than the zero-sum strategy of hardware players like IBM and Google.
My knowledge of quantum computing goes about as far as pronouncing “qubit” correctly (I think), so if you’re not a quantum scientist and would like to learn more about the topic, check out this breakdown by Kurzgesagt or read Hackernoon’s Brief Introduction to Quantum Computing.
If you’d like to learn more about Zapata Computing, you can visit www.ZapataComputing.com
Dexai Robotics just raised a $5.5M Seed Round led by Hyperplane VC. Other investors include Underscore VC, Rho Capital, Harlem Capital, Contour Venture Partners, NextView Ventures, and several others. The Draper spinout and Harvard i-Lab graduate has developed its first product: Alfred, a customizable robot that acts as a “smart sous chef” in commercial kitchens. Perhaps this deal reminds you of Boston’s Spyce, the restaurant powered by similar robotic elements. Dexai approaches kitchen automation by supporting existing restaurants rather than building a robot-enabled brand. This concept got me thinking about “cloud kitchens” and how delivery restaurants will undoubtedly seek to lower their largest fixed costs (humans) through automation. Dexai seems like a great bet to do that.
Haverhill-based HaulHub has raised a $20M Series B investment from T. Rowe Price and Durable Capital Partners, bringing their total raised to $24.5M at a $150M valuation. The five-year-old company offers a software solution to help digitally manage the entire supply chain of industrial construction projects. Their software was used for local large-scale projects such as the Boston Logan Airport and Boston Harbor’s Encore casino. Previous investors are NY-based Lead Edge Capital and the largest public equipment rental company, United Rentals. This deal comes days after the SaaS construction tech company Procore dropped their S-1 with some very attractive metrics. Jon Ma did a fantastic breakdown of the filing.
Waltham-based Peach just raised a $1.98M Series C at a $10M valuation, according to Pitchbook. Founded in 2004, Peach sells women’s clothing for “gym, work, and play.” They also do a multi-level sales approach, allowing customers to purchase and sell their products. Local investors include Moodoos Investments, Persephone Venture Partners, Alumni Ventures Group, Accomplice, NextView Ventures, and Launchpad Venture Group.
According to an SEC filing, Maynard, MA-based ClearGov is raising $1.5M, of which $500K has been closed. The company offers a suite of budgeting and insight products for local government and school districts that help provide transparency to constituents. Their products help schools and cities to budget, benchmark, and communicate important spending information while allowing anyone to sift through the data. The company has previously raised $3.5M from a mixture of grants, accelerators, and investors, including Hub Angels, Launch Capital, MassVentures, and the Bantam Group. You can try it now and see how your local government’s spending compares to other areas around the country.
Spindrift ✨& Loco Coffee Co. ☕
Charlestown-based Spindrift just raised a massive $29.8M Series C funding round for their sparkling water that contains real fruit. Their total raised is now over $72M, previously backed by investors such as Almanac Insights, 819 Capital, New Ground Ventures, Prolog Ventures, Revelry Brands, RiverPark Ventures, Warbros Venture Partners.
Additionally, Boston’s Branch Venture Group just backed Loco Coffee Co., the cold brew coffee company that infuses beverages with antioxidants, electrolytes, and flavors (like maple water and coconut water). You can already find them in stores across New England.
Somerville-based C16 Biosciences just raised a $20M Series A to “use innovative processes found in nature to brew sustainable alternatives to palm oil.” The deal was led by Breakthrough Energy Ventures, with participation from Waldencast, Future Tech Labs, YC, Data Collective, and more several others. Curious why we need alternatives to palm oil? Here’s an overview of the impact that the $61B industry has on our planet.
Jassby, the Waltham-based developer of an app that helps families manage finances together, has closed its $5M Seed Round. Investors included Moneta Capital, Needham Bank, Blumberg Capital, Correlation VC, and PnP Ventures. The app helps parents easily distribute funds to their children while teaching financial literacy. Jassby went through Plug and Play Tech Center as part of the Fall 2019 Fintech Batch.
Fintech app Trio Financial Technologies has raised $2.6M from so far undisclosed investors for their all-in-one investing and checking account service. The Techstars grad previously raised from Boston pre-seed VC fund Mendoza Ventures. Trio users deposit their funds into the app and they sit in a “trio” of highly liquid ETFs that can be withdrawn for spending at any time. They went through the Barclays Techstars FinTech Accelerator last fall.
Qeepsake, the Waltham-based SMS baby journal, just raised $580K. I reached out to Qeepsake’s co-founder, Jeff McNeil, to learn more about the round. Here’s his response:
Qeepsake is the easiest way for families to capture, preserve, and pass down meaningful memories and stories to last for generations to come. Using its proprietary tech and question-prompt content, Qeepsake—which has appeared on ABC's Shark Tank and is a Techstars portfolio company—has helped families save a combined 25 million memories to-date. By the end of 2019 we were privileged to have helped over 300,000 families create heirlooms of lasting memories for their children.
In February 2020 we closed a new round of equity funding from angels and early-stage funds to further accelerate the business' growth. The funds will be used for product enhancements and marketing, continuing our journey toward becoming the hub for all of families' most cherished memories.
According to a press release put out by the West Coast Ideaship Fund, the investor has led a Seed Round of an undisclosed amount into DeepCharge. From the release: “DeepCharge’s artificial intelligence-driven innovation represents a major break-through in simplifying and personalizing wireless charging technology.”
Thanks for reading!
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