Federal fund backs Xanadu with $40M to develop quantum computing technology

OTTAWA — The federal government’s innovation fund is providing Toronto-based Xanadu Quantum Technologies with $40 million in financing to develop the building blocks for a quantum computer that can solve business problems. 

The venture-backed firm is one of a core group of startups across the country working to commercialize advances in the disruptive technology field. “It can be as powerful and as broadly influential as the internet one day,” Xanadu CEO Christian Weedbrook said in an interview with The Logic.

You are reading: Federal fund backs Xanadu with $40M to develop quantum computing technology

Talking Points

  • Toronto-based Xanadu Quantum Technologies will receive $40 million from the federal Strategic Innovation Fund to develop a fault-tolerant quantum computing module, the basis for a million qubit system that will be able to solve customer problems


  • Ottawa has committed significant sums to the disruptive technology field, as countries and companies compete to build faster machines that could crack current encryption and help discover new drugs

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While Xanadu is bringing in some revenue already, its quantum computer isn’t helping uncover new cell compounds or drug molecules just yet. To start solving real customer problems, it will need a million-qubit system that’s as unsusceptible to errors while transmitting information or doing calculations as the classical ones in wide use today. “On our roadmap, it’s around 2026 to reach that point,” said Weedbrook, although he cautioned that it’s a difficult challenge that could take longer.

Ottawa’s backing—a repayable contribution from the Strategic Innovation Fund (SIF)—will help Xanadu develop a fault-tolerant quantum computing module. “Once you’ve mastered that, it’s then about cutting and pasting these things to replicate and mass produce [them],” Weedbrook said. The firm ultimately plans to build “a quantum data centre that [clients] can leverage over the cloud to solve their important problems,” an undertaking that he noted will take “much more money.”

Under the terms of its SIF agreement, Xanadu must eventually pay back the money. It has also committed to spend a total of $177 million, including the federal funds, on the project between June 2022 and December 2025, and to grow its workforce from about 170 to 210 by then. The firm’s technology “has the potential to really be a game-changer in not one industry, but about every industry,” Innovation Minister François-Philippe Champagne said Monday, announcing the SIF award at the company’s Toronto headquarters. 

Canada’s national strategy is “a good starting point,” according to Weedbrook, who noted that Xanadu has participated in programs it will fund, like university research partnerships and Mitacs, which subsidizes and arranges industry placements for students. 

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Innovative Solutions Canada is charged with $35 million over seven years for contracts for federal departments to test prototypes, or $5 million annually. Governments should be spending at least 10 times that on quantum procurement, said Weedbrook; buying from startups gives them revenue and the chance to test and refine their products with real customers. “Ultimately, billions need to go into any industry that’s really deeptech,” said Weedbrook. 

While the company has committed to keeping its headquarters in Toronto, it’s looking to expand abroad in search of talent. The firm plans to open a U.S. office in the next two years, and has considered Singapore and Australia, from which Weedbrook emigrated to Canada. 

If companies like Xanadu can commercialize quantum discoveries domestically, Weedbrook said, “there’s a chance for Canada to be a world leader.”

This story has been updated with remarks from the announcement.

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