The federal government is launching its own quantum computing research program in response to a United States military-backed initiative courting Canadian firms.
“Participation comes with clear conditions. If you’re in the program, you stay headquartered in Canada. That’s how we turn public investment into public value.”
Innovation, Science and Economic Development Canada (ISED) unveiled the Canadian Quantum Champions Program (CQCP) on Monday morning at quantum firm Xanadu’s headquarters in Toronto. ISED says the program is part of a push to keep promising quantum firms in Canada.
The program’s first phase will support four domestic quantum companies—Xanadu, Sherbrooke’s Nord Quantique, Coquitlam’s Photonic, and Montréal’s Anyon Systems—in developing “scalable and useful” quantum computers with up to $23 million CAD in initial funding per company through the first of three planned phases. This technical milestone-based financing will come in the form of non-repayable contributions.
“This is nation building,” AI and digital innovation minister Evan Solomon said at the announcement in Toronto. “Not just nation building in our industries, which we’re doing with our Major Projects Office… but building the economy of the future with ideas, talent, and technology—and it starts right here.”
The potential $92 million in funding will come from Canada’s recent $334-million commitment to support the quantum industry, which was promised in November’s federal budget under the forthcoming Defence Industrial Strategy. Over five years, ISED and other federal agencies are supposed to spend $223 million to support quantum research and $111 million to “anchor the Canadian quantum industry in Canada and unleash quantum for defence.” The government previously unveiled a $360-million National Quantum Strategy (NQS) in 2023.
Contracts over cash
This announcement comes after three of the Canadian quantum companies have advanced to the second round of the US Quantum Benchmarking Initiative (QBI), a program run by the Defense Advanced Research Projects Agency (DARPA). Xanadu, Nord Quantique, and Photonic all stand to win up to $316 million USD ($445 million CAD) in funding if they can develop a functional, fault-tolerant quantum computer.
“Participation comes with clear conditions. If you’re in the program, you stay headquartered in Canada,” Solomon said of the CQCP program. “That’s how we turn public investment into public value.”
Solomon said Canada’s program won’t pick a single winner, but will instead judge companies’ progress through technical milestones. Companies are expected to demonstrate a viable path to a logical qubit—an error-free quantum bit that performs properly within a quantum computer. Their work will be assessed by experts at the National Research Council of Canada through a newly established Benchmarking Quantum Platforms initiative.
In response to questions from reporters about how funding for the CQCP compares to the DARPA program, Solomon said there will be further announcements coming for phases two and three. “We are going to not just match any program, but we’re going to be the best program,” he said. However, he said he didn’t know whether Canada would match the US program dollar-for-dollar.
Companies progressing through the DARPA program will have the opportunity to secure US government contracts. Solomon signalled to reporters on Monday that a similar arrangement for Canada’s program “makes a lot of sense.”
“I’ve said repeatedly that companies would like a contract more than cash, and Canadians want value for their money,” he added.
“If you look elsewhere in the world, [other] companies are also backed by their countries,” Nord Quantique co-founder and CEO Julien Camirand Lemyre told BetaKit in an interview following the announcement. “This is a strategic business to invest in, and now Canada is showing that they’re part of that game.”
Doing better than the US?
Nord Quantique works on superconducting qubits with a special type of error correction at the level of the qubit—the basic programming units of quantum computing. The 50-person team says it has developed a method of computing that keeps the size of a quantum system compact and more energy-efficient than its competitors.
Through the US QBI program, Nord Quantique has received $1 million USD for participating in Phase A. The second phase offers companies an initial $5 million USD with the opportunity to negotiate for another $10 million USD, which Lemyre said would have to be matched by the participating companies.
Xanadu founder and CEO Christian Weedbrook credited the feds for pledging more money through its first phase than the American program via its first and second phases combined.
“I can’t think of any other program where Canada has actually said, ‘We’re going to do better than the US,’” Weedbrook said in Toronto.
Xanadu has taken a photonic approach to building a useful quantum computer, using light particles to power computations. In November, it announced plans to go public via a special purpose acquisition company (SPAC) as part of a push to raise the capital it needs to achieve its goal of building a Canadian quantum data centre by 2029.
This morning, Weedbrook reiterated that Xanadu would be staying headquartered in Canada. “This sort of thing stops us from thinking about going to the US,” Weedbrook told BetaKit in an interview following the announcement. “There’s always a strong pull towards the US for obvious reasons. This shows us that the government is really serious.”
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Weedbrook had previously advocated for a Canadian equivalent to the QBI program on The BetaKit Podcast. Since the US government has already done due diligence on the participating companies, he said it would be “great to have a sister program or [our] own program” for Canadian companies. Weedbrook said that direct investments are ideal when it comes to federal support for companies like his, rather than loans through things like the Strategic Innovation Fund.
The self-described “dark horse” of the program is Anyon Systems, according to founder and CEO Alireza Najafi-Yazdi. The 30-person company, founded in 2014, plans to develop a useful quantum computer with a few thousand qubits and built-in error and noise reduction in its hardware. The company hasn’t taken on venture capital but has benefitted from government grants.
“The government wants to make sure companies are anchored in Canada, [and] I fully agree with that sentiment,” Najafi-Yazdi told BetaKit in an interview yesterday. “We should take sovereignty very seriously.”
Photonic develops silicon spin qubits that it networks together with a focus on solving the problem of scalability for quantum computers. It has raised over $100 million USD in funding so far, including from strategic partner Microsoft.
“We’re competing globally, and the validation from the QBI program has been quite positive,” Photonic CMO Alison Berg told BetaKit in an interview following today’s announcement, citing the size and strength of DARPA’s due diligence team as one of the reasons for its participation.
Berg expressed hope Photonic’s selection for CQCP will prove similarly beneficial. “It’s fantastic to see the [federal government’s] commitment to building the entire ecosystem,” she said.
In light of the US QBI program, Solomon told BetaKit in June that Ottawa planned to introduce policies to help keep quantum firms in Canada. He said that keeping quantum intellectual property (IP) and innovation “robust and Canadian” was a “matter of national priority.” Quantum and cybersecurity technologies, he added, are a matter of national security.
“For the industry overall, the big thing is keeping the talent here and the IP here, and I think this will do the job,” Weedbrook said.
Solomon said the first phase of CQCP will last a year, and other companies may still join.
Lemyre described today’s announcement as a good first step, but added that “we need to make sure that the rest follows.”
Weedbrook expressed hope that through the second phase of CQCP—which has yet to be announced—the feds will offer the same or more than the $300 million USD promised to companies that advance to the third phase of QBI, be that in the form of non-repayable contributions, contracts, or some combination of the two.
With files from Josh Scott. Feature image courtesy Josh Scott for BetaKit.