Inside Q-CTRL’s $86.3 million Series B extension

Quantum startup Q-CTRL has secured an additional $86.3 million in Series B funding, bringing the total funding round to $166 million. The company says its differentiator lies in already building and selling products in a sector that is still largely research-based.

The round was led by GP Bullhound and joined by previous contributors, including Main Sequence Ventures and Salesforce Ventures. It also saw participation from new investors such as Lockheed Martin Ventures, Edison, NTT Finance and Salus Group, among others.

Q-CTRL has long been a leading player in quantum infrastructure software, which has given the startup a competitive edge.

“We actually build and sell software. We are not primarily a consultancy [or] doing contract R&D for third parties,” Q-CTRL CEO Michael Biercuk said on a call with SmartCompany.

“We are in the business of building stuff and selling it. And so our own maturity and the maturation of the sector together are what gets amplified by this particular fundraising.”

Quantum sensing provides Q-CTRL with real-world applications and revenue

While much of the quantum industry is still years away from achieving quantum advantage – the point when quantum computers outperform traditional ones – Q-CTRL’s focus on quantum sensing offers immediate value.

Unlike quantum computing, which focuses on using quantum systems to solve computational problems, quantum sensing uses quantum properties to make extremely precise measurements. They’re so precise that traditional sensors can’t match them.

Quantum sensors can measure tiny changes in gravitational fields, magnetic fields, or time, which makes them highly valuable for applications like navigation in GPS-denied environments, seismic monitoring and medical imaging.

Quantum sensing is already finding practical use, especially in defense. Q-CTRL’s quantum sensors have been deployed in navigation systems for submarines and ships, which need highly accurate positioning in scenarios where GPS isn’t available, such as under the ocean or in remote, signal-blocked areas.

“Quantum sensing is not a future-looking thing. It’s already here,” says Biercuk.

“It’s a near-term value capture opportunity, and we’ve positioned ourselves to build and sell products in that sector as well.”

Beyond defense, quantum sensing holds promise in other industries. In healthcare, for instance, quantum sensors provide new ways to detect small physiological changes that traditional methods might miss, and in the resource sector, they can be used to improve mineral exploration by providing more accurate data and reducing environmental impact.

“Quantum sensors have the potential to disrupt industries that rely on precision measurement,” Biercuk explains.

“This isn’t just about defense; it’s about solving real-world challenges in healthcare, resources, and beyond.”

De-verticalisation gives Q-CTRL a path to scale

Another key aspect of Q-CTRL’s strategy is its role in the de-verticalisation of quantum technology.

Many quantum companies have traditionally followed a “full stack” approach – building everything from the hardware up to the applications.

But Q-CTRL’s focus is on software infrastructure that can work across different quantum hardware platforms. This positions it to scale more quickly through partnerships.

“The maturation [of the sector] sees that specialist teams like ours can come in and make important contributions, in a narrower sense, than building a full-stack quantum computer,” Biercuk says.

While full-stack quantum companies attempt to handle both hardware and software development in-house, Q-CTRL’s de-verticalisation strategy allows it to remain agile.

“Importantly, this idea of de-verticalisation is exactly what we saw in all conventional computing, from desktop to cloud,” explains Biercuk.

Historically, niching down in traditional computing led to faster innovation. So, rather than being tied to a single platform, Q-CTRL’s performance-management software can instead be integrated into other platforms.

This is exactly what the startup has done with IBM, which will allow Q-CTRL to expand through commercial partnerships rather than building everything from scratch.

“We’re not trying to build the whole quantum computer. Instead, we’re focusing on the key areas of performance management that allow these systems to work better,” says Biercuk.

Defence partnerships and continued export control concerns

The raise also includes major investments from defence players like Lockheed Martin Ventures, reflecting the growing importance of quantum technology in national security.

However, this has also been a point of contention for the Australian quantum sector this year.

The introduction of stricter export controls in Australia as part of the AUKUS alliance has complicated quantum technology development.

These controls place heavy restrictions on the transfer of quantum-related technologies, not only across borders but also within Australia.

One of the key challenges is that companies like Q-CTRL must ensure compliance even when sharing information with team members of different nationalities based on Australian soil.

This means that an export control violation can occur if quantum technology information is shared with non-Australian employees, even if they are working within the country. This can be something as simple as sharing a document or a link to a drive.

As a result, navigating these regulations has become particularly burdensome, creating legal risks that can slow down innovation and complicate international partnerships.

Biercuk has been vocal about the ongoing regulatory concerns in Australia, particularly the strict penalties associated with quantum export violations.

“The export controls punishment regime is so crazy, we view it as a risk to our staff… team members are individually facing 10-year criminal penalties for a mistake,” says Biercuk.

It’s worth noting that no criminal defence is allowed in these circumstances. The stress of this is taking its toll on the Q-CTRL team.

“It’s causing paralysis in our teams. Nobody makes good decisions with a gun to their head,” Biercuk says.

He emphasised the company is not opposed to regulation or a financial penalty, but it takes issue with the threat of jail time.

“We don’t want to break the rules. We’re trying our hardest, but people make mistakes. And a mistake that carries a 10-year potential sentence is unjust,” says Biercuk.

“One of our core values is to be just at Q-CTRL and we simply do not think this aligns, and that causes us tremendous concern.”

The risks posed by these controls have forced Q-CTRL to move parts of its business offshore, setting up operations in Los Angeles to protect its staff from the uncertainty surrounding Australian regulations.

“We saw the writing on the wall that this was happening,” Biercuk says.

“In an area where we’re developing new technology, we’re building things that might eventually cross the thresholds, that might enable a third party to cross the control thresholds. Because of that, there’s so much uncertainty as to at any point whether what we are building is controlled or not.”

Biercuk also highlights the broader implications these penalties could have on the quantum industry in Australia.

The complexity and severity of the current framework could make it difficult to attract and retain talent, while this regulatory uncertainty could also affect Australia’s ability to compete on the global stage.

This would be particularly unfortunate given that the federal government launched a national quantum strategy ahead of the 2023 budget.

Since then, it has participated in an almost billion investment into Psi-Quantum, as well as launched an $18.5 million quantum grant program, as well as another $36 million program for early-stage quantum startups.

As Q-CTRL continues to grow off the back of this fresh capital injection, navigating this complex regulatory environment will remain a key focus for the business.

“We continue to work cooperatively and constructively with parts of the government to make changes that are simple, that maintain the spirit and intent of the law, but mitigate these concerns prior to the penalty regime coming into force in March,” says Biercuk.

Never miss a story: sign up to SmartCompany’s free daily newsletter and find our best stories on LinkedIn.