Why Quantum Computing Companies Are Turning to SPACs

Insider BriefSpecial purpose acquisition companies, or SPACs, have regained favor among investors and deep-tech executives after a bruising 2022-23 collapse driven by overly speculative pandemic-era deals, according to a leading SPAC executive and investor.Executives, bankers and investors involved in the market say the SPAC structure has evolved into a more disciplined financing tool for companies with large capital needs, long commercialization timelines, and ambitions that are difficult to value through traditional initial public offerings.Lou Gerken, chairman and CEO of FIGX Capital Acquisition Corp., said the market has largely moved beyond the celebrity-driven SPAC frenzy that emerged during the COVID-19 pandemic and has entered a more mature phase focused on viable businesses, experienced operating teams, and strategic long-term growth sectors such as quantum computing, defence electronics, digital assets, and rare-earth supply chains.SPACs are created specifically to raise money through an IPO and later merge with a private company, effectively taking that business public. Investors buy shares in the SPAC before a target company is identified, an expression of confidence in the experience and strategy of the sponsors leading the deal.The structure has existed for decades, but exploded in popularity during 2020 and 2021, when combination of low interest rates with pandemic restrictions disrupted traditional IPOs. Credit investors had ample cash that could earn a return in a SPAC trust account while providing potential substantial upside if a sponsor identified an attractive target. The global move to virtual meetings allowed SPAC sponsors to easily pitch hedge funds for IPO capital and then target management teams for mergers, dramatically accelerating deal activity.“SPACs have actually been around for 40 years,” said Gerken. “But, of course, most associate SPACs with the 2020-2021 period, where, like anything, excesses took place. Sponsors that were not seasoned investors were able to raise capital that too often was invested in weak businesses.”That period produced excesses with hundreds of speculative companies with little revenue or weak business plans entering public markets through SPAC mergers, many backed by celebrities or sponsors with limited sector expertise. As markets tightened in 2022 and 2023, many of those deals unravelled, fueling criticism that SPACs had become vehicles for weak companies seeking easier access to public capital.Gerken argues that the backlash against SPACs temporarily obscured the substantial benefits of the structure, particularly for companies competing in deep tech areas.According to Gerken, approximately 18% of U.S. IPOs in 2024 involved SPACs, rising to roughly 40% to 45% in 2025, and nearing 60% so far in 2026. He added that this rebound reflects tighter underwriting standards and greater scrutiny of sponsor and target company management teams.The renewed interest comes as quantum computing firms increasingly search for ways to fund costly development programs that may require years of investment before generating substantial commercial revenue.Unlike traditional IPOs, SPAC mergers allow companies to present financial projections to investors. That may be especially appealing for quantum computing firms, many of which are pre-profit or generate only modest revenue but claim potentially large future markets.Traditional IPOs generally prohibit companies from presenting detailed forward-looking financial forecasts during the offering process. In a SPAC transaction, however, those projections can be included as part of merger disclosures and investor presentations.For quantum companies attempting to justify multi-billion-dollar valuations based on future capabilities rather than present-day earnings, that flexibility can be critical.Gerken pointed to recent quantum industry transactions as examples of investors pricing companies based on long-term expectations rather than current financial performance. He said quantum firms often face a difficult mismatch between enormous infrastructure costs and limited near-term revenues, making traditional IPO valuation models harder to apply.“One of the main reasons SPACs were allowed was to be able to address the difficulties that emerging companies have in raising capital, because in traditional IPOs you cannot include financial projections and have limited flexibility in addressing capitalization structures. In a SPAC you can include financial projections,” said Gerken.Quantum computing companies also benefit from certainty, another feature of SPACs that draw interest from quantum founders.A conventional IPO can take more than a year to complete, during which market conditions may shift dramatically. Pricing and deal structure are typically finalized shortly before the offering launches, leaving companies exposed to market volatility throughout the process.SPAC mergers, on the other hand, generally establish valuation, structure and pricing earlier in negotiations. Gerken said a typical deSPAC transaction — which is a financial term for the merger between a private company and a publicly listed SPAC — can close in roughly five months once audited financial statements prepared by an independent auditor are available.That predictability can be important for quantum startups because they often need to fund expensive hardware manufacturing, datacenter infrastructure, cryogenic systems or acquisitions.Many quantum firms are also assembling fragmented technology stacks that include hardware, software, networking and cloud orchestration capabilities. Public equity can provide acquisition currency to consolidate those pieces more quickly.Gerken divided the sector broadly into hardware-focused firms pursuing long-term quantum computer development and software or infrastructure companies seeking nearer-term revenue opportunities through cloud services, orchestration layers and enabling technologies.Some investors believe the second category may reach commercial traction sooner because it does not rely entirely on fault-tolerant quantum hardware becoming widely available. Most experts suggest that hardware companies are still years away from fault tolerance.Whether it’s a hardware or software company, Gerken said that management quality remains one of the biggest determinants of whether a quantum company is suited for public markets.Many startups begin with scientist-founders or university researchers whose expertise lies in physics or engineering research rather than operating large public companies. As companies mature, investors frequently push for experienced executives capable of scaling operations, handling compliance obligations, and managing institutional shareholders.“There are a lot of smart savants that are great at starting a business, which only they could do,” said Gerken. “They’ve got the vision to make it happen. But when it gets to past series A and B, they may not know when to let go and pass the startup onto the next generation of leadership who know how to ramp the business up.”Gerken said outside financing events often force those transitions.In many cases, scientist-founders eventually move into technical leadership roles such as chief science officer while seasoned operating executives take over as CEO. Similar transitions have occurred across biotechnology, artificial intelligence, and semiconductor industries as companies evolved from research organizations into commercial enterprises.In deep tech, where products may be months or years from commercialization, the makeup of the leadership team becomes an important measure for investors.“You want to have a leadership team that has as close to a 1 to 1 correlation between what they’ve done in the past and what they plan on doing currently,” said Gerken. “There’s a difference between unrealized and realized success.”Another critical SPAC component is the PIPE, or private investment in public equity.PIPE financing involves institutional investors committing additional capital alongside the SPAC merger. Those funds can replace money withdrawn by SPAC shareholders who have the right to redeem their shares prior to the deSPAC or provide extra growth capital for acquisitions, manufacturing expansion or research programs.In the SPAC market’s weakest period during 2022 and 2023, many investors redeemed shares rather than participate in mergers, leaving some deals with little usable cash. Sponsors increasingly responded by arranging large PIPE investments from institutional or strategic backers.Gerken said strategic PIPE investors can be particularly valuable for quantum companies because they may lead to industry partnerships, procurement relationships, or commercialization pathways beyond simply supplying cash.“The emphasis should not just be on financial investors, but also on strategic investors, groups that can actually help them grow their business,” said Gerken. “The PIPE is a function of the quality of the deal and the size of the deal, and their organic and inorganic capital needs going forward.” The PIPE also serves to independently validate the value of the enterprise, setting the stage for public market investor interest in the aftermarket.Large corporations, including technology and industrial firms, have increasingly taken minority positions in quantum startups to monitor developments in the field without fully committing to acquisitions. Gerken described many of those investments as “toehold positions” designed to track emerging technologies until risks decline further.For companies considering SPAC transactions, Gerken said one of the most important factors is ensuring alignment between the sponsor’s expertise and the target sector.During the speculative boom years, some SPAC sponsors had little direct experience in industries they targeted, leading to weak due diligence and poor long-term outcomes. Gerken said investors increasingly scrutinize whether sponsors have demonstrated success in related fields and whether previous deals produced successful exits rather than merely completed transactions.That focus on realized outcomes rather than aspirational claims mirrors broader trends across venture capital and deep-tech investing.Gerken said sponsors and investors should look for evidence that management teams can transition from research-oriented organizations into scalable businesses capable of operating in public markets. That includes understanding governance, investor relations, compliance obligations and long-term capital allocation.He also argued that companies should avoid going public too early at valuations too small to attract institutional investors. Gerken said his firm generally looks for businesses with enterprise values of at least $1 billion, partly because many large public market institutional investors avoid companies below certain market-cap thresholds.The resurgence of SPACs comes as deep-tech sectors increasingly require financing structures capable of supporting long development cycles, uncertain commercialization paths and large infrastructure expenditures.Quantum computing remains a field where investors are often betting on future strategic importance rather than present-day cash flow.Supporters of the SPAC structure argue that this reality makes the model more suitable for quantum technology startups than conventional IPOs built around predictable earnings histories and mature operating businesses. Critics, however, continue to warn that forward-looking projections can encourage unrealistic expectations and expose retail investors to speculative risks if technologies take longer to mature than anticipated.Whether the latest SPAC cycle proves more durable than the last may ultimately depend on whether sponsors, investors and executives apply the discipline they say the market lacked in prior investment cycles.Evidencing quantum’s interest in accessing SPAC capital include D-Wave, Horizon Quantum, Infleqtion, IonQ, IQM Quantum, Pasqal SAS, Rigetti, SEEQC, Terra Quantum and Xanadu Quantum.Share this article:Keep track of everything going on in the Quantum Technology Market.In one place.