Xanadu moves closer to public listing as quantum race heats up

The Canadian tech startup plans a dual listing on both the Nasdaq and the Toronto Stock ExchangeAuthor of the article:You can save this article by registering for free here. Or sign-in if you have an account.Startup Xanadu Quantum Technologies Inc. is preparing a public listing with the promise that it’s going to build one of the first quantum-powereddata centres by 2030. If successful, the deal would break a long drought.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.It has been several years since a Canadian technology company went public on the Toronto Stock Exchange. Toronto-based Xanadu is trying to gain a listing via a merger with blank-check company Crane Harbor Acquisition Corp. in a transaction that would value the business at more than US$3 billion.The merger vote is scheduled for Thursday, with the listing set to happen by the end of March. Xanadu would get US$455 million in net cash, assuming no redemptions from Crane shareholders, with new money coming in from investors including Advanced Micro Devices Inc. and BMO Global Asset Management.

Bessemer Venture Partners is one of the company’s longstanding investors.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Xanadu chief executive Christian Weedbrook, 49, came a long way to found his company in 2016. Born and raised in Australia, he landed in Toronto as a postdoctoral research fellow in quantum technology and never left. He says he now works seven days a week at the firm’s headquarters in a downtown building, living just minutes away.Weedbrook’s obsession has been moving quantum computing from scientific theory to commercial product. Every visitor entering Xanadu’s office is reminded of the mission, which is written in bold black letters across a white wall: “To build quantum computers that are useful and available to people everywhere.”The firm is betting on what it calls a unique approach to building quantum computers that uses photons, or light, that travel through fibre optic elements. The system can mostly operate at room temperature, making it potentially more scalable than other quantum technologies, according to Weedbrook.Quantum computers perform calculations at exponentially faster speeds than traditional computers by making them in parallel, rather than sequentially. Xanadu’s Borealis computer, showcased in 2022, solved in two minutes a mathematic problem that would have taken the world’s fastest conventional computers at the time seven million years, Weedbrook said.Now, with its Aurora system, Xanadu says it was able to connect multiple server racks using existing telecommunications technology. It announced the more powerful machine early last year — four modular server racks, 35 photonic chips and 13 kilometres of fibre optics.The company needs plenty of cash to run and test semiconductors, bring down the error rate of its machines, and create the engineering and manufacturing capabilities for its proposed quantum data center in the Toronto region. On the top of the proceeds to be earned from the merger with Crane Harbor, the company in talks with the Canadian and Ontario governments for as much as $390 million.Once running, the US$1 billion data centre would host hundreds of server racks — enough computing muscle to help to potentially solve complex problems for sectors such as pharmaceuticals, materials design, chemistry, defence and finance. Thousands of conventional data centres would be needed to achieve the same computing power Xanadu’s is expected to have, according to Weedbrook.In finance, Monte Carlo simulations used in risk assessment can take six to eight hours to complete, he said. “So imagine if you can kind of do this in a few minutes, or a few seconds. This would be game-changing, particularly if you are one of the first to have access to it.”There are many other players in the race to deliver useful quantum supercomputers by the end of decade, including International Business Machines Corp., Alphabet Inc. and Amazon.com Inc., along with numerous startups.“Quantum can have multiple winners because there’s multiple sub-segments within,” said Richard Shannon, an analyst with Craig-Hallum Capital Group, adding there are also several different approaches to the technology.The first firms to reach a capacity of 100 logical qubits or more — a qubit is the basic unit of information in a quantum processor — will have a better chance to stand out, Shannon said, because that’s the point when the technology will start delivering practical applications.Many quantum companies have managed to reach low double digits in terms of logical qubits. IonQ Inc., which uses trapped ions instead of photons, “certainly shows getting to 100 logical qubits and even higher well earlier than others, and so time to market would be important,” said Shannon. Xanadu’s Aurora system has achieved 12 qubits, but the company argues its networking and modular capabilities could deliver much more than that, soon.Xanadu plans a dual listing on the Nasdaq and the Toronto Stock Exchange. Weedbrook said a merger with a special purpose acquisition company was the fastest path to raising money quickly, and other quantum firms have been successful with this method.“We did start what would have been our Series D, and it was going well, but it was slow to be honest,” he said. “We can now think about acquisitions as we’ve seen in the space as well, if they make sense.”D-Wave Quantum Inc. went public through a SPAC deal in August 2022. It was based in Vancouver at the time but it has since moved its headquarters to the US.Last month, the quantum computing firm Infleqtion Inc. completed a deal with serial dealmaker Michael Klein’s SPAC, Churchill Capital Corp. X. Almost no redemptions from the SPAC shareholders were made, and the stock price rose in its public debut, but has fallen by more than 30 per cent since.“Our focus isn’t on short-term fluctuations in peer share prices,” said Weedbrook. “I believe our differentiated technology speaks for itself, and that the long-term investors we’re interested in attracting will value us accordingly.”All quantum firms are currently burning cash and typically carry valuations disproportionately high compared to their sales. Xanadu said in a regulatory filing its revenue was US$2.7 million for the first nine months of 2025.Wedbush Securities Inc. analyst Antoine Legault said investors are “now looking beyond artificial intelligence, and what might be the next frontier of technology,” and valuations for quantum firms are analogous to biotech or emerging pharmaceutical companies.“Quantum is often cited as being sort of the next big thing,” he said. Much of the hype stems from retail investors as large asset managers have not started investing in the sector since quantum firms are still in a development phase — that comes with more volatility, and less support for quantum stocks when shares start going down. “The game hasn’t even begun.”Bloomberg.comPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. 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