Full-stack quantum computing systems company Rigetti Computing announced plans to go public by merging with a SPAC, or special purpose acquisition company.
The deal values Rigetti at $1.5bn. The startup plans to use the funds to further develop its technology and pioneer advancements in the field.
When the merger with Supernova Partners Acquisition Company II closes, Berkeley, California-based Rigetti will receive about $458m. The funds include a fully committed private investment in public equity (PIPE) in excess of $100m, direct investment and $345m of cash held in the trust account of Supernova II. These figures assume there are no redemptions by shareholders.
Speedy information processing
In a slideshow presentation about the SPAC merger hosted by Rigetti on 7 October, founder and CEO Chad Rigetti outlined why investors should be excited about his company’s technology, which harnesses the information processing capabilities of quantum mechanics.
“Quantum computers process information in a fundamentally different way than their classical computing counterparts,” Rigetti said, explaining the technology uses qubits, which store vast amounts of information when compared to classical bits so complex calculations can be performed in a fraction of the time.
“These properties imbue quantum computers with the ability to solve problems by evaluating solutions simultaneously rather than sequentially,” he said.
Numerous applications for technology
Rigetti Computing has been offering access to its quantum processors on its cloud services platform since 2017. Its customers include Amazon Web Services, Astex Pharmaceuticals, DARPA, NASA, Standard Chartered Bank, and the US Department of Energy.
Investment funds allocated for product development
In the company presentation, Rigetti Computing COO Taryn Naidu discussed how they plan to spend the cash infusion.
“We intend to use these proceeds to accelerate the adoption of quantum through the development of multiple generations of our systems, while increasing investment in R&D fabrication and customer engagements,” Naidu said. “We believe this will position us to generate positive free cash flow in 2026, when we can reinvest in new generations of our technology.”
Rigetti Computing expects to roll out its 80-qubit system later this year, followed by a 1000-qubit system in 2024, and a 4000-qubit system in 2026.
“Because these machines promise to solve problems that are today out of reach of all other forms of computing, the market for quantum is projected to be much larger than the current entire cloud hardware and high-performance computing markets combined,” Rigetti said.
Tech investors on board
The Supernova SPAC is led by technology investor Michael Clifton, Blackstone Group senior partner Robert Reid, entrepreneur Spencer Rascoff (co-founder of Hotwire, Zillow, dot.LA and Pacaso), and Alexander Klabin, who founded Ancient and co-founded Senator Investment Group.
The PIPE involved in this SPAC includes funds and accounts advised by T. Rowe Price Associates, Bessemer Venture Partners, Franklin Templeton, and In-Q-Tel, the venture capital arm of the US Central Intelligence Agency. Keysight Technologies, Palantir Technologies and Ampere Computing are strategic partners.
Rigetti Computing’s common stock is expected to be listed under the ticker RGTI on the New York Stock Exchange.
Why merge with a SPAC?
SPACs, also known as blank-cheque companies, are shell companies formed specifically to merge with, or acquire, private businesses. They can fast-track a company’s journey to going public, a complicated process that requires compliance with the Sarbanes-Oxley (SOX) Act of 2002.
The popularity of SPACs has increased exponentially in recent years, according to figures supplied by SPAC Insider. In 2018, there were 46 SPAC IPO transactions. Ten times that many – or 461 SPACs – have already been created in 2021.
When a SPAC has its initial public offering, or IPO, the company (or companies) to be acquired by the SPAC are unknown. Investors must put their trust in the SPAC incorporators. Funds raised are initially placed in an escrow account. If investors aren’t satisfied with the SPAC’s merger or acquisition plans, they can exercise redemption rights, and the SPAC must buy back their shares.