Q-CTRL gets intelligence boost via In-Q-Tel


James Riley
Editorial Director

The strategic investment by US intelligence-linked venture capital firm In-Q-Tel in the Sydney headquartered quantum startup Q-CTRL brings with it a lot more clout than money.

Ironically the participation of In-Q-Tel, with its deep connections into the national security apparatus of the United States may prove most useful in helping deliver Australian government customers from within the defence and intelligence establishment.

Q-CTRL chief executive Michael Biercuk said the In-Q-Tel investment was an extension of the company’s US$15 million Series A raise of late last year, with the terms similar (but importantly with an uptick in valuation.)

In-Q-Tel adds gloss to what was already a blue-chip roster of investors, joining Silicon Valley’s Sierra Ventures, Li Ka Shing’s Horizons Ventures and Sequoia China, as well as Paul Bassat’s Square Peg and the CSIRO’s Main Sequence Ventures.

Michael Biercuk
Michael Biercuk: The In-Q-Tel relationship is a huge boost

In-Q-Tel is a fascinating case study in strategic industry development. It is a not for profit that was originally set up at the turn of the 21st century as a venture capital arm of the US’ Central Intelligence Agency, although these days it works with ten US government agencies.

It was established, in part, to help that national security apparatus keep track of fast-moving developments in the tech sector, and to ultimately influence and participate in their development. It has been incredibly successful in identifying companies that have gone on to become very successful.

Australia does not have an equivalent fund, although In-Q-Tel now has a Sydney-based Australian subsidiary that collaborates with the Office of National Intelligence on behalf of the local defense/intelligence community.

It’s an affiliation that supports a partnership between the intelligence and national security communities of the US, UK and Australia.

Q-CTRL is just a couple of years old and has been a pioneer in quantum control engineering, building software products and professional services that help customers who are working in quantum.

More recently, Q-CTRL has begun applying their tools and expertise to quantum enhanced sensing, helping to improve the efficiency and performance of standoff detection as well as precision navigation and timing for defense and aerospace.

In February, Professor Biercuk was invited to present the US Office of Naval Research distinguished lecture in recognition of this work. He is clearly excited by the investment.

“In-Q-Tel is famous for a number of things, one of which is having a great eye for companies that very successful,” Prof Biercuk said.

“But they also bring connections and access to a set of government customers who are otherwise reasonably difficult to access,” he said.

“For us it is very exciting that their connections to the US intelligence agencies – and to the intelligence agencies in Australia and the UK – help us to introduce our products and capabilities and services to that market. This is potentially very significant to us.”

Q-CTRL is not publicising the size of the investment but said the “uptick” in valuation that it delivered was worth recognising.

“Even in the midst of COVID and the shutdown, we are seeing an improved valuation based on the progress we are making, which is great.”

The company employs about 35 people full-time, across offices in Los Angeles and Sydney. The vast majority are based in Australia, with four in LA. But the company’s growth will be in the US to support its US-based customers.

Prof Biercuk says that “COVID-19 notwithstanding, the objective is to add another 10 to 12 people” mostly in the US.

Right now, all of the company’s customers are in the US except one. And the centre of gravity will necessarily move toward where the customers are based. It is an irony that it is the VC arm of US intelligence that may provide the breakthrough to more customers in Australia.

“We are hopeful in the near term that the Australian government will start to engage with us more, but to date that has not materialised. We are hopeful that In-Q-Tel may help to facilitate this,” Prof Biercuk said.

Meanwhile, the precipitous drops in the value of the Australian dollar combined with the timing of the Series A round last year – conducted in US dollars – have given the company an unexpected boost.

“The net position is that Australia is a low-cost labour market right now,” Prof Biercuk said.

“The dramatic falls in the value of the dollar – even in the time since we closed that [Series A] round until now – means that what was historically very high wages for staff and talent in Australia, while they remain high for everybody that keeps just Aussie dollars, for those with currency reserves in US dollars it is suddenly a very high value proposition.”

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