(Forbes) There were rumors last year that IonQ was considering an IPO. But rather than raising capital with a conventional IPO, IonQ chose to go public by using a merger with dMY Technology Group III, a SPAC (special-purpose acquisition company). The deal will create a combined entity estimated to be worth about $2 billion.
The original interview is summarized here and focuses primarily on IonQ’s cash injection. The original discussion is lengthy and also includes a lengthy discussion of IonQ’s future plans.
IonQ was founded in 2015 by Dr. Christopher Monroe and Dr. Jungsang Kim. They did it with $2 million in seed funding from New Enterprise Associates.
Between 2015 and 2018, IonQ raised an additional $20 million from Google Ventures, Amazon Web Services, and NEA. In 2019, under the guidance of a new CEO and president, Peter Chapman, IonQ raised another $55 million from notable investors that included Samsung, Lockheed Martin, Airbus Ventures, Bosch, Hewlett Packard, and Mubadala.
Architects of IonQ’s historic deal were Peter Chapman, CEO of IonQ, and dMY SPAC executives Chairman Harry You and CEO Niccolo de Masi. The process initially began when an IonQ investor suggested that he consider using a SPAC as an option to go public. The investor also offered to introduce Chapman to de Masi. After meeting with de Masi, Chapman became interested in the SPAC concept and presented it to the IonQ board. Later, after de Masi had raised $300 million in a previous public offering, Chapman and the board gave de Masi a thumbs up to explore a possible merger.
IonQ will receive $650 million cash and 64% of the new equity. The $650 million comes from two components, $300 million raised by dMY III and $350 million from new PIPE strategic investors Hyundai Motor Company and Kia Corporation, MSD Partners, Bill Gates’ Breakthrough Energy Ventures, Marc Benioff’s TIME Ventures, Silver Lake, and Fidelity. Before the merger is fully closed, it remains for the SEC to review and approve the deal.
“This was the easiest PIPE to raise of our career,” de Masi said. “Harry [dMY Chairman You] and I have done five SPACs between us. This PIPE was the most oversubscribed so far.
Niccolo de Masi is a physicist by education. He told the interviewers there were several reasons why he believed this was the right year for IonQ to go public.
First, cloud computing is essential. It’s the common denominator for connecting everything that’s a service. Growth and dependence on the cloud amplify the importance of IonQ’s partnerships with Amazon and Microsoft.
De Masi went on to comment about quantum market growth. He believes IonQ revenues will begin to take off in a very smooth and impressive way over the next two or three years.
The door to IPOs has been opened, so this deal is likely to encourage other quantum IPO’s or SPACs. Let’s hope that innovative research being done today isn’t replaced by an IPO-inspired focus on commercialization and pre-IPO prepping of products. We saw that happen when competitive pressures forced redirecting a large portion of AT&T Bell Labs’ financial resources to developing commercial products. That was done at the expense of pure research.