Colorado may be an official U.S. Tech Hub for quantum technology, but to help the budding commercial industry nab a chunk of what is purported to become a trillion-dollar sector, state officials announced new tax-credit incentives to attract quantum companies.
Gov. Jared Polis announced the incentives Wednesday at the Mountain West Elevate Quantum Summit in Denver “to make sure that companies that are facing decisions about where to scale up and enter production, have a much easier decision to make and know that the answer is right here in Colorado.”
The incentives would come through a bill that would create a tax credit program for quantum companies to purchase equipment and build collaborative lab spaces for the next generation of computing, as well as create a loan-guarantee program to help startups get capital.
The bill, which Polis said has bipartisan support, is expected to be introduced in the coming weeks. Additionally, the incentives are riding on more funding from the federal government.
In October, Colorado was named one of 31 U.S. Tech Hubs, an initiative of the Biden administration to cultivate tech innovation between the coasts. The second phase is a chance to win implementation grants of up to $75 million from the U.S. Economic Development Administration, or EDA, and having state support like what was announced Wednesday could help a grant applicant’s chances. Elevate Quantum — a mix of private quantum companies, educators and public officials who came together on the initial Tech Hub application — will submit their grant application Feb. 24 and expect a decision in May.
“This is contingent on us having funding from EDA,” said Eve Lieberman, executive director of the Office of Economic Development and International Trade.
She wouldn’t say how much the value of incentives would be, but called them “significant.” The loan-guarantee program would be a new incentive offered by the state, which currently offers a plethora of business-expansion incentives that mostly provide tax credits after a company spends the money and hires workers. But essentially, having the state back a loan could help small quantum startups qualify for business loans. Details are still being worked out with the Department of Revenue but it would provide a refundable 15% state income tax credit for lenders or fund managers making loans to help quantum companies expand operations.
“This is one of the significant ways we can demonstrate the ability to commercialize more products more quickly that will help drive investment into the state,” she said. “The loan guarantee is to help some of those (startups) get some of that cash support (so) that the business we have we can retain here and we can attract different types of businesses moving to Colorado.”
Quantum hub on the rise
The Boulder area has been a hub of quantum activity since the 1950s when the National Institute of Standards and Technology picked Boulder for a research facility. NIST, which needed quantum measurements to measure the most precise and sensitive things in the world, later partnered with the University of Colorado to create the Joint Institute for Laboratory Astrophysics in 1962. At least four scientists at CU have received Nobel Prizes in quantum science, or more than half the number awarded.
But a lot of the local quantum thinking was in a lab or research at the universities. Commercialization was an afterthought. More recently, a number of hardware companies have opened up shop in the Denver-metro region and gained substantial attention in the industry and with investors. Last fall, Atom Computing in Boulder became the first with a quantum computer exceeding 1,000 qubits, which is the term quantum computers call computer data.
LongPath Technologies, a Boulder startup that uses quantum sensors to monitor methane emissions, raised $22 million in venture-backed capital in 2022 and earlier this month received a $189 million loan guarantee from the U.S. Department of Energy. Broomfield-based quantum hardware maker Quantinuum just closed on a $300 million equity round last week.
“When all of this is said and done, we believe that this will be three to $5 trillion annually for enterprises that are able to really harness these capabilities,” said Matt Langione, managing director and partner of Boston Consulting Group.
Solving very complex problems
The technology can be used to calculate very complex problems that current computers can’t do, or at least not quickly. There’s interest in using the tech to curb agricultural methane or reducing the cost of hydrogen so it can become a viable alternative to fossil fuels. Quantum sensors could diagnose cancer, Alzheimer’s or dementia faster than current technology.
“What I’m most excited about is the ability to get away from simulations and be able to mirror things so you can see them at a quantum level,” said Jesus Salazar, chairman of the board of trustees at the Colorado School of Mines. “If you think about the applications and being able to mirror a human cell, an organ, the body, you’re talking about endless and spontaneous experimentation. It could very well unlock the answer to cancer and other things that we have a long way to go for answers.”
The School of Mines added a quantum engineering program for undergrads in 2020 and at the university level, there’s increased demand for graduate certificates and training programs, he added.
“The Tech Hub will be transformational because as universities, we operate like a business. We have financial constraints and we can’t just build it all and hope they will come,” Salazar said during a panel at the summit. “Having a place like this will help us to be more bullish and be able to predict demand. If we have businesses moving here and jobs being created, job seekers will have work.”