Illinois Gov. J.B. Pritzker has called for Illinois and Chicago to become "the Silicon Valley of quantum development," and while there has been strong activity in the space in recent years, the key will be to keep the momentum going, local experts say.
Chicago is home to Duality, the first accelerator designed to support quantum startups that is part of the University of Chicago's $20 million Polsky Deep Tech Ventures, and has seen federal funding flow toward Illinois-based Argonne National Laboratory and Fermi National Accelerator, two of five quantum research centers across the U.S.
Meanwhile, Illinois quantum startups have raised $33.2 million through 27 deals since 2017, the second-most deals made by quantum startups after California, according to a new report by World Business Chicago. The numbers are even better when looking at federal contract funding for quantum science, with the state leading the U.S. with 27 contracts totaling just over $51 million.
However, most of the venture capital money that Chicago quantum startups have been able to attract — including EeroQ, which moved its offices from Michigan to the West Side of Chicago and raised $7.25 million of seed funding last August — appears to be coming from the coasts. There has been more than $3 billion invested in U.S. quantum companies since 2021 compared to just $406 million between 2014 and 2019. And nearly half of investors — 49% — are located in New York, with another 40% in California.
It's not a new problem for Chicago startups but one that Preeti Chalsani, director of industry partnerships for Quantum Information Science and deputy director of Duality, thinks shouldn't hold the quantum ecosystem back in Chicago.
Chicago keeping and drawing quantum talent
With the third-highest number of universities engaged in quantum research and third-most quantum-related degrees awarded, one reason why the broader Chicago region's quantum space is poised for growth is because it is already doing a great job of keeping its talent here.
"Places like University of Illinois [and] University of Wisconsin have some of the strongest engineering and science programs, but the complaint has always been that after we train them they go off to the coasts to work there," Chalsani said. "I think, at least in quantum, we're seeing a bit of the opposite. We're keeping people and drawing people from the coasts to be here."
Unlike other local industries that suffer from Chicago being seen as "flyover country," where companies move to coastal hubs to be part of bigger ecosystems, that's not as much of an issue for the quantum space, she said.
"In general there's a lot more VC funds in and around New York and the Bay Area, and it used to be that it was hard to get them to invest in companies outside of those geographic areas," Chalsani said.
However, she said Covid has greatly changed that as taking investor meetings via Zoom has become more common.
The novelty of the quantum space may also play into Chicago's favor.
"VCs are looking here, and they are not balking from investing in these startups because it's not like you can find them anywhere else," Chalsani said. "Perhaps Illinois has greater competition when it comes to AI startups, but with Duality we're able to attract a lot of VC interest."
