Quantum startup Sandbox AQ spins off from Alphabet, gains 'nine figures' in funding

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Former Alphabet's Executive Chairman Eric Schmidt speaks on the phone during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 24, 2018. REUTERS/Denis Balibouse

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March 22 (Reuters) - Sandbox AQ, which has long-term goals to help clients use quantum computing, announced on Tuesday that it has spun off from Alphabet Inc (GOOGL.O), raised "nine figures" of funding and signed several clients for its cybersecurity services.

With the large funding and former Google Chief Executive Eric Schmidt as its chairman, Sandbox AQ is one of the highest-profile startups pursuing software that would operate at least partially on quantum computers.

Though unreliable and costly now, quantum computers could within a decade boost the power of artificial intelligence and other tools by crunching data millions of times faster than supercomputers.

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Sandbox AQ's initial sales are coming from software that runs on classical computers but tries to block quantum machines from someday unlocking standard encryption and exposing sensitive communications. Customers include New York's Mount Sinai Health System and telecoms providers Vodafone Business (VOD.L) and SoftBank Mobile (9434.T).

Mount Sinai President David Reich told Reuters that Sandbox would over the next year assess the encryption in the health system's messaging tools and propose potential algorithm upgrades.

Schmidt said in an interview that converting large organizations to quantum-secure communications would be "a pretty big business."

In addition, Sandbox is nearing deals to sell quantum simulation software to potentially accelerate development of drugs and materials, CEO Jack Hidary said. Projects that could be commercialized over the next three years include using AI to analyze data from quantum-based sensors to improve medical imaging and also enable navigation by tracking magnetic fields instead of GPS satellites, he added.

Some of the team and inspiration for Sandbox originated at Alphabet in 2016. But the Google parent will not be a shareholder. Hidary said he wanted outside investors to help speed growth. The company will use cloud computing from Google Cloud and others.

Alphabet said it was "pleased to help Jack to transition to an independent company."

Investors include Schmidt, Breyer Capital, T. Rowe Price funds and Salesforce.com Inc (CRM.N) founder Marc Benioff's TIME Ventures. Hidary declined to specify the amount of funding, saying he wanted attention instead to be on the technology.

The Palo Alto, California-based company has 55 employees and will spend the new funding on hiring.

Hidary said the company had prioritized increasing racial, gender and other diversity and was working to bring in residents from University of California Merced, not commonly known as a tech powerhouse, as one way to reach its goal.

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Reporting by Paresh Dave; Additional reporting by Jane Lanhee Lee; Editing by Edwina Gibbs

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