Intel agrees to acquire Tel Aviv-based quantum computing startup Classiq; Classiq has raised more than $200M in funding and has about 130 employees

Quantum computing software development becomes a target for major hardware players, increasing acquisition potential for similar startups.

Intel has agreed to acquire Classiq, an Israeli quantum computing software startup, for $2.3 billion. The deal, comprising cash and Intel shares, is expected to provide significant returns for Classiq's founders and early investors. Co-founders Nir Minerbi, Amir Naveh, and Prof. Yehuda Naveh are each projected to receive between $80 million and $100 million. Entrée Capital, an early investor, is anticipated to gain over $300 million, having initially invested a small sum. Classiq, founded in 2020 and employing about 150 people, develops software for designing and running quantum algorithms across various hardware platforms, focusing on the programming layer rather than hardware itself. Employees collectively hold about 10% of the company, valued at around $230 million, with Intel also offering over $100 million in retention grants for staff.

Intel's strategic acquisition of Classiq highlights the increasing importance of the software layer in quantum computing, signaling a potential shift in how major tech companies approach the nascent field. Instead of solely focusing on building quantum hardware, Intel is investing in the tools that will make quantum computers accessible and programmable. This move suggests that the value in quantum computing is rapidly moving towards abstraction and ease of use, making software platforms critical for broader adoption.

The substantial return for Classiq's investors, particularly Entrée Capital, validates the early-stage investment in quantum software despite the technology's long development cycle. This outcome may encourage further investment in quantum software startups, potentially accelerating innovation in the field. Other companies looking to enter or expand in the quantum space might consider similar acquisitions or partnerships to quickly gain expertise and market position in the essential software domain.