The next technological revolution is already here – and it is called "quantum computing." This phrase has in recent years become the "holy grail" in the global struggle to achieve strategic superiority, driving countries around the world into a marathon to develop capabilities in the field.
Dr. Aviv Zehavi, Vice President of Innovation Infrastructure at the Israel Innovation Authority and Israel’s representative in the dedicated OECD forum for the field, explained to "Maariv Business" that "quantum computing is a branch of computer science that uses principles of quantum physics and mathematics to perform calculations beyond the capabilities of computers as we know them today. The field effectively expands the boundaries of computational power, and therefore the scope of human activity in a variety of areas.
For example, we will be able to develop drugs and medical devices and conduct experiments tens or hundreds of times faster, thereby shortening by decades the time it takes for a medical solution to reach the market from the moment work begins. This applies to all areas of life as well."
Global investment in quantum computing is led by the government sector, with estimates indicating that over $55 billion has been invested in the field by 2025, of which around 70% came from governments, and the rest from private investors, according to a November review by the Israel Innovation Authority.
The same review also indicated that Israel is showing a reverse trend, in which the government continues to invest in the early stages of local companies in the field, but many of those that have reached technological maturity have managed to raise most of their funds from the private sector.
The Next Star
For most of us, who fund government investments through our taxes, the term "quantum computing" mostly evokes question marks and yawns, even though it is a field that could change the future of humanity, particularly for those who will hold independent capabilities in the field. However, investors have already realized that this is the "next technological revolution" after AI – even though commercialization is still in its infancy – and have begun betting on start-up companies they believe will become the next tech giants.
The total venture capital investment in Israeli quantum computing companies stood at approximately $650 million by the end of last June, and has since almost doubled, joining government investment in the field, which amounted to $340 million by the end of 2025. Among the notable recent investments were fundraisings by Israeli companies such as "Quantum Art," a Weizmann Institute spin-off developing a quantum computer, which announced a $100 million fundraising about a week and a half ago, and "Qedma," developing a system for quantum computing error correction and precision, which announced a $26 million fundraising in early July.
According to Zehavi, the reason that most investments in the field come from governments is due to strategic and security considerations and the high risks still inherent in the field, given its low technological maturity. "Quantum computing requires a high level of knowledge, experience, and capabilities," he notes, "which are currently mainly found in academic research and among senior technologists and scientists in the private sector.
This creates a kind of barrier that prevents entrepreneurs from establishing a large number of start-ups to address a variety of problems, similar to the number of start-ups that adopted AI technology. This is also why, in Israel, known as the ‘start-up Nation,’ there are only about 20 to 30 companies at various stages in the field, three of which are the large defense companies in Israel, and four others are R&D centers of international technology giants such as NVIDIA and IBM. If we need to gauge where quantum computing currently stands, in my estimation it is exactly where AI was in 2021–2022."
How to Price Technology?
Despite the relatively low total investment in quantum computing compared to the hundreds of billions of dollars already invested in AI, the buzz around the field has already given it the status of the "next trend" in the capital market after artificial intelligence.
The projected size of the quantum computing market is already estimated at $200–250 billion by 2035, even before potential applications of the technology in a variety of tech initiatives, similar to AI, according to a review by the international consulting firm Bain & Company.
But how can a market still based on government funding and academic research generate such buzz among investors? Sylvia Jablonski, Chief Investment Officer at the American ETF company Defiance, explains that "financial markets began taking quantum computing seriously in 2021–2022, with the entry of the first pure quantum companies into the stock market, led by IonQ, which went public in New York in October 2021.
Until then, quantum was mostly perceived as a research field within tech giants like IBM, Google, and Honeywell, or as a field led by governments and academia. Once tradable shares were created, the market could, for the first time, price technological progress, delays, and long-term economic potential in real time.
Since the beginning of 2024, quantum shares have exhibited high volatility, and sharp rallies have been recorded around technology roadmaps and government contracts in the field, alongside declines due to cash burn rates and long commercialization timelines. The volatility itself increased market attention and transformed quantum from an academic phenomenon into a trading and investment theme.
The major quantum companies, valued at over a billion dollars and primarily focused on quantum, are mostly in the U.S., with some traded on U.S. stock exchanges, but some of the most advanced and largest remain private, including Quantinuum and PsiQuantum, reporting valuations in the billions of dollars."
Jablonski estimates that government money will continue to lead investments in the field in the coming years, as "quantum computing is directly linked to national security, encryption, and strategic advantage between countries." What she expects to happen, however, is "a rebalancing between government and private money, since as commercialization paths become clearer, private capital will increase its presence.
It should be remembered that quantum computing is no longer just a theoretical scientific field, but a story of capital allocation and competition between countries alongside the pricing of expectations. Investors are not buying immediate results, but strategic options for the long term, similar to early investments in disruptive technologies in the past.
The level of interest and expectations certainly recalls the AI days of 2021–2022, and quantum can definitely become a central investment theme, but the dynamics, in my estimation, are likely to resemble biotechnology more than software, as the field is characterized by long development timelines, sporadic breakthroughs, and more."
Leading the Field
Lior Litvak, partner at Galilot+, the growth fund of Galilot Capital managing $800 million in Israeli investments, who led the fundraising at the Israeli company Qedma, provided the investor perspective, noting that "the quantum computing field is still in its early stages and the technology has room to advance, but investors understand that it is a field worth being in.
The next milestone is 'quantum supremacy,' and the main race today is to produce a product capable of performing quantum calculations with measurable results. There are several methods being developed for these computers, such as cold atoms, and investors are betting on the direction they believe is most promising.
All the major players, such as Microsoft and Google, are already investing in quantum computing, and the private market is fully involved. The understanding is that if and when they achieve ‘quantum advantage,’ it will open the way to solving problems that no current solutions can handle.
Our investment in Qedma stemmed from the fact that Qedma is a software company, as Galilot Capital+ invests in software. Qedma's technology will be relevant and applicable in any form of quantum computing hardware that develops, and alongside us, IBM also invested in Qedma.
Our decision to invest in Qedma was not solely because it is Israeli, although the Israeli ecosystem is where we operate, but based on market feedback indicating that Qedma leads in its field globally. There are, of course, other companies worldwide working on quantum computing error correction, but the feedback regarding Qedma positioned it as a market leader, and this influenced our decision to join them in the field. If we did not believe it was leading, we would not have made the investment, even though it is in Israel."
According to Litvak, the Israeli "X factor" lies in local human capital, which he defines as "very significant talent in the world of quantum computing. Prof. Dorit Aharonov, for example, is a senior lecturer at the Hebrew University and Chief Scientist at Qedma, and Prof. Nenatel Lindner is a senior lecturer at the Technion and serves as Chief Technology Officer of the company.
Israel has a broad quality human capital base, and therefore, in my view, there is room for additional Israeli companies to emerge in this field in the relatively near future. It is true that the field is still relatively small in terms of the number of companies operating in it, so if asked whether I would establish a fund that invests solely in quantum computing, the answer is no. Nevertheless, I believe we are on the verge of a wave of new companies being established in this field in Israel."