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All-star billionaires and their family offices back quantum/cybersecurity outfit

Cyber-security looks like a winner for quantum software outfit Sandbox AQ, and its bevy of billionaire backers, following Alphabet’s decision to spin it off. 

Sandbox, led by Eric Schmidt, is aiming to capitalize on the fear, sometimes expressed by family offices, that quantum computing will smash through the encryption barriers that currently protect digital data. 

It is also developing software based on quantum mechanics which can upgrade AI systems to provide protection. It also believes that its software can assist with precise navigation, drug development and investment portfolio construction by using data that current systems find hard to read.

Sandbox says it has raised sums into “nine figures” from the family offices of billionaires…

Its fundraising has also illustrated a hunger for capital from loss-making quantum computing developers, as they strive to win clients and compete for talent. 

D-Wave of Canada, backed by Jeff Bezos and Goldman Sachs, plans to reverse into a SPAC following a completion of similar exercises by IonQ and Rigetti Computing. 

Private sector investment in the sector doubled to $1.7 billion in 2021, says McKinsey. But far more has been invested by governments, with China the biggest spender by far, with a budget of $15 billion. 

Quantum computing harnesses the behaviour of molecules to carry out calculations at astonishing speed. It can access encrypted data in fractions of a second.

Sandbox says it has raised sums into “nine figures” from the family offices of billionaires including Jim Breyer’s Breyer Capital, Guggenheim Investments, Marc Benioff’s Time Ventures, David Siegel, co-founder of hedge fund Two Sigma, Bradley Bloom, co-founder of Berkshire Partners and Tulco’s Thomas Tull, data fiend and founder film producer Legendary Entertainment.

Sandbox started as a pet project for Alphabet co-founder Sergey Brin. Former Alphabet chief executive Eric Schmidt, who also has a family office Hillspire, has become its chairman, whose advisers include Blythe Master of private equity firm Motive Partners. The business is separate to Alphabet’s DeepMind Technologies.

Sandbox chief executive Jack Hidary, an internet pioneer, is transferring from Alphabet with a 55-person team. Hidary, and his brother Murray, created internet portal EarthWeb in 1994, which later bought Dice, the online jobs firm.

Sandbox is actively recruiting and seeking to make its software available to other systems as a service, rather than trying to build quantum hardware. 

Jim Breyer sees its biggest opportunities in medicine and healthcare, but says Sandbox’s biggest early impact will come from creating defences to quantum computing cyber attacks. 

Schmidt is deeply concerned about the issue, which has national security implications. In 2021 he said: “We know that foreign powers, and I won’t go into the details, are busy recording everything. And it is their plan, ten years ago, ten years from now, to decrypt everything.” Events in Ukraine have heightened these concerns. Retired members of the US military sit on the Sandbox advisory board and talks are on-going with the US federal government.

Blythe Masters sees opportunities at every level: “Quantum computers will one day crack today’s ubiquitous RSA cryptography in a matter of seconds and adversaries are already acquiring sensitive data that can be decrypted when quantum computers are available.”

RSA is an algorithm central to cyber security systems. Sandbox has developed a solution that can sound the alarm if systems are unsafe and migrate them to a higher level. 

It is working with Softbank Mobile, Vodafone, Mount Sinai Health Service and Israeli web developer Wix to future-proof their systems. 

There are doubts at MIT, and elsewhere, that quantum hardware will develop sufficiently quickly to satisfy its investors. But fears over cyber security will give Sandbox an early mover advantage, as it seeks to bridge the gap between the two worlds.

According to Gartner, 20% of global organisations already expect to start budgeting for quantum in the near future with cyber security an issue. Surveys have also ranked cyber security a top concern for family offices. 

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