A person works inside Xanadu's Toronto office in September, 2025.Fred Lum/The Globe and Mail
Xanadu Quantum Technologies Ltd. XNDU-T has struck a deal to raise up to US$300-million from an affiliate of a New Jersey investment firm with strong ties to the family of U.S. President Donald Trump.
The Toronto-based quantum computing startup said Thursday it had entered into a synthetic at-the-market equity facility with YA II PN Ltd., managed by Yorkville Advisors.
The deal gives Xanadu the ability to issue and sell up to US$300-million of its subordinate voting shares in private placements to the Yorkville entity over three years. Xanadu said it plans to access the program “opportunistically, based on prevailing market conditions and valuation levels it believes to be favorable to shareholder value.”
At-the-market (ATM) offerings have become a popular funding mechanism for quantum computing startups. Rather than marketing a large offering at a set price, often at a discount, companies use ATM offerings to issue shares in smaller chunks at the market price. That provides more funding immediacy and flexibility and tends to have a smaller impact on the stock price than typical equity deals, which carry higher fees and require time-consuming road shows.
Xanadu rivals D-Wave Quantum Inc. QBTS-N, IonQ Inc. IONQ-N and Rigetti Computing Inc. RGTI-Q have each raised hundreds of millions of dollars in the past year through ATM offerings.
Quantum stocks have gyrated wildly, making strong gains in late 2024 and through 2025 on the heels of a string of technical breakthroughs that promise to bring the underlying, experimental science closer to widescale commercialization. They subsequently sold off more recently as geopolitical uncertainty mounted and tech valuations declined early this year before rebounding.
On Thursday quantum stocks jumped again after the U.S. government said it would invest US$2-billion in nine American quantum computing developers, including D-Wave – which was founded in Canada but is now headquartered in Miami – through the Commerce Department.
Xanadu stock has been tumultuous since the company merged in late March with a NASDAQ-listed special purpose acquisition company (SPAC). On Wednesday, the stock, which still has a thin float, closed up 20 per cent– the ninth trading day in which it has swung by that degree. Xanadu’s market capitalization has exceeded US$10-billion at times, but most of its investors, who invested when Xanadu was a private company, can’t trade the stock until late September.
Those include Ontario Municipal Employees Retirement System, several Canadian venture capital firms including Georgian, Canadian tech entrepreneurs Michael and Richard Hyatt, Dennis Bennie, Michael Serbinis, Anthony Lacavera and ex-Manulife CEO Donald Guloien.
Xanadu has estimated it will need to raise US$1-billion from private and government sources to deliver on its goal of establishing a quantum computing-powered data centre in the next few years. It raised US$302-million in gross proceeds in the go-public transaction.
Yorkville has emerged as a key financial partner and advisor of the Trump family, helping Trump Media & Technology Group (TMTG) DJT-Q to raise US$2.5-billion to buy bitcoins and partnering with it to launch five exchange-traded funds. A Yorkville board member leads a SPAC affiliated with the president’s sons Eric Trump and Donald Trump Jr. Yorkville is the official sponsor of another SPAC that is in talks to merge with the Trump family’s Truth Social online platform business. Truth Social is now part of TMTG, which is in the process of merging with fusion energy developer TAE Group.
Xanadu is one of several companies in a global race that features startups and giants, including Alphabet Inc. GOOGL-Q and International Business Machines Corp. IBM-N They’re all working to harness the logic-defying rules of quantum physics in machines they hope will vastly outperform the world’s most powerful computers in several categories. That, in theory, should allow them to speed through sophisticated tasks such as complex economic forecasting, discovering advanced materials and pharmaceuticals – and, if used by bad actors, pick the cryptographic locks that protect global online systems. No company has yet produced a commercially relevant quantum computer, and the soaring valuations of publicly traded quantum companies have attracted short sellers.
Xanadu has emerged as one of the nascent sector’s leaders. The company uses light as its medium of calculation, enabling it to make a system that is simpler and less costly than others to develop, the company says.
In the past five years, Xanadu has published four papers in the journal Nature documenting its scientific breakthroughs. It also advanced last year to the second stage of an international competition held by the U.S. Defense Advanced Research Projects Agency challenging quantum computer developers to prove their machines will work by 2033. Two other Canadian companies, Photonic Inc. and Nord Quantique Inc., are also in the running; both recently struck funding deals that also value them at more than US$1-billion.
Companies that succeed in the DARPA program stand to receive more than US$300-million in U.S. government funding. The Canadian government launched a matching program last year that awarded each of this country’s DARPA contestants up to $23-million to match the U.S. funding they’ve qualified to receive so far.