(Bloomberg) — The Central Intelligence Agency’s venture capital firm has invested in Sandbox AQ, a software spin-off from Google that focuses on harnessing artificial intelligence and quantum science.
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CIA’s In-Q-Tel was joined by Paladin Capital Group, which backs innovative technology companies, in Sandbox AQ’s first fundraising round. The cycle – which was oversubscribed – garnered “well into the nine figures,” Sandbox AQ managing director Jack Hidary said in an interview.
Founded in 2016, Sandbox AQ spun off Google from Alphabet Inc. earlier this month and is chaired by Eric Schmidt, the search giant’s former CEO. Instead of creating its own quantum computer, Sandbox AQ seeks to develop a software architecture capable of replacing existing cryptography with complex new algorithms deemed impossible to decipher by quantum computers, a nascent technology that is not yet economically viable. operational.
Steve Bowsher, president of In-Q-Tel, said the goal of the participation was to develop new encryption software that could withstand the prospect of code cracking by emerging quantum computing, as well as sensors quantum and other products.
“We want them to be able to sell to the US government,” Bowsher said in an interview. He added that the venture capital firm has spent the past several weeks showcasing Sandbox AQ’s work to some of the eight US intelligence agencies it works with, including the National Security Agency, Federal Bureau of Investigation and CIA.
Paladin Capital Chief Investment Officer Chris Steed has predicted that Sandbox AQ could dominate a market worth tens of billions of dollars. Industry analysts IQT Research estimated last year that the post-quantum crypto market will reach $2.3 billion by 2026 and $7.6 billion by 2030.
Support from In-Q-Tel and Paladin would allow Sandbox AQ to develop relationships to work closely with US and allied governments during the deployment, Hidary said. While it was “wonderful” to have a frontrunner advantage, the strength of its software, its 55-plus team of experts, and its alliances were more critical to success, he added.
Scientists disagree on when a breakthrough in quantum computing might come, with estimates ranging from five to 50 years – or never at all.
Joe Altepeter, who manages a quantum research program at the Pentagon’s Defense Advanced Research Projects Agency, said last month that there was a lot of “hype” over industry claims about the arrival of the quantum computing, which has attracted billions of dollars in investment, although several “hardware miracles” still stand in the way.
While there’s “certainly still a possibility that the quantum won’t develop eventually” and the problem may never show up, Bowsher said it’s important to prepare ahead of time “because you don’t want to not be caught off guard”.
He added that it was unclear how close China, which is investing billions of dollars in quantum research, might get to public-key encryption. “If you wait until then, it would be too late,” he said.
Experts warn that encrypted data that is being stolen and stored en masse could be hacked on a large scale as soon as quantum computing comes online. This could risk creating troves of trade and government secrets, some of which remain classified for 25 years or much longer.
Wary of the threat ahead, the Biden administration in January tasked national security systems with coming up with transition plans to help defend against the theoretical threat to public-key encryption posed by the arrival of quantum computers.
The National Institute of Standards and Technology, known as NIST, is looking to select new quantum-proof encryption algorithms from among seven finalists in a global competition soon. Two of the shortlisted algorithms come from the team behind PQShield, a University of Oxford spin-off that also offers post-quantum cryptography software. The winners will be integrated into the software architecture of Sandbox AQ and other companies.
Sandbox AQ also recently formed partnerships with Ernst & Young and Deloitte to offer services to thousands of their clients, initially including an inventory of legacy software. Financial, pharmaceutical and telecommunications companies, which have some of the most sensitive data to protect, will likely be at the forefront of efforts to create a new post-quantum crypto market.
“We’re not being alarmist and saying you have to change everything today,” said Colin Soutar, who leads cyber strategy at Deloitte Risk & Financial Advisory. “But I want to say that organizations should start looking carefully at what they have.”
Some in the private sector are already taking the plunge. New York’s Mount Sinai Health System and its 7,000 physicians became customers of Sandbox AQ’s discovery services last month, said Kristin Myers, chief information officer. This will allow the healthcare company, which makes $9.3 billion a year in revenue, to review all the software it would need to prepare for post-quantum cryptography, before determining whether she will continue the transition.
“I think that’s the way the industry will go, especially in the next five years,” Myers said, adding that she’s taken steps to protect patient confidentiality.
(The company corrects in the second paragraph that the funding round is not open but closed.)
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