Colorado lands coveted Tech Hub designation to boost quantum sector

Quantum leaders packed the Colorado Senate earlier this year when the chamber passed a resolution supporting efforts to grow the sector.

Colorado leaders’ big bet to make the state a focal point for the rapidly growing quantum-computing sector has garnered its first major payout —designation as a national Tech Hub and a $40.5 million federal grant to boost the industry in the Rocky Mountain West.

Gov. Jared Polis announced Tuesday that the U.S. Economic Development Association chose Elevate Quantum, a consortium representing Colorado and New Mexico industry leaders, for Phase 2 Tech Hub funding over the Chicago area with which it was competing. The award was part of $504 million in grants given by the EDA to 12 tech hubs across the country — funding set aside by the 2022 CHIPS and Science Act, which also has generated more than $100 million so far for growth of semiconductor companies in Colorado.

The Centennial State already had begun to push itself to the front of the national picture for quantum research, which involves freezing quantum bits to extremely cold temperatures to speed their processing time and perform complex calculations quickly. Colorado is home to about 3,000 quantum workers currently — the largest cluster in the country — and has four Nobel laureates in quantum physics, which has helped to attract entrepreneurs in the nascent sector to the area.

What the money will do

But winning the Tech Hub designation will allow the state to offer $74 million in incentives that the Legislature approved this year on the condition that the EDA matched them with the awarded funding. Colorado now can offer $44 million in refundable income-tax credits to firms building a shared research facility that can commercialize quantum learnings and $30 million in loan-loss funding for banks and lenders willing to invest in early-stage quantum companies.

With those incentives, the $40.5 million federal award and $10 million in matching funds from the state of New Mexico, state and industry leaders expect to be able to access between $1 billion and $2 billion in private capital and create 10,000 jobs. Doing so could position Colorado as the Silicon Valley of what some believe will be the next big technology sector and generate employment opportunities for individuals ranging from the advanced-degree holders thinking up the next steps in quantum to the manufacturing workers who will be building the computers needed to make the technology run.

“This award will be a game-changer for our industry, providing an opportunity for researchers and companies to innovate side-by-side, accelerating the development and commercialization of quantum technologies,” said Corban Tillemann-Dick, Elevate Quantum co-founder and Chair and CEO of Maybell Quantum, in a news release. “Moreover, today’s award is a down payment on the quantum future, with up to $960m in additional potential funding available from the federal government over the next decade and billions in play from the private sector.”

Corbin Tillemann-Dick listens as the Colorado Senate discusses a resolution to support the quantum sector during the 2024 legislative session.

How the quantum incentives work

Polis has made efforts to acquire once-in-a-generation federal funding offered through laws like the CHIPS and Science Act, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act a key part of his economic-development strategy. The Democratic governor worked particularly closely with Elevate Quantum leaders to land the highest Tech Hub designation, believing it can make the state “the center of the quantum technology ecosystem,” as he said in a news release Tuesday.

Elevate Quantum is working with University of Colorado Boulder, Colorado State University and Colorado School of Mines to build a shared academic research center and incubator housing multiple start-up quantum companies seeking to bring products to market. That joint effort is expected to take advantage of the $44 million facility-creation tax credit and launch a physical hub for entrepreneurs to grow the sector, Massimo Ruzzene, University of Colorado Boulder vice chancellor for research and innovation, told legislators.

And the $30 million in loan-loss tax credits is viewed as an innovative way to get institutional capital to companies in the field that otherwise might find it hard to raise funding. Banks and lenders can seek the tax-credit certificates as a financial backstop even before loans have incurred any losses and then apply again later for registered loan loss certificates of as much as 15% of the size of the loan.

Creating a quantum workforce

In addition to the specified funding programs, Colorado officials have vowed to establish a workforce-development program to create a pipeline of local talent into the sector, as 80% of jobs will not require advanced degrees. In that way, officials are looking to flip the script the state used to boost many advanced industries between 2000 and the pandemic, when employers imported much of their talent from other states — a flow that is beginning to dry up as Colorado’s cost of living rises.

“We are shovel-ready to scale the thousands of quantum jobs that exist today to tens of thousands, benefitting Colorado workers across the state with and without advanced degrees,” said Eve Lieberman, executive director of the Colorado Office of Economic Development and International Trade.

The award marks the first “large-scale, place-based federal investment in quantum” made by the federal government, noted Zachary Yerushalmi, Elevate Quantum CEO, in a news release. It comes after the EDA narrowed an original pool of nearly 400 applicants for tech-hub status to 31 efforts that received Phase One accreditation.