Quantum drug discovery start-up Rahko snapped up by US investor Odyssey Therapeutics

A British quantum computing start-up has been bought by US investors in the latest case of a cutting edge British technology company falling into foreign hands.

London-based Rahko, which was developing software designed to utilise quantum computers for drug discovery, has been swooped upon by US-based Odyssey Therapeutics.

Odyssey, which is based in Boston, confirmed this week that it had raised $218m in venture capital funding to back new drugs and drug discovery technologies. It has acquired a majority stake in Rahko, which was founded in 2018 by computer science graduates at UCL. The start-up previously secured funding from Balderton Capital in 2019.

Rahko’s website states that it is “solving drug discovery with quantum machine learning”, developing a drug discovery service called Hyrax that applies drug discovery algorithms to quantum computers. It has around a dozen staff, according to LinkedIn. One technology investor said Rahko had struggled to raise additional funds. Rahko and Odyssey did not respond to requests for comment.

There are only a handful of quantum computing companies in the UK, and many are at a very early stage, but the technology is seen as critical for national security and scientific innovation.

Sebastian Weidt, the chief executive of Brighton-based start-up Universal Quantum, said the UK faced a challenge to keep the best quantum companies in the UK. He said: “There is a real threat if you are thinking about UK sovereignty, and a question over how you keep great start-ups, great knowledge and talent.”

Unlike traditional computers that perform functions by stringing together binary ones and zeros, quantum computers use “qubits”, which harness quantum mechanics so they can be either one, zero or both at the same time. This technology is expected to supercharge computational power.

There is often significant pressure from US investors for British founders to relocate to Silicon Valley to secure funding for their work, in particular for quantum computing.

In 2019, the UK-based scientists behind quantum start-up PsiQuantum relocated to Palo Alto, Silicon Valley, securing the backing of US venture capitalists. The start-up raised $450m earlier this year at a valuation of $3.1bn.

This summer, Cambridge Quantum, a quantum software company, sold a majority stake to US conglomerate Honeywell, combining with its own quantum division. Honeywell said it would invest up to $300m in the merged business.

Developing quantum technology is expensive, with US investors raising hundreds of millions of dollars to build functioning quantum computers that are ready for commercial use.

The UK has previously struggled to hold on to its best talent in artificial intelligence and biotechnology from deep-pocketed US investors. In 2014, DeepMind was acquired by Google in a $500m deal while this year Vaccitech, which helped develop the AstraZeneca vaccine, opted for a US listing over the City.