3 Ways to Invest in D-Wave Stock Right Now Pre-IPO
Quantum computing promises to turn Moore’s Law on its head with exponentially faster computing times than we are capable of today. Canadian quantum computing startup D-Wave made headlines recently by taking a problem that would take 10,000 years to solve with conventional computing and then solving it in seconds. This would imply that quantum computing is 100 million times faster than conventional computers. With such mind boggling amounts of computing power, we can take all that big data we’re creating every day and begin to do some pretty cool stuff with it. Just yesterday, IBM announced that their own quantum computing chip is now available for developers to play with via “the cloud“. This is what the interface looks like to the “IBM Quantum Experience”:
So while buying shares in IBM will give you next to no exposure to quantum computing yet, investing in D-Wave stock sounds like a very viable way to invest in quantum computing, The problem is, D-Wave is a privately held company. Since we’ve had strong interest from our readers about how retail investors can get exposure to D-Wave stock, we’re going to give you three ways as follows.
Buy Shares in Harris and Harris Group (NASDAQ:TINY)
We wrote an entire article on this topic which you can read about here. If at the time we wrote that article you bought shares in Harris and Harris Group (NASDAQ:TINY), you’d be down -44% on your position as of today but on the other hand, your exposure to D-Wave would have increased significantly. TINY’s holding in D-Wave now accounts for 16% of TINY’s current NAV and is now their largest equity investment. Since our original article, Harris and Harris Group (NASDAQ:TINY) wrote up their investment in D-Wave by $4.1 million giving their 5.1 million share position a current value of $11.5 million. This would imply a price of $2.24 per share of D-Wave.
Buy Shares in Pender Growth Fund (CVE:PTF)
One of our readers, Vanisle500, turned us on to this fund which holds shares in D-Wave. If he is still holding his 10,000 share position, then the value of that holding would have increased from $6,800 to $16,000 or an increase of +147% in just 8 months. The question is, how much exposure do we get to D-Wave by buying shares in Pender Growth Fund (CVE:PTF)?
According to their financial statements, as of December 31st 2015, PTF held 1,120,720 shares in D-Wave with an implied valuation of $2.5 million (using TINY’s latest valuation). Their NAV as of April 29th 2016 was $15.9 million which means that all things being equal, buying shares in PTF gives you a 15.7% exposure to D-Wave which is roughly the same amount of exposure that an investment in TINY would give us. Given the recent spike in the PTF share price, the fall of TINY’s shares, the increased liquidity for TINY, and the diversity of TINY’s other holdings, we’d buy shares in Harris and Harris Group (NASDAQ:TINY) over Pender Growth Fund (CVE:PTF) right now if we had to choose between the two for exposure to D-Wave. However, the absolute best way to buy shares in D-Wave is to actually buy shares in D-Wave which brings us to our third and best way to invest in D-Wave.
Buy Shares in D-Wave through Harris and Harris Group (TINY)
Last week an entity owned by TINY called “H&H Co-Investment Partners, LLC” began accepting subscriptions for investments from accredited investors to purchase a limited amount of equity interests in “H&H Co-Investment Partners, LLC D-Wave Series J”, an investment series created to invest in future rounds of financing of D-Wave Systems, Inc. For anyone who asked us how they can buy shares in D-Wave, this is your answer. You don’t have to be a shareholder in TINY to invest but do note the following:
Accredited investors interested to participate in this offering, who are identified as holders of Harris & Harris Group’s common stock immediately prior to the date of this announcement, will receive priority should the offering be oversubscribed, will be able to invest in the offering at reduced expense rates and will be entitled to reduced placement agent fees.
D-Wave is looking to raise $15,000,000 and the offer appears to expire on the 16th of June. In order to participate you need to create an account with FolioClient and invest a minimum of $25,000. For the average retail investor, that’s a significant amount. We’re not sure if we’re going to pull the trigger yet, but signing up for an account was easy enough. Be sure to read the prospectus which even contains some basic financials for D-Wave as seen below:
There is one last way which may be a long shot but we’ll mention it anyways. If D-wave looks to IPO, there’s one platform that allows retail investors to buy into IPOs before they go public. Motif Investing announced last year that they will begin offering pre-IPO shares for JP Morgan led IPO offerings. If D-Wave files for an IPO, let’s hope JP Morgan is the lead on the deal. In the meantime, you can open a Motif Investing account for free with no deposit required so you are ready to buy shares of future IPOs before they begin trading.