We are delighted today to unveil our investment in Arqit. I say ‘unveil’ because this has been a long time in the making. We have been working with David Williams, the Founder and CEO, and his team for over three years now having led a pre-seed investment round in March 2018 and supported subsequent raises in June 2019 and September 2020 – but the company has remained in ‘stealth mode’ throughout, preferring to focus on its product, technology and customers than getting caught up in tech ecosystem newsflow. As of today, Arqit moves from relative obscurity to some prominence as a potential NASDAQ listed entity by way of its proposed $1bn acquisition by US SPAC Centricus Acquisition Corp with substantial cash resources expected upon close.

Whilst Arqit will (subject to completion of the proposed transaction) become a US listed company, this is a British success story through and through – and a testament to the amazing entrepreneurial and engineering talent we are fortunate to have in the United Kingdom. It’s a story of pioneering technology of genuine global significance built by British founders, backed by (mainly) British investors, creating thousands of new quantum jobs in the UK, with satellites to be launched from Cornwall by (recent investor) Richard Branson’s Virgin Orbit and technology distributed by (amongst others) British Telecom (BT). Arqit is, furthermore, supported by the British Business Bank (both directly through Future Fund and indirectly as LPs in all three of Arqit’s VC backers), and its National Security Strategic Investment Fund (“NSSIF”) program has provided invaluable insight into government user cases. Anyway, enough flag waving for now – you get the picture. Further details of the company and transaction are provided here.

Whilst today’s focus is rightly on Arqit, it’s also a big day for Notion as the first investor and largest external shareholder by some margin, ticking all the VC ‘mythical beast’ boxes as both a ‘unicorn’ ($1bn company) and a ‘dragon’ (fund returner for Notion, albeit as yet unrealised). So I wanted to share some insights as to why we backed the company and how we have helped them on the journey.

Deep Tech plays an important, albeit lesser-known, role in Notion’s investment strategy. We are best known as a B2B SaaS investor operating at Series A and most of our time and energy is focussed there – but we have long recognised the opportunity in European Deep Tech, and have invested in several high potential ‘moonshot’ companies in this area (Five AI, Element and Novatiq to name a few). Arqit’s domain resonated with us in particular, given our MessageLabs heritage and our status as a NSSIF backed firm.

For these types of investment, the model is somewhat different. Commercialisation takes longer so there is not the normal evidence we look for in our core SaaS strategy. The capital needs of these companies can often be much greater too, so finding the right partners is key.

In the absence of commercial data, our decision focus is on the scale / accessibility of the opportunity and the capabilities of the team seeking to address it.

Given our heritage we know the cyber landscape well, so we were all too aware of the impending threat that quantum computing poses to conventional data encryption. It is no exaggeration to say this threat is existential. The world needs a different approach quickly or all of our data and assets are at risk. Whilst quantum computing is still nascent and we are a few years away from full access to such capabilities, just think of all the data already captured by mal actors in encrypted format waiting to be decrypted as soon as the technology allows. This problem needs a solution today – not in ten years’ time. We need to future proof our approach to encryption and Arqit ticks every box in terms of scale of opportunity. We are talking of a TAM in the hundreds of billions of dollars.

The team is stellar. David Williams, Founder and CEO, is an immensely impressive entrepreneur with a formidable intellect and boundless energy. His career spans banking and technology at both large and small companies and he led a large public Satellite comms company at a relatively young age. His longstanding friendship / partnership with co-founder (and astrophysicist) Dave Bestwick provides solidity at the core of the executive team. Together they have assembled some of the very best talent in the world which reads like a Who’s Who at the intersection of Space-tech, cryptography and optical communications:

Board & Advisory

Dr Taher Elgamal (Main Board Director) – Inventor of SSL and Security CTO at Salesforce.com

Daryl Burns (Co-inventor) – Former Chief of Research & Innovation at GCHQ and Deputy Chief Scientific Adviser for National Security

General ‘Dash’ Jamieson (Director Arqit Inc) – Former 2 Star General & Chief Staff for Cyber Warfare, US Airforce

General ‘Seve’ Wilson (Director Arqit Inc) – Former 4 Star Vice Chief of Staff, US Airforce

Sir Iain Lobban (Advisory Board) – Former Chief Executive GCHQ

Dr Alison Vincent (Advisory Board) – Former CISO HSBC and CTO Cisco UK, PhD Cryptographer

Executive

Dr Daniel Shiu (Chief Cryptographer) – Former Head of National Technical Authority for Cryptographic Design and Quantum Information Processing at GCHQ

Dr Barry Childe (Chief Innovation Officer) – Former Distinguished Engineer at HSBC and winner of the IBM prize aged 13

David Webb (Chief Engineer) – Formerly ran McAfee End-Point Security for 13 years

Ben Olivier (MD Operations) – Former CEO Thales Alenia Space, 30 yrs in Optical Comms

Nick Pointon (Chief Financial Officer) – Former VP Finance King Digital for its NASDAQ listing

Rocky Rochelle (Chief Operating Officer) – Former Air Vice Marshall & Head of Capability, Royal Airforce

James Brown (Chief Product Officer) – Former senior roles at Palo Alto Networks, AWS and Microsoft

Richard Jackson (Chief of Staff) – Former Head of Operations for UK Prime Minister Theresa May

Combining massive opportunity and extraordinary talent, the solution Arqit has created is truly ground-breaking – massively innovative, hugely defensible but also simple to deploy and support. It’s built for the Cloud and you don’t need to throw legacy investments out to make it work – plus it is provably secure. See the video explainer here.

At Notion, we have helped David assemble his leadership team, define Arqit’s proposition and execute its early strategy. Today’s announcement is just a milestone and there is a long way to go on this journey with much work still to do. We don’t pretend to know all the answers and are firm believers in partnership. It takes all kinds of skills and resources to build a global category-leader, as we firmly believe Arqit will become. Seraphim Space joined us in the 2018 pre-Seed and we introduced Evolution Equity, a partner in another Notion portfolio company, for the 2019 Seed round. All the existing investors then supported Arqit in extending its runway with a Future Fund application in 2020. In parallel, Arqit was fortunate to enjoy support from the European Space Agency, a valued partner throughout and from a number of UK government initiatives. We now look forward to working with Garth Ritchie and his talented team at Centricus to build a defining and enduring company. I will remain on the board and can’t wait to see what the next chapter brings.