(Bloomberg) -- SandboxAQ, a startup spun off from Alphabet Inc., is seeking to raise new equity funding at a valuation of more than $5 billion, according to people with knowledge of the matter.
The company is in discussions with prospective investors, said the people, who asked not to be identified because the talks are confidential. The more than $5 billion valuation figure represents a pre-money basis, meaning it doesn’t include the sum that is raised. Terms of the transaction haven’t been finalized.
A spokeswoman for the Palo Alto, California-based startup declined to comment.
The company, which is developing artificial intelligence and cybersecurity services, said in 2022 that it raised $500 million but didn’t disclose a valuation at the time. Led by Chief Executive Officer Jack Hidary, it’s backed by investors such as Eric Schmidt, Marc Benioff, Jim Breyer, Thomas Tull’s US Innovative Technology, T. Rowe Price, Guggenheim Partners and Allianz, its website shows. Schmidt — a former Google CEO whose net worth is $32.4 billion, according to the Bloomberg Billionaires Index — is chairman of SandboxAQ.
SandboxAQ’s technology combines AI and quantum physics, and the company has three business units. Its artificial intelligence is trained using large numerical data — rather than with words, which is how ChatGPT and other popular chatbots were developed.
The largest business unit offers simulation software based on AI and quantum algorithms to speed up drug discovery and develop new chemistries for better batteries and other products. SandboxAQ has partnered with Nvidia Corp. to make it easier for customers to run the simulation software on powerful AI chips.
SandboxAQ also develops cybersecurity software to help companies fortify their systems against hackers, both today and in the future. While there is no known quantum computer today that can crack encrypted data, hackers can harvest the information and wait until technology improves enough to decode it.
The US Department of Commerce’s National Institute of Standards and Technology released encryption standards in August that could withstand such attacks, and SandboxAQ software can help transition large businesses to these new standards.
SandboxAQ’s third unit offers AI software that can read the signals from quantum sensors that detect the Earth’s magnetic fields. The AI can identify the location against a map of these magnetic fields in real time, allowing a plane to navigate without using global positioning system satellites — technology that can be spoofed or blocked. SandboxAQ has been working with the US Air Force on this new approach.
©2024 Bloomberg L.P.