Zapata Computing, a quantum software startup that spun out of Harvard University in 2017, is shutting down operations. The company announced in an SEC filing last week that it has laid off most of its employees and will wind down its business. Christopher Savoie, the CEO and president, has resigned from his position.
Sumit Kapur, the CFO, will take over as CEO to oversee the closure process. Zapata cited financial difficulties as the reason for the shutdown. The company owes around $2.3 million in Senior Secured Promissory Notes and has additional debts to other creditors.
It expects to incur more expenses as it winds down operations. The company’s assets are not enough to cover its outstanding financial obligations. As a result, there will be little to no residual value for distribution to common stockholders.
Zapata faces financial difficulties
Due to its insolvency, Zapata does not plan to file for bankruptcy or seek stockholder approval for the closure. Bob Sutor, VP and Practice Leader of Emerging Technologies at Futurum, commented on the situation.
He said, “It’s sad when this happens because of the employees and shareholders. Unfortunately, being in quantum or AI does not protect startups or young companies from economic realities. Unless revenue plus investment exceed expenses and you have solid management, you can’t survive when your ROI is too far out.”
The impact of Zapata’s closure on the nascent quantum market is unclear.
It could be seen as a minor setback or a sign of potential challenges ahead. However, it highlights the risks involved in the high-stakes field of quantum computing and AI. Before going public, Zapata had emphasized its shift towards generative AI.
Christopher Savoie had said, “Our engineers and scientists have spent years building, testing, and refining our proprietary software to put Zapata AI—and our customers—at the forefront of the generative AI revolution. We believe generative AI is shaping a once-in-a-generation opportunity, and the capital and relationships afforded through this business combination will strengthen our market position.”
The next steps for Zapata Computing are not yet known.
