Access, Not Ownership: How Governments Screen Quantum Deals

The National Security and Investment Act 2021 established a mandatory notification regime covering 17 specified sectors, and the sectors themselves are defined in regulations made under the Act. An acquirer buying into any of them has to notify the UK government before the deal closes, and quantum technologies is one of the 17. The duty starts at more than 25 percent of shares or voting rights, and it starts equally when an acquirer gains the ability to secure or block the passage of a class of resolution, and both are treated as acquisitions of control for NSI purposes.

Just over a quarter of the equity does not decide a board vote. It does open the data room, the technical review cycle, and the quarterly reporting pack, and those are what the screening regimes are built to track.

Investment screening in quantum has stopped asking who owns a company and started asking who can reach its technology. Ownership is one route in. Board observer seats, exclusive licences, cloud hosting arrangements, service contracts, and the continued employment of three particular physicists are other routes, and reviewers examine all of them. This is a field guide to those routes: what the main regimes look at, what conditions they impose when they impose any, and what a company should have documented before a term sheet arrives.

The Deemed-Export Logic, Applied to Capital

Export control got there first. Under the U.S. Export Administration Regulations, releasing controlled technology to a foreign national standing inside the United States counts as an export to that person’s home country. Nothing crosses a border. The conversation is the shipment, because the conversation is what moves the capability. Practitioners call this a deemed export, and it has governed lab access and hiring in controlled fields for decades.

Investment screening has adopted the same logic. Congress extended the reach of the Committee on Foreign Investment in the United States (CFIUS) through the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). CFIUS is the interagency committee, chaired by the Treasury, that reviews foreign investments for national security risk. Before FIRRMA it looked at transactions capable of resulting in foreign control. Since FIRRMA it also reviews non-controlling investments in businesses that produce or design critical technology, wherever the investment gives the foreign investor one of three things: access to material nonpublic technical information, membership or observer rights on the board, or involvement in substantive decision-making about the technology.

None of the three requires a majority, and none of them requires a vote. An eight percent stake with an observer seat qualifies. The same stake with no information rights attached generally does not.

Treasury then tied the mandatory filing test to export classification. Under 31 CFR 800.401, effective October 15, 2020, a declaration to CFIUS became mandatory where the target’s critical technology would require a U.S. export authorization to release to the foreign investor’s own country. Export classification now determines investment reviewability. A quantum hardware company that hasn’t ever applied for a licence still needs to know how its technology classifies, because that classification decides whether its next funding round arrives with a filing obligation attached.

Where the Regimes Are

United States. CFIUS handles inbound investment. A separate outbound programme, established by Executive Order 14105 in August 2023 and implemented by a Treasury final rule effective January 2, 2025, restricts U.S. persons from investing in Chinese entities engaged in defined quantum activities. The rule sorts covered transactions into prohibited and notifiable categories, and the quantum activities it names sit in the prohibited category rather than the notifiable one. The America First Investment Policy memorandum of February 21, 2025 set the current direction of travel, promising faster review for investors from allied countries and firmer restrictions on capital linked to the People’s Republic of China.

United Kingdom. Mandatory notification under the National Security and Investment Act attaches when a person crosses more than 25 percent, more than 50 percent, or 75 percent or more of the shares or voting rights in a company operating in one of the 17 sectors, and it attaches separately when a person gains the ability to secure or block the passage of a class of resolution. The government’s call-in power, which lets it review a transaction on its own initiative rather than waiting for a filing, reaches further. It covers acquisitions of material influence over an entity, and it covers acquisitions of qualifying assets, intellectual property among them. A licence deal can therefore be called in even though the share register never changes.

European Union. Regulation 2019/452 has applied since October 2020. It creates a cooperation mechanism rather than a central veto, so member states screen and member states decide, with the Commission and other member states able to comment. A revision proposed by the Commission would oblige every member state to run a screening mechanism and would harmonise the sectors covered. Until it is adopted, the practical position stays uneven: France, Germany, Italy and others already reach emerging technology, while a handful of member states screen thinly.

Japan, Canada, Australia. Japan screens inbound investment under the Foreign Exchange and Foreign Trade Act, and pre-notification is required in designated core sectors. Canada reviews foreign investment for national security under the Investment Canada Act, and Australia runs a national security track alongside its ordinary foreign investment approvals.

For a company raising internationally, all of this adds up to one thing. Most credible sources of capital now sit inside a screening system of some kind, and the live question is which filings, in what sequence, and on whose clock.

Five Channels Reviewers Examine

Board Seats, Observer Rights, and Consent Thresholds

A board seat turns equity into standing access to information. An observer seat delivers most of the same access without the fiduciary duty, and FIRRMA names observer rights explicitly for that reason. Reviewers look past the title to the information flow. What papers does this person receive, which technical committees do they attend, and what would they know after a year.

Reviewers give consent rights the same attention. A small holder with a veto over disposal of intellectual property, over relocation of manufacturing, or over export decisions holds a lever that its percentage does not suggest. Regulators read those clauses as control provisions, and they read them the way they’re drafted rather than the way the parties describe them.

Remedies here are well worn. Companies carve technical committees out of a foreign director’s remit, appoint a security officer reporting to a cleared committee, or replace an observer right with a periodic financial-only report. Where CFIUS signs a mitigation agreement, a binding contract setting conditions on how the parties operate after closing, it usually names the information categories rather than the individual.

Licences, Joint Development, and Asset Transfers

Companies transfer capability without transferring equity all the time. An exclusive field-of-use licence, granting sole rights to apply a technology in a defined application area, hands a counterparty the right to build the thing. A joint development agreement puts their engineers inside the design reviews. A patent sale moves the asset outright and leaves the company standing where it stood.

Both major regimes have closed off the obvious path around ownership. CFIUS jurisdiction reaches certain acquisitions of assets, and the UK call-in power expressly covers qualifying assets including intellectual property and know-how. Where a licence gives a foreign party the practical ability to reproduce a controlled technology, the export rules apply on their own terms in any case, licence agreement or not.

The test we teach is simple to state and uncomfortable to run. List every agreement under which a counterparty could rebuild your core capability without you, then sort the list by counterparty nationality. Most companies have never made the list.

Hosting, Cloud Access, and Physical Location

Quantum machines are rare and expensive, so access to them is usually mediated through a cloud endpoint, a queue, or a remote lab. That raises two separate questions, and companies routinely conflate them.

The first is export. Giving a foreign user a session on a controlled quantum computer may constitute a release of the underlying technology, depending on what that user can see and control. The Bureau of Industry and Security added quantum computing items to the Commerce Control List in an interim final rule in September 2024, with control parameters set on the measured capability of the machine rather than on a marketing description of it. Cloud-mediated access has been an area of active interpretation since.

The second is jurisdiction. If a European company’s control software runs on infrastructure operated under U.S. or Chinese law, a European reviewer will ask what happens to that dependency in a crisis. One pattern answers the question: localisation with a foreign partner. The Fraunhofer-Gesellschaft operates an IBM Quantum System One in Ehningen, Germany, where the hardware sits on German soil under German law while the technology stack remains IBM’s. The European Quantum Communication Infrastructure programme applies the same instinct to networks.

Reviewers now ask the location question directly in acquisitions. Where does the machine physically stay after closing, who operates it, and under whose law.

Customers, Markets, and Export Classification

A quantum sensor sold for gravity surveys is the same device sold for submarine detection, and the second sale answers to a different set of rules. Companies find out about their own dual-use status at the worst possible moment, which is usually during diligence.

Two things follow. Classification is a document rather than an opinion, and it should exist before an investor asks for it. And the customer list forms part of the review file, because defence contracts, national laboratory relationships, and sales into restricted destinations all shape how a screening body reads a proposed acquisition and what conditions it attaches.

The Bureau paired the September 2024 controls with relief for jurisdictions that implement equivalent ones. Alignment between allies is the mechanism, and a company selling into aligned markets carries a lighter licensing burden than the raw control list suggests.

Key People

In a company of forty people, four of them usually hold the capability. Reviewers have learned to ask which four, and to ask what the acquirer intends to do with them.

This is where sovereignty policy reaches employment contracts. Retention undertakings, commitments to keep research and development in-country, restrictions on transferring named staff to overseas sites, notification duties when someone with access to controlled technology is hired or leaves: these are ordinary conditions now rather than exotic ones. A company that can show a documented continuity plan, with named backups and cross-trained teams, presents a smaller risk than a company whose roadmap depends on one person’s continued goodwill.

Conditional Clearance

Clearance is rarely a straight yes or no. The National Security and Investment Act gives the UK government power to make a final order permitting a transaction subject to conditions, and CFIUS reaches a comparable result through a mitigation agreement. Both instruments attach to the access channels described above rather than to the share register, and the conditions they carry read like the previous five sections: where the hardware stays, who operates it, which staff remain in post, what a foreign director gets to see.

Two things follow for a company on the receiving end. An acquirer can own the business outright and still be told where the machines stay and who works on them. And allied nationality lowers the temperature of a review without removing the filing, so a friendly buyer means a shorter process rather than no process.

What Changes in Deal Structure

Timelines lengthen, and they lengthen unpredictably rather than by a fixed amount. Statutory clocks start only when a filing is accepted as complete, and an incomplete filing does not start them. It just sits there. Round mechanics have adapted accordingly, through regulatory conditions precedent that make closing contingent on approval, cooperation covenants obliging an investor to accept reasonable mitigation, divestiture undertakings, and explicit allocation of who carries the loss if approval never comes.

Cap table hygiene has become a diligence item in its own right. The nationality of a fund’s own limited partners, the investors whose money the fund manages, can carry the screening question through into every portfolio company, and several funds now run parallel vehicles that exclude particular investors from deals in screened sectors. The outbound investment rule from the 2023 executive order runs the same logic in reverse. A fund with U.S. persons among its investors has to check its Chinese quantum exposure before it writes the cheque, not after.

Exit optionality narrows. A founder weighing an offer now weighs approvability alongside price, and a higher bid from a buyer unlikely to clear is worth less than its number. Governments have begun acting on the other side of that arithmetic. Public co-investment programmes, the European Union’s €1 billion Quantum Flagship among the older examples, exist partly so that domestic companies are not forced to choose between capital and jurisdiction.

Before the Term Sheet

Six documents answer most of what a reviewer will ask, and every one of them can be prepared before an investor requests it:

• The export classification of the core technology, written down, with the reasoning behind it.
• A register of board seats, observer rights and consent thresholds, showing what information each holder receives.
• A schedule of licences, joint development agreements and field-of-use grants, with counterparty nationality against each.
• A hosting and residency map: where the machines sit, where the control plane runs, and whose law governs each contract.
• A named list of key personnel dependencies, with the continuity plan for each name.
• The nationality chain of existing investors, followed down to limited partners where that information is available.

Companies holding these six close faster, because diligence stops being discovery. Companies that don’t assemble them until a deadline forces the work discover the awkward answers at the point where answers are expensive.

Learning the Screening Layer

The screening layer is not exotic legal territory, and it doesn’t require a law degree to read. It requires knowing what a technology actually is, precisely enough to classify it, and knowing what a company actually has, precisely enough to describe it to a reviewer. Both jobs draw on the same underlying knowledge: what the device does, what the software touches, and which parts of each are controlled.

Quantum Academy’s programs for investors, corporate development teams and startup leadership cover both sides of that, from the physics and engineering needed to read a technical claim to the regulatory structures that turn those claims into filing obligations. The full program list sits at quantumacademy.com/.

For the policy background behind this guide, including the strategic-capital picture and how governments are funding their own champions, Marin Ivezic’s longer treatment at PostQuantum.com goes further into the government side of the same question.