IBM’s venture capital chief, Emily Fontaine, has revealed the types of startups that the company is actively investing in. The software giant’s investment division, IBM Ventures, which has a $500 million fund, is placing its bets on products and technologies it plans to use internally.Fontaine explained that IBM acts as the first customer for some of these investments. In an interview with Fortune, she said, “At IBM, we are client zero. We drink our own champagne and what I mean by that is we use our own capabilities internally to drive a ridiculous amount of value.” Fontaine gave the example of “AskHR,” which is IBM’s AI-driven internal HR app.“I have a ton of amazing, young employees who all need an apartment. I need a mortgage rate! I need all these things!’ So, before it used to be, Zach would come to me, ask me for this. I’d go to HR. HR would make the request. They’d come back to me. And it would take time. Now, we can go to AskHR, and he can get it immediately,” she explained.Fontaine noted that the fund is mainly focused on artificial intelligence (AI) and quantum computing. Its priority is business-to-business (B2B) companies that align well with IBM’s extensive client base. To date, IBM Ventures has made 23 investments. These include companies like Hugging Face (develops tools for machine learning), Not Diamond (which optimises the choice of AI model on a task-by-task basis), Unstructured (which helps prepare data for large AI models), as well as QEDMA (focused on quantum computing) and Reality Defender (deepfake detection).Fontaine highlighted: “We’re looking for investments that are ready to scale, ready to partner, deploying responsible AI, [using] what we call the ‘capital-plus’ model.” She noted that the “plus” is IBM’s ability to help its startups reach new customers through the clients it already serves.“We actually have an over 90% collaboration rate with our portfolio companies. We look at three key areas for every one of our investments. The first, products or capabilities. The second being: Are they an ecosystem partner? Generally, they fall within those two categories. The third being: Are they very disruptive to industry? And we work very closely with IBM Research on those ones that are totally disrupting the industry and doing something incredibly novel.” Fontaine added.She mentioned that IBM expected to save about $4.5 billion this year after it began using AI tools within the company. Fontaine also revealed that IBM’s work in quantum computing had mainly focused on software and algorithms, even though the company had also built and tested its own quantum chips. One example she gave was QEDMA, an Israeli startup that develops software to fix errors in quantum computers, which often produce significant “noise” in their results.The finance industry partly drove IBM’s push into quantum technology, the report continued. Quantum computers could eventually be powerful enough to challenge the encryption systems that banks currently rely on. As a result, banks will need “quantum-safe” security systems.“The banks are at the forefront of wanting a quantum strategy. The banking industry is really leaning in, saying, ‘What’s our strategy around quantum?’ You need to be quantum safe, is what you need to be doing,” Fontaine added.However, Fontaine did not share how much IBM Ventures had earned so far, though she said she was satisfied with the results. The report noted that four startups had already exited, among them two were acquired. Wiz bought Gem Security for a reported $350 million, while Cisco acquired Lightspin for an estimated $200–250 million.