The Fusion Energy Future

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This week, I attended a policy conference on the ​fusion industry​ at Union Station in Washington, D.C.

Fusion energy startups have raised more than $7 billion over the past decade.

What makes fusion energy so exciting?

Nuclear fission reactors (today’s nuclear power plants) generate energy by splitting heavy atomic nuclei (such as uranium-235 or plutonium-239) into smaller fragments, releasing heat that is used to produce steam, which drives turbines to generate electricity.

This process is well-established but produces radioactive waste and carries risks such as meltdowns if cooling systems fail.

On the other hand, nuclear fusion generates energy by combining light atomic nuclei (such as hydrogen isotopes, deuterium, and tritium) to form heavier nuclei (such as helium), releasing immense energy — similar to how the sun produces power.

Fusion is cleaner than fission, produces significantly less long-lived radioactive waste, and has no risk of a runaway reaction or meltdown. However, fusion reactions require extremely high temperatures and pressures, making sustained power generation technologically challenging.

Fusion will potentially become the leading clean energy source over the next century.

The technology is not ready yet, but several promising startups are racing to commercialize it. Many believe commercialization will begin in the early 2030s.

Technical challenges lie ahead. However, governments, especially the U.S., U.K., and Japan, aim to create a regulatory environment to encourage investment and growth. The race, of course, is not just between startups deploying various techniques but also against China, which is investing heavily.

Why pay attention?

Ten years ago, a group of entrepreneurs started OpenAI. Artificial intelligence was a term we knew, and scientists and Silicon Valley types said it was the next big thing.

But it took until 2022 to release ChatGPT and commercialize AI.

AI surprised most of us because we didn’t pay attention to what was happening. Now, OpenAI is raising money at up to a $340 billion valuation, and retail investors have largely been left out.

One day, we may wake up and realize that fusion energy is the next big thing, and we missed our opportunity to invest again.

Is fusion energy investable for retail investors? Should we invest?

Venture capital and governments are leading the investments into fusion energy and will need to wait at least a decade to see a return.

Retail investors who want to invest can monitor the various pre-IPO platforms for the availability of companies like the ones listed below. I have seen shares of fusion companies listed on the ​pre-IPO marketplaces​ I follow.

However, these opportunities require investor accreditation and a 10-year+ investment horizon. Most investors will not be able to invest unless one of the non-accredited VC funds (Fundrise, ARK Venture) invests. Another option is to invest indirectly via a public company that makes venture bets on fusion.

It may be early to invest. But an industry this large should be on our radar.

Interested in learning more? Check my latest articles on the following companies leading the charge:

​Commonwealth Fusion Systems (CFS)​ — Considered the frontrunner startup and led by former MIT plasma physicists, CFS is using the $1.8 billion it raised in 2021 to build a prototype fusion reactor in Massachusetts. Once they’ve proved their tokamak (3D donut-shaped device, see featured image) and high-temperature superconductor (HTS) magnet method is viable, it has plans to build its first power plant near Richmond, Virginia. Skeptics I spoke to believe neutron radiation challenges will impede progress.

​Zap Energy​ — Zap Energy raised a $130 million Series D this past October. In addition to sponsoring the conference after-party (thanks, Zap), the company is using funds to build a sheared-flow stabilized (SFS) Z-pinch fusion prototype, aiming to generate cost-effective and scalable fusion power without expensive superconducting magnets or high-powered lasers.

​Helion Energy​ — This January, Helion Energy raised $425 million. Helion receives significant attention because of its association with Sam Altman and Y Combinator. Helion uses a pulsed magnetic compression and direct energy capture method without relying on traditional steam turbines. Their approach involves colliding plasmas of deuterium and helium-3 to generate electricity without relying on traditional steam turbines. This could make fusion more efficient and cost-effective, but helium-3 is rare and challenging to obtain.

​TAE Technologies​ — TAE Technologies uses a Field-Reversed Configuration (FRC), which relies on magnetically confined plasmas of hydrogen-boron (p-B11) fuel. This reaction produces energy primarily in the form of charged particles, which can be directly converted into electricity, avoiding neutron-induced radiation (causing material degradation) and long-lived waste.

Though $7 billion in venture capital financing sounds like a lot, one conference attendee mused that any of the Mag 7 tech companies could buy the entire fusion industry with cash on hand.

CoreWeave and Klarna

Wednesday, Bloomberg reported that ​CoreWeave​ is expected to release its S-1 filing to the public, kicking off its IPO. The company aims to raise $4 billion at a $35+ billion valuation.

Revenue growth is expected to be 4X in 2025 (2024: $2 billion, 2025 projected: $8 billion). Microsoft is a heavy customer, so we’ll be watching for revenue concentration in the filing. However, if you had to pick a dominant customer, Microsoft is at the top of the list.

​Klarna​ is expected to release its F-1 filing (F for foreign) in March for an April IPO.

I’ve been monitoring and reporting on these two companies for more than a year. Both have filed confidentially and are ready to go.

The success or disappointment in their debuts may set the course for the rest of 2025.

IPO Radar

Here are the latest IPO Radar articles and updates.

​Egnyte​ — Egnyte is a cloud-based content security, collaboration, management, and governance software-as-a-service (SaaS) platform. The company filed for an IPO in January 2022 but was late to the party. Now, employees and investors are wondering when the IPO will be.

​Figure AI​ — The humanoid robot startup is already shipping its products and in talks to raise at a $39.5 billion valuation, up from a $2.7 billion valuation just one year ago (Feb 2024). Those of us who are invested in Cathie Wood’s ​ARK Venture Fund​ should see a bump in our holdings, as Figure AI is weighted at 2.3% of the fund before the new valuation.

​xAI​ ​ — While Elon isn’t firing my neighbors, xAI is in talks to raise capital at a $75 billion valuation. This is up from about $6 billion 15 months ago and another win for ARK Venture Fund holders.

​Anthropic​ — Anthropic is in talks to raise $3.5 billion at a $61.5 billion valuation. This is up from $18 billion just 11 months ago. Both ​Fundrise Innovation Fund​ and ARK Venture Fund investors stand to gain.

Where are we in the AI hype cycle? Tune in next newsletter on March 15th.

Watchlist

Watch for new IPO filings soon. The next public companies could include Chime, Clario, Genesys Cloud, and a Cerebras amended S-1 could drop soon as well.

Tokamak featured image via DepositPhotos used under license.