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7 founders and CEOs discuss fusion power’s most pressing challenges

Fusion power has had a breakout year. Can startups capitalize on the momentum?

Tim De Chant 8 months

The hype around fusion power is real. Researchers at the National Ignition Facility achieved net-positive controlled nuclear fusion in December 2022, a milestone that’s been decades in the making. Then, earlier this month, they did it again, proving that it wasn’t just a fluke.

But that’s not the only thing reshaping the industry. Once the exclusive domain of university and government researchers, the center of gravity around fusion power has begun to shift as founders bring fusion out of the lab. So to better understand the state of the industry and the opportunity in fusion power today, TechCrunch+ caught up with seven founders and CEOs.

It’s no secret that the sector has a troubled history. “There is a graveyard littered with over-promises, missed milestones and false starts,” said Benj Conway, co-founder and president of Zap Energy. “The basic physics of fusion is real, the potential upside is real, but to shed its baggage, the industry needs to deliver more than promises and concepts.”

Fortunately, changes are happening fast, several founders said. As government money has dried up, investors have stepped in, funding startups across the sector to the tune of more than $6 billion so far, according to the Fusion Industry Association. “The shift from government-led [funding] to a mix of public and private efforts, with venture capital strategies akin to those used in the electric vehicle and private space industries, brings not just resources but also a greater tolerance for risk and urgency,” said Taka Nagao, co-founder and CEO of Kyoto Fusioneering.

That capital is pouring into the sector at an opportune time, as fusion power startups can now make rapid gains thanks to a convergence of factors.

With $10T on the line, 6 fusion investors explain why they’re all in

For many fusion power startups, high-temperature superconducting magnets sparked their journey. Without them, many fusion reactor designs simply wouldn’t be economical or even possible.

Another factor that shouldn’t be overlooked is the growth in computing power. Cheaper, more advanced processors have helped bring plasma simulation techniques down to earth, said Avalanche Energy co-founder and CEO Robin Langtry. “This is starting to pay off, as we can now use powerful GPUs to simulate many approaches to fusion and explore different ideas, a reality that was not possible even 20 years ago,” he said.

Advances in computing and magnet design have been occurring alongside, and sometimes in coordination with, developments in fusion science. It’s all coalesced over the last few years to create fertile conditions for startups to thrive.

“Now, more than ever, the long-term tailwinds supporting fusion’s commercialization are growing,” said Greg Twinney, CEO of General Fusion.

Read on to find out if things are actually different this time, how the fundraising environment is looking, what founders are doing to tackle this industry’s specific challenges, and more.

We spoke with:

(Note: The following interviews have been edited for length and clarity.)

Benj Conway, co-founder and CEO, Zap Energy

Fusion has broken a lot of promises in the past. What’s different this time?

It may not be the answer you expect, but in my assessment, almost nothing is different: Fusion developers continue to overpromise and understate risk — I’m not aware of any fusion concept that lacks serious science and engineering challenges.

Advances in material science and computational techniques are, in my view, exaggerated. The diversity you see in the fusion startup landscape definitely won’t translate into a diversity of commercial approaches later. Fusion developers still focus principally on plasma physics and not enough on all the other technologies required to make fusion commercial.

Fusion investment is down significantly this year after a blockbuster 2021 and a quieter 2022. What does that tell us about the industry?

[We know] 2021 was a huge outlier skewed by a couple of mega raises. If you remove that datapoint, there has been a steady increase year on year.

What challenges do founders face that are specific to the fusion industry?

Fusion has a reputation problem. There is a graveyard littered with overpromises, missed milestones and false starts. If you call something the Holy Grail, you are setting yourself up to disappoint. Investors are cognizant and wary of this track record.

To compound this, investors find it difficult to distinguish between fusion approaches, and there are countless approaches that stand very little chance of becoming a commercial product. The basic physics of fusion is real, the potential upside is real, but to shed its baggage, the industry needs to deliver more than promises and concepts.

Fusion is famous for its deep technical challenges and long time horizons. How does that affect how you approach investors?

Fusion is still too early for most large institutional investors, which is why most investments come from deep tech, early-stage VC, high-net-worth individuals or strategic corporates. Investors are rightly skeptical of the timelines presented by fusion companies, but it’s usually reasonably binary: Investors either do or do not have a long-enough term investment horizon, and they all have a strong sense of how much timeline risk is acceptable.

Regardless of who the investor is, it’s imperative to be fully open about the risks. The more due diligence an investor does, the better. I do think it is possible to invest in fusion today and exit with strong returns before fusion is fully commercialized.

What’s driving the pace of progress in the fusion industry?

If progress means moving toward a commercial product on a time frame that matters, the pace will depend on two interrelated things: fundraising, the ability of a handful of fusion companies to continue to capitalize themselves; and technology, the rate at which these fusion companies can continue to advance their results and hit milestones.

Ultimately, the pace of progress of the industry will depend on whether fusion economics can compete with other sources of energy.

Robin Langtry, co-founder and CEO, Avalanche Energy

Fusion has broken a lot of promises in the past. What’s different this time?

First, the government funding of fusion science peaked in the late 1970s at $1 billion and then declined to a level that pretty much guaranteed slow progress (chart, for reference). In that environment, the fusion science community responded by focusing on two approaches to Q>1: tokamaks and laser inertial fusion.

Funding for those two approaches from 1980 until recently has averaged about a few hundred millions. Given the scale and size needed for those approaches (and the laser and magnet technology available at the time), the result was very slow but steady progress (see, for example, the recent NIF Q plasma >1 results at Lawrence Livermore National Laboratory). The focus on tokamaks and laser inertial approaches to fusion also meant that many alternative concepts that could have been smaller or faster routes to net energy were never really explored at the national labs due to the lack of resources.

The second point is the urgency of solving the climate change problem and the emergence of private venture capital, which kickstarted a private “fusion industry” around 2018. Since then, over $3 billion has gone into private tokamak and laser fusion approaches that utilize newer technology (high-temp superconducting magnets, high-power lasers) that can shrink the scale of the fusion machines and lower the capital required to build Q>1 demonstrators. In addition, alternative approaches to fusion have also received significant private capital (estimated around $2 billion), including field-reversed configurations (Helion, TAE, General Fusion), Z-pinches (Zap) and now electrostatic fusion (Avalanche Energy).

The third point is compute-related. There has been significant progress in the ability to simulate plasma (e.g., using particle-in-cell codes, which can capture the physics of fusion plasmas), along with the availability of low-cost GPU computing. The U.S. Department of Energy has done a great job of supporting the development of exascale computing simulations for plasma, like LBNL’s WarpX particle-in-cell code. This is starting to pay off, as we can now use powerful GPUs to simulate many approaches to fusion and explore different ideas, a reality that was not possible even 20 years ago. This has unlocked novel approaches such as the electrostatic and hybrid magnetic confinement that Avalanche Energy is developing for its Orbitron.

Beyond these recent developments, there are a tremendous amount of novel ideas that have not been explored previously for fusion plasma confinement that pull from recent developments in ion traps (mass spectrometry orbitraps and quantum computing), particle accelerators, ion sources, and high-power microwave devices (relativistic magnetrons, gyrotrons, vircators, etc.).

Fusion investment is down significantly this year after a blockbuster 2021 and a quieter 2022. What does that tell us about the industry?

Climate tech investing was also down in the first half of this year compared to the first half of 2022 (reference), and most people view fusion as the high-risk, high-reward tail in that funding gaussian distribution. I think it shows that fusion and climate tech, as a whole, are not immune to the macro VC fundraising environment and the dearth of recent IPO opportunities in the stock market to produce exits and distributions to LPs.

Until a commercial fusion company hits Q plasma >1, I don’t think we are going to see many mega-rounds under $500 million, like the CFS or Helion deals, so that funding phase may be over.

Going forward, fusion companies are going to have to demonstrate capital efficiency and credible plans to first build a demo fusion machine and second, successfully commercialize their technology. They will need to show that these plans can be executed in a timeframe relevant to impact climate change and at exit valuations consistent with where the IPO market is likely to be in the early 2030s. I think the companies that are showing steady progress through their technical milestones will be fine. We set out to raise a $40 million Series A following the above approach, and we were able to close the round in what was, looking back, a very tough fundraising environment.

Broadly speaking, this may very well turn out to be the decade of AI and fusion in the tech industry. Many investors have not yet bet on fusion and I believe there are still a lot of potential deals to be done if the terms are right.

What challenges do founders face that are specific to the fusion industry?

One of the things that has surprised me as we got into fusion is how much the government support for plasma physics and fusion research has atrophied over the years. There is a major shortage of qualified fusion and plasma physicists in this country, especially given the number of fusion companies and their growth rates.

In the short-term, we are going to have to hire and pull from many adjacent fields like electric space propulsion, New Space and nuclear fission, while also training the next generation of “fusioneers.”

A related issue is that the timeline to reach profitable operations for commercial fusion is long, yet there is little support in the form of fusion R&D grants and non-dilutive funding opportunities. For example, the recent IRA bill is attempting to jump-start a green hydrogen economy by subsidizing $3 of the current $4 it costs per kg to produce carbon free hydrogen. This amounts to potentially tens of billions of dollars of subsidies over the next 10 years. Whoever helped write the IRA law and did the lobby work for Big Hydrogen was operating at a very high level. Kudos to them.

In contrast, the DoE recently awarded $45 million to eight private fusion companies as part of a new public-private partnership (PPP) to develop 50 MW fusion pilot plants. This works out to about $5 million per company, which I’m sure is welcome support but is nowhere near the levels needed to really accelerate the advent of a domestic commercial fusion industry.

Disappointingly, as I write this, a proposed appropriation bill in the Senate has the fusion PPP program dropping down to $25 million in 2024. Right now, VC is the only impactful source of capital for private fusion efforts that could develop a commercial reactor on timelines relevant to affect climate change. I hope that changes in the future.

What’s driving the pace of progress in the fusion industry?

I think it comes down to three things:

  1. Advances in key component technologies (like high-temperature superconducting magnets, efficient lasers, miniaturized high-voltage switches and power).
  2. Availability of meaningful levels of private capital to advance the technology and readiness level of the various approaches to fusion.
  3. Modern computing capability and the ability to increasingly simulate the fusion machines and support design and experimental programs.

Christofer Mowry, CEO, Type One Energy

Fusion has broken a lot of promises in the past. What’s different this time?

The short answer is that the industry’s latest growth has been driven by big milestones.

Take, for example, the National Ignition Facility’s breakthrough milestone last year where they reached net energy gain, which they recently repeated to prove it wasn’t a one-time wonder. Several private fusion companies are anticipating they will achieve the same important milestone in the next few years — some of whom I believe are likely to do so. All of this demonstrates that the science of plasma physics has finally matured to the point where we truly understand the fusion process and how to design the technology that can make fusion happen.

So, we’re finally moving on from proving that net energy gain is possible and focusing on the ultimate goal: demonstrating a practical fusion energy power plant. This clear progress has propelled massive venture capital investment in fusion. It’s a passing of the baton, if you will, in fusion development leadership, from government-sponsored research programs to the private industry.

Fusion investment is down significantly this year after a blockbuster 2021 and a quieter 2022. What does that tell us about the industry?

I don’t really think this says anything about fusion as much as it is a reflection of the current investment landscape in general. As such, it’s more about the macroeconomic conditions and the nature of private financing, which is not a continuous thing. Fundraising for any specific company is a lumpy affair, and you don’t normally raise money every year. If you combine that reality with the fact that interest rates have been incredibly high over the past year, the investment numbers in fusion make sense. Even so, I think the only place where there’s been a reasonable level of venture capital participation is in the clean tech space.

What challenges do founders face that are specific to the fusion industry?

One challenge is the long timeline for commercialization. Thankfully, this timeline has recently shortened to one that results in a more viable business case, which has in turn stimulated significant investments. The shrinking timelines to commercialization are all due to the industry’s ongoing technical breakthroughs, which are demonstrating the maturation of fusion technology.

This couples with the second challenge founders have historically faced, which is the high science risk. But again, this challenge is subsiding rapidly with the more mature fusion technologies.

Fusion is famous for its deep technical challenges and long time horizons. How does that affect how you approach investors?

One of the differentiating value propositions of fusion energy is its massive addressable market. It’s probably one of the biggest for any transformational technology, with an estimate approaching $1 trillion a year across the global energy markets. This market opportunity is driven by the geopolitics of climate change and the need to transition the energy system to net-zero carbon emissions.

Fusion isn’t being pushed into the energy system and society as a whole; it’s being pulled into it because of fusion’s incredible potential to fully meet the demand for carbon-free electricity generation.

Thomas Forner, co-founder and CEO, Focused Energy

Fusion has broken many promises in the past. What is different this time?

Our understanding of how fusion works is accelerating. In December 2022, for example, scientists at California’s Lawrence Livermore National Laboratory achieved nuclear fusion by laser ignition for the first time with a net energy gain. This is another important milestone on the road to safe, clean and virtually inexhaustible energy production.

For us, it was only a matter of time before this next milestone was reached. The success of our friends and colleagues in Livermore is fantastic because it shows that ignition succeeds when the appropriate conditions are achieved. So, this scientific question has been answered. It is still a long way to a power plant, but with this achievement, it is clear that it can be done.

In August 2021, it was demonstrated for the first time that a plasma ignites and can continue to burn on its own. Based on the results, it then took a year to successfully repeat the experiment. After that, another two months until the next result, then another month and then two weeks later the experiment with positive energy gain. This clearly shows the progress and the slope of the learning curve. There have also been great successes in further understanding the physics in recent years, especially as it relates to instability in compression.

Focused Energy is one of two companies, and the only one in Europe, that has been confirmed in the physical concept by these experiments. Our approach is identical to the California result in the final phase of igniting and burning the plasma. Many of the scientists who contributed to this success in December now work for us in Austin, Texas, or Darmstadt, Germany. This gives us the best team of any inertial fusion energy company.

However, our approach is different in the way we prepare the fuel. First, we use lasers to shine directly on the target, and second, we use green laser light instead of blue. Both changes save enough energy that a laser system using our approach is only about a quarter the size of the facility in California.

The most important difference, however, is our fast ignition concept. Here, the fuel is first compressed by a set of lasers and only then ignited by a series of ultrashort pulse lasers. This makes our compression less prone to instability and again saves a lot of energy.

After a blockbuster 2021 and a quieter 2022, fusion investment is down significantly this year. What does this tell us about the industry?

The decline in investment in nuclear fusion in 2022 is due to several factors, including rising interest rates, the economic slowdown and the war in Ukraine.

But on the one hand, it’s important to note that investment in nuclear fusion is still much higher than it was a few years ago. On the other hand, nuclear fusion is now picking up speed internationally and also in Germany. This is due not only to the rapid progress of the technology but also to government support programs and changing regulations.

In the U.K., the industry is receiving massive government support. Fusion Valley is being created near Oxford, where massive investment is being made. At the same time, the government has changed the classification of fusion power plants. They are no longer covered by the Atomic Energy Act but are placed in the “health and environment” category and thus classified like a tumor therapy facility, for example, because the potential danger is similarly low.

In the United States, the Nuclear Regulatory Commission has also separated fusion power plants from conventional nuclear power plants. This, of course, has great advantages for investors when licensing procedures no longer take many years.

These programs in the U.K. and the U.S., and of course the Public-Private Partnership program in the U.S., in which we also participate, ensure that there is currently massive investment in other countries such as China.

All of this suggests that interest in fusion research remains high and that the industry is well on the way to achieving commercialization in the next few decades.

What challenges do founders face that are unique to the fusion industry?

The challenges in the fusion industry are great, but the potential of the technology is even greater. Fusion energy is a clean, safe, and inexhaustible energy source that has the potential to make a significant contribution to solving the global energy crisis.

But fusion is the most difficult experiment mankind has ever done. For fun, we always say it’s not rocket science. Because if it were “rocket science,” we would have had it in the ’60s.

We’ve had to learn a lot, but that learning curve has increased significantly in recent years. After the successful milestones at California’s Livermore Lab, where burning, self-sustaining plasma was produced in the reactor for the first time, it is clear to the scientific community that fusion works.

In addition, nuclear fusion research and commercial use require an appropriate regulatory framework that is independent of nuclear law. This framework must take into account the inherently lower risks of fusion technology and allow for further research. A risk-appropriate and innovation-friendly regulation would also strengthen the social acceptance of nuclear fusion.

Fusion is known for its deep technical challenges and long time horizons. How does that affect how you approach investors?

We are interested in investors who think and invest for the long-term. In the deep tech sector, Focused Energy is an excellent investment object for that. After all, we are the leading company in laser fusion on both sides of the Atlantic.

What’s driving the pace of progress in the fusion industry?

The pace of progress in the fusion industry is being driven by several factors. These include increasing investment in the field, the development of new technologies, and a growing awareness of the urgency of fusion research.

About 90% of the world’s energy needs today are still met by fossil fuels. The associated climate issues, limited fuel supplies, and political instability make a new energy system necessary in the longer term.

The energy supply crisis has made us aware of the need to develop additional renewable energy sources as quickly as possible. We also do not believe that the world will eventually reach a state where we will have too much energy.

Kieran Furlong, co-founder and CEO, Realta Fusion

Fusion has broken a lot of promises in the past. What’s different this time?

Enabling technologies and private funding.

In magnetic confined fusion, we are availing of the latest generation, extremely high field high-temperature superconducting (HTS) magnets. That is a key enabling technology unlocking our magnetic mirror approach and other concepts (tokamaks, stellarators, etc.). Along with that, significant advances have been made in plasma stability and the advent of huge computing power allows physicists to model and steer high-energy plasmas in ways previously unimaginable.

Just looking at linear time is also misleading in fusion research, as it leads people to think there has been a constant level of funding and effort toward solving the challenge. That has not been the case at all. Research has been funded in fits and starts. At Realta Fusion we are essentially revisiting a concept that was a leading contender for fusion energy back in the 1960s and 1970s, but when swinging budget cuts were made in the 1980s, it was essentially put on ice for 40 years.

Fusion research up until very recently was completely dependent on public funding. That was one of the reasons for the on-off nature of funding. The oil shock of the 1970s stimulated interest, but that quickly changed when oil prices dropped again in the 1980s. Now private funding is flowing to the fusion sector in a manner never seen previously: $6 billion total with approximately $4 billion of that in just the last two years. (I should point out this is still just a tiny fraction of the total annual global venture capital invested. It should be much higher.) Significant private funding has a direct impact on our ability to advance fusion but also an indirect effect in generating momentum and giving the sector credibility.

Fusion investment is down significantly this year after a blockbuster 2021 and a quieter 2022. What does that tell us about the industry?

The fact that fusion is still attracting investment in 2023 tells us a lot. The right comparison is not fusion funding now versus fusion funding in the abundant days of late 2021, but the amount of venture capital flowing to fusion in 2023 versus other tech sectors. Areas like fintech and food tech are seeing huge down rounds and frigid funding deserts. Fusion startups continue to raise even in a very challenging environment — and from top-tier investors, too.

What challenges do founders face that are specific to the fusion industry?

A critical one is the availability of skilled talent. We are seeing a boom now in fusion startups; there are now over 40, according to the Fusion Industry Association’s 2023 report. This increases the demand for talent from what was already a very shallow pool. It takes time to educate and train people in fusion science, plasma physics, vacuum engineering and the like. But fusion startup founders need that talent now and are competing for it. We need to bring in talented people from adjacent industries, and they will have to learn on the job.

Another challenge specific to the fusion industry is how to communicate to a broad audience. Founders need to clearly differentiate fusion from fission. We need to make a clear case for why a firm “always-on” energy source is needed alongside renewables. We need to make it clear that there are still tough technical challenges ahead, while also instilling confidence in stakeholders that those challenges are surmountable.

Fusion is famous for its deep technical challenges and long time horizons. How does that affect how you approach investors?

You have to identify investors who understand this, and they are out there, as the surge in venture capital flowing to fusion startups in the past few years proves. So initial conversations I have with investors are usually “sorting” discussions. What time horizon is a specific investor working on? How patient are they with their capital? I need to weigh up whether their risk appetite is a match for fusion and determine their enthusiasm for the technology and its potential.

There is no point continuing to pursue an investor who has a “software” VC mindset and timeline. So I look at investors who have already made bets in fusion or have invested in deep tech with similar timelines and large technical challenges.

What’s driving the pace of progress in the fusion industry?

Private funding has definitely accelerated the pace of progress. This has allowed for a “Cambrian explosion” (as Andrew Holland of the Fusion Industry Association refers to it) of different technologies and concepts in various startups. Previously, public funding tended to be funneled to a few select projects and technologies.

Greg Twinney, CEO, General Fusion

Fusion has broken a lot of promises in the past. What’s different this time?

Now, more than ever, the long-term tailwinds supporting fusion’s commercialization are growing. The science of fusion is progressing, as we saw with the Lawrence Livermore National Lab achieving fusion ignition last year. At the same time, climate change advances rapidly, and leaders worldwide acknowledge that on-demand, zero-carbon power is needed for a clean energy future.

In addition, disruptive enabling technologies are spurring fusion research and engineering capabilities. For instance, when Dr. Michel Laberge founded General Fusion in 2002, he purposefully sought a practical method that overcame the barriers to commercializing fusion energy and didn’t rely on expensive superconducting magnets or high-powered lasers. Michel turned to magnetized target fusion (MTF), which was initially conceived in the 1970s, but at the time, the science and enabling technologies didn’t exist or weren’t advanced enough to move it forward. With the advent of new innovations and technologies such as big data analytics, high-speed digital control systems and 3D printing, we’re on track to deliver commercial energy to the grid by the early to mid-2030s.

What challenges do founders face specific to the fusion industry?

Many private fusion companies are targeting similar timelines to achieve and demonstrate 10 keV and breakeven. But these other approaches fall short of addressing the numerous barriers that need to be overcome to commercialize fusion.

Here’s how General Fusion’s approach works: We inject hydrogen plasma into a vessel coated with liquid metal. From there, high-powered pistons compress the liquid metal around the plasma, squeezing and building pressure until the plasma reaches more than 100 million degrees Celsius. At that point, fusion occurs.

The first barrier to commercial fusion is the damage made to the machine, often called the “first-wall problem.” The neutrons generated in a fusion reaction hit the metal wall causing blistering, chemical erosion and impurities. Obviously, a power plant needs to run for 40 years and beyond; a degrading machine isn’t practical or cost effective. But our liquid metal wall absorbs these neutrons, preventing damage to the machine.

The second barrier is fuel production. A mixture of hydrogen isotopes, deuterium and tritium fuel most fusion reactions. Deuterium is easy enough to acquire; it is derived from seawater. Tritium, on the other hand, can only be manufactured. Here again, General Fusion’s liquid metal wall provides a simple solution. The metal contains lithium, which transforms into tritium and helium when hit with fusion neutrons. The result in our machine, using MTF, is sufficient tritium production to sustain the machine through its lifetime of operations. This is another critical differentiator.

The third barrier is energy conversion. Much work has gone into the study of creating fusion energy, but less research has been done on actually extracting and converting the energy from the fusion reaction created in the machine. Our liquid metal wall uniquely solves this problem and overcomes this commercialization barrier too. The hot metal can circulate through the fusion machine to a heat exchanger to boil water, producing steam that will drive a turbine and generate electricity. This is a fully industrialized process used in most modern power plants today.

The final barrier is the brass-tacks cost of creating fusion energy. Using mechanical compression and liquid metal keeps our costs manageable and enables us to ultimately be competitive with coal when looked at from a levelized cost of electricity perspective.

Fusion is famous for its deep technical challenges and long time horizons. How does that affect how you approach investors?

As CEO, one of my roles is to act as the bridge between the founder’s vision and what the investor needs to understand about the company. Of course, investors are looking for value creation, along with the right team and approach to create that value. General Fusion has been building critical IP and making technical progress for over 20 years, and therefore created huge value for our shareholders.

We’ve demonstrated our expertise in being nimble, and building large-scale machines that get us closer to commercialization. Our new machine, LM26, is a great example of our team implementing this skill set, as we’re able to utilize our existing plasma injector to build a cost-efficient machine that will produce results quickly, allowing us to push toward scientific breakeven by 2026. The value created when we achieve this milestone is enormous, and investors want to be a part of it. When investors do their diligence, this all becomes very apparent to them.

Additionally, the market opportunity for this technology, investment and the impact that fusion will have is almost immeasurable because it’s so transformative to the world. Clean, virtually limitless, cost-competitive energy from minimal amounts of water changes everything. Smart investors understand the longer timelines of progressing game-changing technology such as this. As a leader in an industry with a projected market size of $1 trillion per year, they understand the opportunity in investing in General Fusion.

Taka Nagao, co-founder and CEO, Kyoto Fusioneering

Fusion has broken a lot of promises in the past. What’s different this time?

The most fundamental difference in the pursuit of fusion energy this time is the unprecedented convergence of advanced technologies, fresh investment models, and a heightened global urgency toward clean energy. Each of these factors not only propels the field forward independently, but they also act synergistically to enable several secondary developments:

Primary factors:

  • Technological breakthroughs: Significant advancements in related fields, such as high-speed computing, new materials and advanced manufacturing, are now being harnessed in the fusion context. These developments enable more advanced modeling, creation of smaller and more efficient fusion devices, and rapid, cost-effective production of complex components.
  • New investment models: The shift from government-led to a mix of public and private efforts, with venture capital strategies akin to those used in the electric vehicle and private space industries, brings not just resources but also a greater tolerance for risk and urgency. This diversification is speeding up the pace of fusion energy research and development.
  • Global urgency for clean energy: Climate change imperatives and energy security concerns have magnified the significance of fusion energy. This global push mirrors the momentum shift that occurred in the renewable energy sector, driving more intense and dedicated efforts in fusion.

Secondary factors enabled:

  • Cross-disciplinary collaboration: The convergence of technologies and investments has fostered unique collaborations, attracting talent and expertise from diverse fields and enhancing innovation in fusion energy.
  • Accelerated pace of innovation: Venture capital funding and the adoption of agile methodologies have spurred a transition from slow, incremental progress to rapid prototyping and fast-paced experimentation.
  • Greater risk tolerance: The influx of private investment has created an environment that encourages exploration of diverse, innovative approaches to achieving fusion, which might have been deemed too risky in traditional research settings.
  • Increased public awareness and support: The heightened demand for clean energy solutions has amplified public awareness and support for fusion research, potentially influencing policy decisions and resource allocation.
  • Policy influence: The demand for zero-carbon energy and the progress in fusion technology have begun to impact policy measures, leading to increased regulatory support and funding.
  • Commercial viability: The blend of advanced technology and diversified investment models has shifted the focus from research-oriented objectives to achieving commercially viable fusion energy solutions.

This blend of factors sets the current endeavor apart from previous attempts, providing strong indications that practical fusion energy may soon be a reality.

Fusion investment is down significantly this year after a blockbuster 2021 and a quieter 2022. What does that tell us about the industry?

Understanding the decrease in fusion investment this year, following a highly successful 2021 and a comparatively less active 2022, should be framed within the industry’s natural growth and maturation trajectory. The industry is evolving, and fluctuations in investment are a part of this process. To elaborate:

  • Refined investment focus: As the industry matures, investments are becoming more strategic and targeted, centering on the growth and evaluation of existing projects. This progression from high-volume to more intentional funding is common in evolving industries and underscores an emphasis on measurable results.
  • Global economic considerations: The broader global economic landscape invariably impacts investment trends across sectors, fusion being no exception. Therefore, it’s vital to view investment fluctuations within this wider context.
  • Persistent positive signals: Despite investment variations, the sector continues to witness substantial technological breakthroughs, form effective partnerships, and attract increased governmental backing, all of which underline a steady and promising trajectory for the industry.
  • Companies at different developmental stages: Companies within the fusion space are at various stages of growth, with some deploying recently raised funds while others, still in their infancy, don’t require substantial investments. For instance, Kyoto Fusioneering’s $80 million funding in May 2023 demonstrates that substantial investments are still being secured.
  • Strategic intermission for future growth: The present period could be perceived as a strategic pause, characterized by sustained funding with a focus on preparation for future expansion cycles. This time allows the industry to consolidate, introspect, and strategize for future acceleration.
  • Essential role of government support: The current phase underscores the pivotal role of continuous and augmented government backing in the fusion sector. This support is crucial to counterbalance the ebb and flow introduced by market forces. As the fusion industry navigates its path to maturity, it requires nurturing, and this responsibility should not rest solely on market dynamics. The potential of fusion to revolutionize energy security and environmental sustainability underlines its significance as an endeavor too important to leave entirely to market forces.

The recent slowdown in investment is more indicative of the industry’s ongoing maturation than a setback. With the continued commitment of both private and public sectors, the fusion industry stands as a promising area of development poised for considerable future growth.

What challenges do founders face that are specific to the fusion industry?

Founders within the fusion sector grapple with a unique combination of challenges, a blend of technological, logistical and strategic concerns:

  • Technological complexity: At the heart of fusion lies intricate technology, melding disciplines such as physics, engineering and materials science. Such technological depth calls for a harmonized interdisciplinary stance, knitting together knowledge from multiple arenas.
  • Talent acquisition and retention: The nuanced nature of fusion technology intensifies the competition for top-tier talent. Not only is there a need to attract professionals, but there’s also a significant focus on in-house expertise cultivation, entailing considerable investment in training and mentorship.
  • Collaboration and coordination: Fusion mandates a dance of diplomacy among varied entities like academia, industries, international organizations and governments. Such coordination is crucial for aligning strategic goals and nurturing beneficial relationships.
  • Funding and financing: Fusion endeavors, marked by their long-term and capital-intensive nature, call for pioneering financial models. There’s a need for investors who understand and embrace the unique risk-return profile of fusion projects, as highlighted in recent studies such as Financing Fusion Energy.
  • Regulatory navigation: Fusion’s evolving regulatory milieu demands meticulous engagement at multiple tiers. Founders have the dual task of ensuring compliance while also influencing future-friendly regulations.
  • Public perception: Fusion, though laden with potential, is often misconstrued. Effective public education initiatives are necessary to clarify misconceptions and differentiate fusion from fission-centric nuclear energy.
  • Supply chain complexities: Transitioning from R&D to full-fledged production demands intricate supply chain orchestration. This involves a synchronized dance with suppliers, specialized material handling, and upscaling manufacturing regimes.
  • Global dynamics: Fusion is an international affair, and this globalized nature brings with it a slew of considerations, from cross-border collaborations to addressing geopolitical intricacies.
  • Ethical commitments: Fusion founders have the crucial responsibility of marrying rapid technological progression with unwavering ethical and environmental commitment.
  • Intellectual property protection: In such a fast-paced, competitive domain, safeguarding proprietary innovations is vital. This calls for a delicate balance between open collaboration and strategic IP management.
  • Resilience and vision: Fusion’s journey demands unwavering resilience and a long-haul perspective. It’s about setting the pace, rebounding from setbacks and fostering a shared vision.
  • Public support leverage: Aligning public funding with fusion’s trajectory necessitates proactive interfacing with governmental entities.

Fusion founders are at the epicenter of a whirlwind of multifaceted challenges. But within this intricate maze lies a tapestry of opportunities, set to redefine the contours of our energy future. Tackling these challenges with innovation, collaboration and strategic foresight is what will usher in fusion’s transformative potential.

Fusion is famous for its deep technical challenges and long time horizons. How does that affect how you approach investors?

When navigating the investment waters for fusion, the profound technical intricacies and extended timelines necessitate a nuanced approach. For Kyoto Fusioneering, our engagements with potential investors hinge on several pillars:

  • Transparent communication: While fusion is synonymous with intricate technicalities and extended timelines, we strive for candid conversations about where we stand, the hurdles ahead and the recent breakthroughs, ensuring our investors are well-informed.
  • Emphasizing transformative potential: Beyond the immediate challenges, our focus remains on the game-changing potential of fusion energy. It’s about selling a vision of a sustainable, energy-abundant future.
  • Unique value proposition: KF operates under a distinctive business model. Rather than solely aiming to “create the star,” we supply pivotal systems integral to fusion plant development. This dual-pronged approach not only carves a niche for us but also presents a compelling case of near-term revenue streams alongside long-term industry significance.
  • Strategic milestones: By setting and achieving tangible milestones, we reinforce our commitment and capability. Each accomplishment serves as a testament to our progress and the feasibility of our end goals.
  • Collaboration and alignment with global goals: In this era marked by an urgent call for sustainable solutions, fusion stands out as a beacon of hope. Our concerted efforts, in sync with global sustainability drives, amplify the allure of fusion from an investment standpoint.
  • Tailored investor engagement: Recognizing that investors aren’t a monolithic bloc, we adapt our pitches according to their individual priorities, risk appetites and objectives.
  • Roots in renowned research institutions: Drawing from our foundation in prestigious Japanese research entities, we assure investors of the credibility and rigor underpinning our endeavors.
  • Leadership with insight: KF’s leadership team is adept at discerning investor concerns and aspirations, ensuring that our dialogues resonate and are mutually beneficial.

What’s driving the pace of progress in the fusion industry?

The surge in fusion advancements stems from a multifaceted interplay of factors:

  • Technological breakthroughs: Key developments in superconductors, supercomputing, and novel materials like silicon carbide have empowered the fusion community to push performance boundaries.
  • Investment landscape: The fusion sector has attracted increased financial backing, driven both by its transformative promise and favorable market dynamics.
  • Global synergies: Collaboration on an international scale, particularly between academia and industry, is sharing knowledge and accelerating common objectives.
  • Environmental urgency: As the world grapples with climate challenges, fusion’s promise of abundant, clean energy aligns perfectly with global sustainability ambitions.
  • Digital and entrepreneurial evolution: The fusion industry is benefiting from the digital revolution, enabling data-driven insights and fostering innovative startup ecosystems.
  • Infrastructure development: Beyond research, access to specialized facilities and progress in supply chain management are turning theoretical advancements into tangible outputs.
  • Public perception: An increasingly informed public recognizes fusion’s potential, generating momentum and support.