Commonwealth Fusion Systems announced today it has raised an additional $1 billion and hired the chief financial officer that took biotech and pharmaceutical company Moderna through its initial public offering.
But the raise isn’t “pre-IPO funding” and the arrival of Lorence Kim as CFO isn’t an indication of imminent plans for the fusion company to go public, Kim said on a call with reporters.
“The question in front of us is, what are the depths of the capital pools, both on the private side and perhaps the public side?” he added. “We see that the private markets have a lot of capital to deploy toward our mission, and that gives us a lot of confidence.”
This spring, CFS became the first fusion company to file a generation interconnection request, and the company says it’s on track for getting power to the grid in the early 2030s. This comes at a time when the federal government is pouring resources into getting fusion to commercial scale on a timeline relevant for the influx of large loads.
That said, the science has yet to prove the viability of commercial-scale fusion, and fusion’s technical challenges mean private markets continue to be a good fit in the near term, CEO Bob Mumgaard said.
“The private markers allow us to have a deep, nuanced, risk-informed conversation that I think sometimes can be lacking when a company is in the public markets,” Mumgaard said. For any emerging category of technology, companies need somewhere “for research results to be digested, for failures and setbacks to be discussed, and the private markets…enable that.”
The equity investment — which is a sign that more risk-averse investors are getting comfortable with fusion — is in CFS’ topline, he added, rather than its first grid-scale project, ARC. “We’re not ready yet to put equity into an ARC project, but with this capital, and with a little bit more time here, we’ll be in a position to really do that,” he added.
CFS didn’t disclose the investors participating in this latest round, though Mumgaard acknowledged that the “substantial majority” came from new infrastructure investors including large pension funds, sovereign wealth funds, and “industrial corporates.”
ARC, a planned 400-megawatt facility slated to be built in Virginia, will be built in partnership with Dominion Energy. CFS has already signed two power purchase agreements for the plant, “When you have the interest of infrastructure investors, the draw is a string of projects they could participate in, and we are…lining those projects up,” Mumgaard said.
This latest raise is focused on starting to build ARC, but won’t cover that project’s full construction, he added. That will likely take several billion more dollars — though the total is projected to come to less than $10 billion, he clarified.
Public fusion?
Fusion, like many other next-gen energy technologies, is riding an AI wave that has already taken companies building geothermal power and long-duration battery storage toward public markets.
But while the fusion industry has seen an acceleration in funding in the last several years, access to cash remains a major hurdle for fusion companies.
When it comes to raising funds, CFS has blown past fusion peers — including those who have already turned to the public market to help them build their projects.
Late last year, TAE Technologies, which is backed by Google, Chevron, and Goldman Sachs, merged with Trump Media & Technology, the parent company of Truth Social. That deal, valued at $6 billion, hasn’t yet closed. Prior to the merger, TAE had raised a total of around $2 billion. This latest raise brings CFS’ total to around $4 billion.
Meanwhile, General Fusion became the first public fusion company after being listed on the Nasdaq earlier this month, following a $1 billion merger with a special purpose acquisition company.
SPACs, popular in the early 2020s, are experiencing a comeback, especially in the energy and climate tech space. Fusion is still a risky bet; the technology could be transformative when it comes to meeting massive demand for firm power generation, but there’s still no guarantee it will ever work at that scale. But risky bets are what SPACs do best: The approach offers a faster path to public markets with more deal certainty up front.
CFS has been watching those public moves closely, as well as “rumors about possible future IPOs of other fusion companies,” said Kim, who has already been working as CFO for the company for several months. But for now, the company has enough inbound investor interest on the private side: “If an IPO makes sense at some point because the capital is there under the right terms, we’ll consider it at that time,” he explained.
