Just several years after a boom and bust cycle of climate tech startups going public via SPAC, the backdoor deals are making a comeback.
Canadian fusion developer General Fusion on Thursday announced a $1 billion merger with a special purpose acquisition company, and a target to list on the Nasdaq by the middle of this year. That would make it the first fusion company to go public, as startups race to commercialize technologies that replicate the reaction powering the sun.
The merger comes amid a shift in the overall SPAC market, which saw a boost in 2025 that analysts expect to continue this year. Investors spent about $30 billion on SPAC IPOs in 2025, the most since 2021’s boom, Bloomberg reported. The deals have already attracted $2 billion this month. SPACs tend to target businesses working in artificial intelligence, along with data centers, renewables, mining, and rare earths.
General Fusion — and the fusion sector more broadly — is riding the AI wave. CEO Greg Twinnery said in a statement that the company is working to meet skyrocketing demand for “clean, sustainable, baseload power.” Meanwhile, President Donald Trump’s social media company, in a major surprise to industry observers, last month announced a surprise merger with TAE Technologies, a competitor of General Fusion. While not a SPAC transaction, it underscored investors’ growing interest in fusion energy now that securing enough power is the main bottleneck to building AI data centers.
No company has achieved fusion power in a way that is commercially viable yet, and scientists predict the mid-2030s is the most realistic timeline for electricity to enter the grid. That’s because creating a fusion reaction has, historically, used more energy than it produces. A breakthrough arrived in 2022, when the National Ignition Facility at Lawrence Livermore National Laboratory managed, for the first time, to break even. Now, the push is for a verified “net energy gain.”
That makes the industry a risky bet. But risky bets are what SPACs are best-suited for.
The SPAC appeal
SPACs don’t have commercial operations of their own, but rather raise capital with their own IPO at first, then search for a private company to merge with for a negotiated price. The strategy offers a faster pathway to a public listing for a company like General Fusion that doesn’t earn revenue yet but needs cash to keep advancing its technology.
The SPAC market thrived in 2021 and 2022 across a range of industries, including climate tech. But by 2023, climate tech firms that had gone public through a SPAC were down roughly 70% year-over-year, “underperforming the NASDAQ index by more than 2X,” according to Sightline Climate.
Transactions rebounded last year for several reasons. The SEC in 2024 finalized stricter disclosure rules for SPACs that have improved investor confidence, and there are more experienced bankers and institutional investors in the game.
General Fusion’s partner — Spring Valley Acquisition Corp. III — said its team has closed more than 50 energy and decarbonization transactions over the last 30 years and has played key roles in seven SPACs. That includes taking the SMR startup NuScale Power public in 2022.
SPACs are appealing to private companies that are past the venture capital stage and need larger-scale infrastructure investments to build their first commercial projects. General Fusion sat in that financing gap, known as the “missing middle.” Twinnery in May 2025 issued a call for more funding in a public letter after the company announced layoffs, GeekWire reported.
“We are closer than ever to delivering practical fusion, but success depends on securing the right financing partners to carry this breakthrough forward,” he said at the time.
In August, the company announced it had closed a $22 million round, bringing total dollars raised to nearly $400 million since its founding more than two decades ago, including from Amazon founder Jeff Bezos. Generate Fusion said it plans to use the new cashflow from the merger to demonstrate its technology — called “magnetized target fusion” — can be commercially viable. That technology involves compressing magnetized plasma inside a lithium-lined machine so it rises to a temperature hotter than the center of the sun. A pilot project began operating last year.
