With Xcimer raise, cleantech investors once again bet on nuclear fusion

Xcimer, a Denver-based nuclear fusion startup, attracted the attention of a who's-who of elite climate venture backers for its $100 million Series A. The slew includes the Gates family’s Breakthrough Energy Ventures and the Jobs family’s Emerson Collective; VC firm Hedosophia led the round. 

Nuclear fusion, which replicates the nuclear reactions that power the sun, is estimated to release four million times more energy than fossil fuels, and four times as much energy as nuclear fission. 

• The top line: Xcimer plans to produce that energy by using a laser to fuse hydrogen isotopes to form helium. This latest round of funding, the company said, will help it build a prototype of its proprietary laser tech, which it says is ten times more efficient than other existing systems, meaning more energy output for less input.
• The market grounding: Nuclear fusion’s promise of safe, clean, baseload power has long drawn the interest of major tech investors — Sam Altman, Reid Hoffman and Dustin Moskovitsz, to name a few. But commercialization of the tech remains far off. The Biden administration — which has committed $46 million to fusion startups including a $9 million award to Xcimer — has set a goal of getting fusion to pilot-scale this decade.

Hedosophia is a low-profile VC firm founded by Ian Osborne, a financier described to the Financial Times as “a real man of mystery” who is known for having executives agree not to talk about his investments without his permission. Xcimer, and fusion more broadly, represents a departure from the firm's software-focused plays.

And in addition to Breakthrough and the Emerson Collective, other investors include Lowercarbon Capital, Prelude Ventures, Gigascale Capital, and Starlight Ventures. (Editor’s note: Prelude Ventures is also an investor in Latitude Media.) This financing follows the start-up’s 2022 $2.5 million seed round. 

The technical feasibility of laser-driven fusion was proven extremely recently. In 2022, the National Ignition Facility at Lawrence Livermore National Laboratory managed, for the first time, to break even on energy for fusion ignition. That program, however, cost billions of dollars, and took decades to reach so-called “ignition.”

And in order to use fusion as clean, firm power, companies would have to take the laboratory’s success a step further and create reactions that produce more energy than is required to sustain the reaction itself.

Hence Xcimer’s focus on creating a more efficient laser: the company claims its lasers are up to ten times more efficient than those of the National Ignition Facility, and over 30 times lower cost per joule.

The fusion landscape

Despite its nascency, nuclear fusion has been heating up in recent years. 

And that interest comes in substantial part from the tech world, as it grapples with where to get enough electricity to power the voracious energy appetites of artificial intelligence. Some nuclear startups are already reporting that most of their inbound leads are coming from data center operators.

Xcimer’s use of lasers represents just one possible approach to fusion. Helion Energy, a startup in which OpenAI’s Sam Altman is lead investor and executive chairman, instead uses magnetic pulses, for example.

That company is already on its way to powering data centers. Microsoft, which has already seen a rise in its energy intensity since the start of the AI boom, earlier this year committed to purchasing electricity from Helion in what is considered the first power purchase agreement for nuclear fusion.