Why fusion startups are giving the government shares in exchange for awards—and whether it’s worth it | TechCrunch

Awards bring equity strings

The Department of Commerce awarded Helion $175 million and Commonwealth Fusion Systems $85 million under the CHIPS and Science Act. The 2022 law supports domestic semiconductor development, and the awards will fund advanced semiconductors for the companies’ reactors.

In return, both companies agreed to give the government non-voting shares. Helion’s stake is based on its Series G valuation of $15.5 billion and works out to roughly 1%; the size of the government’s CFS stake is unknown because the company has not made its latest valuation public.

Funding signals renewed interest

The awards are modest compared with the companies’ fundraising: CFS has raised about $4 billion, while Helion has $3.2 billion in committed capital. Their significance may lie more in showing that the U.S. government is again supporting fusion after years of reduced and limited funding.

Fusion uses the same basic process as the sun, combining atoms to generate power. Developing it requires specialized materials, complex manufacturing and advanced computer modeling, while private investors have put more than $14 billion into companies pursuing grid-connected power plants.

Industry seeks larger investment

The Fusion Industry Association has argued that current investment is insufficient to keep pace with other countries. Last year, the trade group called for a one-time $10 billion federal investment, including $5.4 billion for startups.

The Biden administration’s Milestone Based Fusion Development Program paid companies for meeting technical goals, but distributed less than $50 million in its first couple of years. The recent awards are larger, though they came from Commerce rather than the research budget the association sought, and include equity stakes.

A CFS spokesperson told TechCrunch that other nations are investing billions in commercial fusion and said the proposed funding would support the Department of Energy’s Fusion Roadmap and help U.S. companies compete with China. Helion CEO David Kirtley said the equity structure aligns the company’s interests with those of U.S. taxpayers.