Venture capitalists’ interest in fusion startups has been a rollercoaster in recent years. While the Fusion Industry Association reported a record-breaking $6 billion in investment for nuclear fusion companies in 2023 (a $1.4 billion increase from the previous year), the growth rate slowed to 27% compared to the previous year. This dip can be attributed to external concerns such as rising inflation.
However, numbers don’t fully capture the story. Despite the slowdown, venture interest in the field remains strong as startups explore innovative ways to harness the power of the sun to generate safe and limitless energy.
In a major breakthrough, the Department of Energy’s National Ignition Facility achieved a fusion reaction in 2022 that produced more energy than was used to initiate the process. And last year, the team confirmed that this was not just a fluke. While there is still a long road ahead, the important thing is that fusion power is no longer just a theoretical concept.
The latest contender entering the fusion race is Proxima Fusion, the first spin-off from the renowned Max Planck Institute for Plasma Physics (IPP). The Munich-based company has raised €20 million ($21.7M) in a seed round to start building its first generation of fusion power plants.
The company relies on “quasi-isodynamic (QI) stellarators” with high-temperature superconductors for its technology. Simply put, a stellarator is a ring-shaped structure with precise arrangements of magnets that contain the plasma where fusion energy is born. However, creating stellarators is incredibly challenging as the magnets require complex, precise engineering in unconventional shapes.
Proxima Fusion claims to have found a solution to these challenges through engineering and advanced computing in 2022. As a spin-off, the company has capitalized on research from the Max Planck IPP, which also developed the world’s largest stellarator, the Wendelstein 7-X (W7-X) experiment.
This new approach to fusion is made possible by the use of artificial intelligence (AI) to simulate the behavior of plasma. This brings us closer to achieving viable nuclear fusion, according to Dr. Francesco Sciortino, co-founder and CEO of Proxima Fusion, in an interview with TechCrunch.
Another German startup, Marvel Fusion, funded by German venture capitalist Earlybird, uses laser containment to initiate the fusion reaction. When asked why Proxima chose the stellarator route, Sciortino explained, “With lasers, you compress a small pellet and blast it with powerful lasers to release energy through fusion. It’s like controlled explosions. But with stellarators, we aim for continuous operation in a steady state, making it more sustainable.”
With a PhD in tokamak nuclear projects from MIT, Sciortino also noted that Proxima will leverage the lessons learned from the W7-X device, which received over €1 billion in public funds. He predicts that by the mid-2030s, they should achieve fusion energy, with plans to build an intermediate device in Munich by 2031.
Proxima’s investors share the same optimism.
Ian Hogarth, partner at Proxima’s investor Plural, said, “There are two major factors that make Proxima’s technology so compelling. First, their stellarator benefits from the advancements in high-temperature superconductors and computer-aided simulations for complex systems. Secondly, the world’s advanced stellarator is in North Germany.”
Hogarth believes that being the first spin-off from such an ambitious government project will give Proxima an edge in the race for fusion: “It’s a classic example of the ‘entrepreneurial state’ where a startup can build on top of tremendous public investment.”
However, Proxima is not alone in the race for fusion. Two years ago, Helion Energy raised a whopping $500 million in a Series E funding round led by tech entrepreneur and OpenAI CEO Sam Altman. And there are currently 43 other companies working on nuclear fusion technologies.
Proxima’s seed round was led by Redalpine, with participation from Bavarian government-backed Bayern Kapital, German government-backed DeepTech & Climate Fonds, and the Max Planck Foundation. Plural and existing investors High-Tech Gründerfonds, Wilbe, UVC Partners, and Tomorrow of Visionaries Club also contributed to the round.
