Fusion Funding Has Fizzled

Funding to startups focused on fusion energy has declined sharply in recent quarters after hitting a high two-and-a-half years ago.

So far this year, just $58 million has gone to companies innovating around the future of fusion as a potential power source, per Crunchbase data. By contrast, more than $2.4 billion went to the space in the fourth quarter of 2021, the peak period for funding.

For a sense of how fusion-focused startup funding has fluctuated, we used Crunchbase data to chart out investment to the space over the past 14 quarters.

As you can see, there was something resembling a fusion gold rush in late 2021. That’s when a series of giant financings got done.

By far the biggest was a Series B of over $1.8 billion for Cambridge, Massachusetts-based Commonwealth Fusion Systems, led by Tiger Global.

Everett, Washington-based Helion Energy came in second with a $500 million Series E led by Sam Altman — with an opportunity for an additional $1.7 billion tied to performance milestones.

Generous financings coincided with greater optimism around the feasibility of fusion, the energy created when two atoms are merged, as an emissions-free energy source. Plus, investors were used to writing big checks at the time. Global startup investment hit a record high in Q4 2021 and has fallen considerably since.

Dramatic ups and downs

Fusion funding has seen much more dramatic annual ups and downs than average for startup sectors, as charted below.

In part, this is likely a function of the fact that comparatively few rounds close in a given quarter, and they often skew large.

Besides Commonwealth Fusion and Helion, a few other fusion companies have been prodigious fundraisers over the years. Janesville, Wisconsin-based Shine Technologies picked up over $500 million in equity financing, while British Columbia-based General Fusion, has taken in over $350 million in funding to date.

Slowdown, or just a pause?

Given the smallish number of fusion-related rounds, and the history of large financings, it’s not clear whether the recent lag in investments is just a temporary pause between big rounds or a sign of other investor concerns.

The funding pullback may also be less about the technology’s potential than investors’ appetite lately for risky, high-cost, high-impact investments that aren’t AI-centric.

Whatever the cause, the numbers speak for themselves: Fusion funding is down, and it will take a multifold increase to get back to where we were a couple years ago.

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Illustration: Dom Guzman