The LM26 at General Fusion in Richmond, B.C., on May 3.Jennifer Gauthier/The Globe and Mail
Seven months after hitting a cash crunch, General Fusion Inc. has secured its second capital infusion – and could be eyeing an initial public offering.
The Richmond, B.C., company, which is pursuing its next scientific milestone in a generation-spanning attempt to develop commercial-scale fusion reactors, laid off staff and reduced operations in May because of the cash shortfall.
Three months later, it secured US$22-million in a “pay-to-play” deal that saw most existing preferred shareholders buy their pro rata share to maintain their stakes, including PenderFund Capital Management, Shopify chief executive officer Tobi Lütke and JIMCO, the global investment arm of Saudi Arabia’s billionaire Jameel family. Some that didn’t, including Singapore sovereign wealth funds Temasek and GIC, saw the size of their stakes shrink.
Rival fusion developers haven’t had as much trouble fundraising: This year alone, Proxima Fusion, Commonwealth Fusion Systems and TAE Technologies Inc. announced nine-figure (U.S.) deals.
General Fusion CEO Greg Twinney said in August that the US$22-million financing was backed by “an activated set of shareholders that proved through this difficult time that they’ll step up, and that they believe in the company and the opportunity” and would keep funding it.
General Fusion escapes funding crunch with $22-million financing to achieve key scientific milestone
That appears to have happened. Last month, the company quietly raised $51.5-million, according to a Nov. 27 filing with Canadian securities regulators. Of that, $51.1-million was through a “simple agreement for future equity,” or SAFE.
With a SAFE, investors buy the right to receive discounted equity the next time a company does a financing, goes public or is sold. A total of 67 investors from British Columbia, the United States and five other countries invested. General Fusion also raised just over $400,000 in a warrants deal. The company has raised just over $500-million to date.
PenderFund invested about C$5-million in the SAFE after putting close to US$5-million into the August round. David Barr, CEO of PenderFund, said in an interview that his firm took part in the summer deal “with the understanding the company would look to go public as soon as possible,” possibly by merging with a special-purpose acquisition company.
He described the latest deal as a “crossover financing to further support the company’s go-public endeavours. We believe this is a great time for the company to go public given interest in the nuclear space.”
If it went public, General Fusion would be the first player in its emerging space to do so.
The company is working to develop its LM26 fusion demonstration device and reach the 100-million-degree temperatures needed to cross what it calls scientific break-even – the point beyond which the machine would produce more energy than it takes in if it were loaded with the appropriate fuel mix. First, it is trying to heat plasma – which contains a hydrogen isotope called deuterium – in the LM26 to 10 million degrees, which it expects to achieve within months.
General Fusion at financial crossroads in quest to build ‘break-even’ reactor
Mr. Twinney said in August that once General Fusion hits the 10-million-degree goal, “it significantly changes the game because it proves out the first milestone of our science in LM26. We’ve seen competitors raise capital on that.” The company expects to reach the 100-million mark soon after. Others that have already achieved that higher threshold include Helion Energy Inc. and Tokamak Energy.
General Fusion was founded in 2002 by physicist Michel Laberge, who sought to revive an approach to nuclear fusion that was shelved in the 1970s. The method, which differs from those used by other companies, includes using a metal sheath to momentarily contain and then rapidly compress plasma to reach the temperatures and pressures needed to initiate fusion reactions.
After years of development in B.C., General Fusion agreed with the UK Atomic Energy Authority in 2022 to build its own demonstration reactor in Oxfordshire. It put those plans on hold a year later to focus on the LM26 in Canada to prove out its technology.
The test machine is not designed to generate electricity but to serve as a precursor to a full-scale fusion reactor General Fusion ultimately hopes to develop. Last spring, the LM26 successfully compressed and heated deuterium plasma that was injected into a solid lithium liner.
Mr. Twinney didn’t directly answer questions about the new financing but said in an e-mailed statement: “The real, tangible progress we’re making, coupled with strong financing support from a portfolio of investors who believe in our mission and practical path to commercial fusion energy, makes this an incredibly exciting time.”