Fusion startups Helion and CFS give U.S. government shares in return for $260 million in awards
The U.S. Department of Commerce awarded fusion power companies Helion and Commonwealth Fusion Systems a combined $260 million, and the government will receive non-voting shares in return. The approach could change how private investors view the sector.
The U.S. Department of Commerce last week granted fusion power companies Helion and Commonwealth Fusion Systems (CFS) awards totaling $260 million. The money comes from the CHIPS and Science Act, a 2022 law that funds domestic semiconductor development, and is meant for advanced semiconductors used to power and control the companies' reactors. Helion received $175 million and CFS $85 million. In exchange, both agreed to give the government non-voting shares.
What is different
Until now, government support for startups was typically non-dilutive capital, meaning money that does not reduce existing investors' ownership percentages. The Trump administration has been pushing to change that. Helion said the government's equity is based on its Series G round, which valued the company at $15.5 billion, amounting to a stake of roughly 1%. CFS's stake will be based on its latest valuation, which the company has not disclosed, so its size is unknown.
The sums are modest next to what the companies have raised: about $4 billion for CFS and $3.2 billion in committed capital for Helion. Private investors have put more than $14 billion into fusion overall. Last year the Fusion Industry Association, the sector's trade group, called on the federal government for a one-time $10 billion injection, $5.4 billion of it for startups. A person familiar with the matter said the association's lobbying did not include equity stakes in exchange for awards.
Other cases
The government has made similar arrangements elsewhere. MP Materials gave a 15% stake, USA Rare Earth gave 10%, and the administration converted Intel's $8.9 billion award into a roughly 10% stake. Germany's Proxima Fusion has the German government and the EU on its cap table. Thea Energy, Avalanche Energy and Pacific Fusion said they have not given the government equity.
TechCrunch notes that government backing could raise investor confidence or discourage private investment, since venture capital firms must weigh the dilution from a government stake.
