General Fusion Faces Tough Choices

General Fusion’s open letter this week announced a breakthrough technical achievement and a sobering funding crisis. 

CEO Greg Twinney revealed that on April 29th, the company successfully compressed a magnetized plasma using its new LM26 demo machine. Yet in the same breath, Twinney warned that General Fusion is facing “one of the most challenging financial moments” in its 20-year history. 

The company has slashed staff and scaled back operations to conserve cash, and is openly seeking new investment or even a buyer to carry its technology forward. This candid disclosure underscores a difficult reality: while fusion startups are making real technical strides, that’s not always enough to bridge the “valley of death” between proof-of-concept and commercialization.

Two Decades of Magnetized Target Fusion

Founded in 2002 by physicist Michel Laberge, General Fusion is betting on Magnetized Target Fusion, which involves rapidly compressing a magnetically confined plasma ring to fusion conditions with a collapsing liquid metal liner. This approach aims to sidestep the huge superconducting magnets of tokamaks and the high-powered lasers of inertial fusion, theoretically offering a simpler, more compact route to a fusion power plant. 

Over the years, General Fusion built dozens of plasma injectors and piston-driven compression rigs to prove out the concept. By 2021, the company claimed it had validated its core subsystems and announced plans to build a 70%-scale Fusion Demonstration Plant in partnership with the UK Atomic Energy Authority. The pilot device was slated to be the world’s first substantial public-private fusion demo.

However, these lofty ambitions met reality in 2023. The envisioned UK demo, with a price tag reported around $400 million, was put on hold as General Fusion pivoted its strategy. Instead, the company decided to build a smaller, faster, and cheaper machine at home in Canada: the “Lawson Machine 26” (LM26), intended to approach scientific breakeven by 2026. 

While General Fusion is one of only a few private fusion firms that have published peer-reviewed results, its long journey of technical validation has always run on a relatively tight financial leash. General Fusion has raised on the order of $450 million over two decades. Notable backers include Jeff Bezos (through Bezos Expeditions), venture firms Chrysalix and BDC Capital, energy companies like Cenovus, and government programs in Canada and Malaysia.

By late 2023, the first close of General Fusion’s Series F brought in a modest $25 million, far short of the capital needed to build and operate the UK demo plant. The shifting macroeconomic climate in 2022–2023, combined with the rise of increasingly well-funded competitors, clearly shook investor confidence in the company.

A Shifting Landscape

General Fusion’s predicament comes as fusion startups face a challenging market. In the early 2020s, investor exuberance toward fusion was running high. Late 2021 saw a gold rush, with over $2.4 billion pouring into the sector in just one quarter. Major funding milestones during that peak included Commonwealth Fusion Systems’ record $1.8 billion round in November 2021 and Helion Energy’s $500 million Series E (with an additional $1.7B committed upon hitting performance milestones).

However, that wave of funding has since receded. According to Crunchbase data, fusion startup funding declined sharply in 2023–24 after the 2021 high-water mark. Rising interest rates and the broader venture capital pullback in late 2022 have made it harder for fusion ventures to raise the huge sums they need to scale.

Indeed, in a mid-2024 industry survey, two-thirds of fusion startups cited funding as a major challenge in the next five years – despite overall private investment in the sector still growing year-over-year. In other words, capital is concentrating: while large rounds (like Helion’s $425M Series F) are still being raised, investors are looking at fusion startups with a more critical eye.

General Fusion’s open letter underscores this new normal. The company just cleared a technical milestone, exactly the point when one would expect aggressive scale-up funding, but instead finds itself having to pull back and cut staff. Technical progress alone is no longer enough to win investors; startups need to show a clear path to commercial viability. And as Twinney himself has noted, “fusion is hard, but commercial fusion is harder.”