Struggling fusion energy firm General Fusion will get $22M lifeline from traders

General Fusion, a Canadian nuclear fusion energy startup, announced today that it had been thrown a lifeline in the form of $22 million in fresh funding.

The company had laid off at least 25% of its employees in May in a bid to shore up its stretched finances. At the same time, CEO Greg Twinney wrote an open letter pleading for funding. The additional cash will give General Fusion some breathing room, though not much.

A subset of General Fusion’s existing investors ultimately ponied up for what the Globe and Mail reports was a “pay to play” round — a financing structure where existing investors must participate to maintain their ownership stakes — that included Chrysalix Venture Capital, Gaingels, Hatch, MILFAM, JIMCO, Penderfund, Presight Capital, Segra Capital Management, and Thistledown Capital. Penderfund and Segra gained board seats as part of the deal.

Though the company described the round as “oversubscribed,” the $22 million falls far short of the $125 million that the company was reportedly seeking. Adam Rodman, chief investment officer at Segra Capital, told the Globe and Mail that the $22 million was “the least amount of capital possible” to help the company hit the next scientific milestone.

General Fusion was founded in 2002 and before this round had raised $440 million, according to PitchBook.

Just months before making its financial woes public, General Fusion had activated its latest device, Lawson Machine 26 (LM26), a half-scale prototype of a commercial-scale reactor. The new funding will give the company more time to run LM26 as it attempts to hit key scientific milestones.

General Fusion is pursuing what’s known as magnetized target fusion. Inside its reactor, electricity flows through deuterium-tritium fuel — heavy hydrogen isotopes — generating a magnetic field to contain the plasma. That plasma is then compressed by a liquid lithium wall that is pressed inward by steam-driven pistons. The combination should drive the temperature and pressure inside the plasma high enough to trigger a fusion reaction.

In March, when it commissioned LM26, General Fusion said it expected the device to hit scientific breakeven in 2026. Scientific breakeven is a technical term in fusion circles that means the amount of energy generated by a fusion reaction is enough to offset the amount of energy that’s required to kick off the reaction. Reaching scientific breakeven is crucial in proving the viability of a reactor design, though it doesn’t guarantee commercial success.

Today, General Fusion said it is still pursuing scientific breakeven, though it didn’t provide a timeline. The company also listed two intermediary goals: heating plasmas to 10 million degrees C and 100 million degrees C.

Given the limited size of the fresh funding, it seems likely that General Fusion will shoot for the most achievable milestones to convince investors to cut a new round of checks. The company may have bought itself a few precious months, but unless it can deliver promising results, it may find itself in back in the same tight spot it was in during May.