Fusion startups seek defense alliances to offset climate-tech investment slump
Fusion power companies are rekindling ties with the defense sector, a relationship that dates back to Cold War-era research, as climate-focused venture funding slows. These partnerships offer startups alternative capital sources, with defense contractors like RTX investing in laser-based fusion firms such as Xcimer. The interest is partly driven by the need for cost-effective counter-drone weapons, where lasers could replace expensive missiles.
The economic mismatch in drone defense is stark, as a single Patriot missile can cost millions to intercept a hobbyist drone. This inefficiency drives defense interest in laser weapons, which use electricity rather than expendable munitions. Xcimer's Phoenix laser, though less powerful than a future plant requires, is attracting investment from RTX Ventures, letting the defense giant explore laser applications while funding fusion research.
Pacific Fusion's New Mexico facility sits near national labs, and its experiments could exceed the power of current government weapons-testing setups. The company's leadership includes veterans of Sandia, Livermore, and the NNSA, indicating a deliberate alignment with national security priorities. This dual-use approach provides alternative capital as climate-tech venture funding slows.
This dual-use strategy could reshape how fusion startups are funded and prioritized. If defense contracts become a major revenue stream, it may delay grid-scale fusion power as companies focus on military applications. However, it could also stabilize the sector, allowing research to continue during a climate-tech funding slump. Society may benefit from cheaper drone defense, but taxpayers could see public research facilities increasingly tied to private military interests.