Two fusion power companies have agreed to give the U.S. government non-voting shares in exchange for $260 million in federal awards, according to a report published by TechCrunch last week. Helion received $175 million while Commonwealth Fusion Systems (CFS) secured $85 million from the Department of Commerce under the CHIPS and Science Act to develop advanced semiconductors for their reactors. The awards mark a shift from traditional non-dilutive government funding to a model where taxpayers hold equity positions in the companies they support.
The dollar amounts represent a small fraction of what each company has raised privately. CFS has pulled in about $4 billion in total funding, while Helion trails slightly with $3.2 billion in committed capital. Helion said the government will get $175 million worth of non-voting equity pegged to its Series G round, which valued the startup at $15.5 billion—roughly a 1% stake. The government's ownership percentage in CFS remains unknown because the company hasn't disclosed its latest valuation publicly. Private investors have bet more than $14 billion on the fusion sector over the past decade, but the Fusion Industry Association—the sector's trade group—argues that's still insufficient to compete globally and has called for a one-time $10 billion federal injection, with $5.4 billion earmarked for fusion startups.
The equity-for-funding arrangement isn't unique to fusion. Last year, critical minerals supplier MP Materials handed over a 15% stake for a $400 million investment paired with a $150 million loan, while USA Rare Earth gave up 10% for a $277 million award and $1.3 billion loan. Intel set what the report calls "an even more awkward precedent" when the Trump administration converted an $8.9 billion award from the Biden administration into roughly a 10% government stake. David Kirtley, co-founder and CEO of Helion, stated that "this type of structure has become more common in large U.S. government investments in recent years" and "aligns the interests of Helion and the U.S. taxpayer around our commercial success." A CFS spokesperson echoed that sentiment, saying the equity stake "will enable the U.S. taxpayer to participate in the upside of our commercial success." Not every fusion startup has accepted these terms—Thea Energy, Avalanche Energy, Pacific Fusion, and Inertia Enterprises all confirmed they haven't given the government equity in exchange for awards or partnerships.
The new model could reshape how venture capital flows into fusion. VCs now face a calculation about whether dilution from a government stake justifies the funding, and questions linger about priority in scenarios like pay-to-play rounds or wind-downs. The report notes that federal awards "used to be no brainers when it came time to scale up" but have now "grown more complicated." Until recently, the government had been trickling out modest sums—the Biden administration's Milestone Based Fusion Development Program distributed less than $50 million in its first couple years. The Fusion Industry Association's lobbying push sought research budget dollars, not Commerce Department funds, and didn't include discussions about equity stakes, according to a person familiar with the matter. A CFS spokesperson told TechCrunch that "other nations are moving aggressively to accelerate their commercial fusion industries, pouring billions in state-backed efforts to win the race to fusion power," adding that the $10 billion request is meant to help the domestic industry compete with China. The fusion sector will need billions more to deliver working power plants, and these awards signal government backing is back on—just with strings attached that weren't there before. Startups chasing scale now weigh not just the money but who ends up on the cap table and what leverage that brings when capital gets tight.