This week, a news headline gave me a sense of déjà vu. Nuclear power startup Deep Fission has announced it is going public as it hopes to garner investor support to build an underground nuclear reactor to power an AI data center.
Wait, I already wrote that story, right? I might have sworn that.
Oh, yes, that’s right. Last September, Deep Fission announced it was going public through a reverse merger with Surfside Acquisition, a Delaware shell company. The transaction, in which a private company acquires an existing public company and lists it on the stock market, raised $30 million in a simultaneous private placement at $3 per share. It is currently seeking $157 million in an IPO on Nasdaq at $24 to $26 per share. You can see my confusion.
It turns out that the previous listing was a listing in name only. After the reverse merger with Surfside was completed, Deep Fission became an SEC-required reporting company, but the company’s stock was never traded. The company said it intended to list on OTCQB, a market for developing companies that don’t meet the listing requirements of major exchanges such as the New York Stock Exchange or Nasdaq. However, a search for Deep Fission on OTCQB yielded no results, and the company denied that its stock was ever listed on the S-1.
In response to questions from TechCrunch, Deep Fission declined to comment, citing the quiet period before the IPO.
Deep Fission’s initial public offering on Nasdaq follows a more traditional IPO route, valuing the company at up to $1.66 billion. That’s a significant number for a company that was struggling to raise $15 million a year ago.
Even more bizarrely, the picture painted in the S-1 filed on May 20 is perhaps murkier than the one outlined in a December filing with the SEC. The schedule to start up the first reactor has slipped. Furthermore, as of December, the government had indicated that it hoped to reach criticality, the point at which nuclear chain reactions can sustain themselves on their own, by July 2026, but they have not made that estimate public at present.
Deep Fission notes that it is drilling test wells. I also lost a lot of money.
One thing hasn’t changed: The new S-1 statement includes the same “going concern” caveat presented in December. If Deep Fission is unable to complete an IPO, it could run out of cash over the next 12 months.
In fact, the startup’s financial situation has worsened in recent months. As of March, the deficit had widened from $56.2 million to $88.1 million. Over the past month and a half, the company’s cash and cash equivalents decreased by $6.4 million, or about 7%.
On the technical side, Deep Fission says it’s currently prioritizing drilling, perhaps a tacit admission that drilling holes in the ground isn’t as easy as it seems.
The company said it began drilling the first of three test wells in March. The well will be used to collect data “up to 6,000 feet deep.” At 8 inches in diameter, it is much smaller than what is needed on a commercial scale.
Moving from pilot wells to commercial scale can present significant challenges. Deep Fission says it will require a borehole 30 to 50 inches in diameter and a mile deep, but specific dimensions have not yet been determined. Even at the low end, their boreholes are larger than those typically used in the oil and gas industry. And until we know how big a hole deep fission can drill, we’ll have a hard time finalizing the reactor design.
So what has changed since December that could prompt a bigger offering at a nine-figure valuation? The company has actually received $80 million in equity investment, including $20 million from data center developer Blue Owl, and has also signed a non-binding memorandum of understanding for a future power plant. Still, it was not enough to avoid a going concern warning. It’s possible that Deep Fission has positive information that was omitted from the S-1, but given the nature of the IPO, it’s hard to believe.
The company and its backers are likely trying to capitalize on investor excitement about nuclear fission power. Just last month, nuclear fission startup X-energy went public in a scaled-up IPO. But unlike Deep Fission, X-energy is generating revenue and is well advanced in the Nuclear Regulatory Commission approval process. This contrast serves as a useful reminder that recognition and progress are not the same thing in a field where enthusiasm can far outweigh technical and regulatory realities.
It’s not clear exactly what factors are pushing Deep Fission towards an IPO, but technological and commercial advancements don’t appear to be among them.
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