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Defense money reaches fusion startups through the hardware they have already built
Xcimer took investment from RTX Ventures and Pacific Fusion signed an agreement with the NNSA. TechCrunch's reporting shows defense interest landing on machines that already exist, with both plant programs still running.
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What happened
- Pacific Fusion announced a memorandum of understanding last month with the National Nuclear Security Administration to work together on high-energy-density fusion experiments.
- Pacific Fusion broke ground on a demonstration facility in New Mexico near the Sandia and Los Alamos National Laboratories, built primarily to show its design can generate more power than the facility consumes.
- TechCrunch reports that venture dollars committed to climate tech have stalled, even as fusion startups captured a large portion of recent climate tech funding.
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Why it matters
- capability A laser an order of magnitude short of plant power is already interesting to a defense prime. That gives a fusion company a source of money that does not have to wait for net gain.
- exposure Xcimer's laser program now has a reviewer outside its own plant plan, because the investment came with RTX exploring uses of its own.
- constraint Defense demand in this sector comes in two kinds. The counter-drone case turns on the cost of a shot; the NNSA interest turns on running weapons-physics experiments, and one business development pitch cannot cover both.
- precedent With TechCrunch framing the defense route as a boost to willing startups, the next fusion diligence conversation can plausibly include a defense customer alongside a grid one.
About a decade ago a US ally shot down a $200 consumer drone with a $3 million Patriot missile, according to TechCrunch [11]. That is 15,000 dollars of interceptor per dollar of target [12]. Lasers are what defense buyers keep coming back to for that problem, because they fire quickly and relatively cheaply on electricity drawn from a generator or a ship's reactor or engine [13], and TechCrunch reports interest has spiked as drones reshaped modern warfare [14].
Fusion companies pitch electrons on the grid, but these two deals cover hardware that already exists. Xcimer's current laser system, Phoenix, runs at an order of magnitude lower power than a power plant will require, and that is already enough to have caught the defense industry's attention [3]. TechCrunch did not report the size of RTX Ventures' investment; under the deal, RTX can start exploring how to use Xcimer's lasers for its own purposes [15][1].
Pacific Fusion's defense customer wants something else entirely. The company signed a memorandum of understanding with the National Nuclear Security Administration on high-energy-density fusion experiments [4], and the reactions at its facility will be far more powerful than those the government currently uses to perform nuclear weapons experiments [6]. "It turns out that the facility that we're building also has utility in this world-leading defense application," Keith LeChein, co-founder and chief technical officer at Pacific Fusion, told TechCrunch [7]. Defense applications were "always on our mind," said Carrie von Muench, co-founder and chief operating officer [8]. LeChein previously worked at Sandia National Laboratories, the Lawrence Livermore National Laboratory and the NNSA [9].
So the counter-drone story and the weapons-physics story are two different buyers who happen to be shopping in the same sector in the same month. TechCrunch presents both as additions to the grid goal, and says the reacquaintance promises to give willing fusion startups a helpful boost [17]. Xcimer still plans to use its laser system to develop a power plant [2].
If you are weighing a second customer against a first, the deals turn on whether the new buyer wants hardware that exists now or hardware you have to build next, and on whether their acceptance test shares a critical path with the milestone your investors are underwriting. Existing hardware plus a parallel test is a funding event; new hardware on your one critical path is a change of product, whatever the roadmap slide calls it. On the evidence TechCrunch published, both of these fusion companies are in the first box, and the money pressure behind that is real: venture dollars committed to climate tech have stalled, and fusion startups have captured a large portion of recent climate tech funding [10].
What to watch
- Whether Xcimer discloses an actual defense contract or program of record, as opposed to venture investment from RTX Ventures.
- Whether the Pacific Fusion demonstration facility's construction schedule changes as the NNSA memorandum turns into defined experiments.
- Whether climate tech venture funding recovers enough for fusion rounds to close without a defense partner on the cap table.