One news headline this week had a feeling of déjà vu. Nuclear startup Deep Fission announced that it is going public to gain investor support for building underground nuclear reactors to power AI data centers.
Wait, didn’t I already write that story? I could have sworn so.
Oh right. It was like that. Last September, Deep Fission said it had gone public through a reverse merger with Surfside Acquisition, a Delaware shell company. The deal, in which a private company acquires an existing public company and gains a stock market listing, raised $30 million at $3 per share in a simultaneous private placement. It is currently seeking $157 million in a Nasdaq IPO at $24 to $26 per share. You can see my confusion.
Previous public listings showed that only names were public. The reverse merger with Surfside was completed and Deep Fission became an SEC-mandated reporting company, but its stock did not actually trade. The company said it plans to list on the OTCQB, a marketplace for developing companies that do not meet the listing requirements of major exchanges such as the NYSE or Nasdaq. However, a search for Deep Fission on the OTCQB returns no results, and the company denied in its S-1 that its stock was ever publicly traded.
In response to questions from TechCrunch, Deep Fission declined to comment, citing a quiet period prior to the IPO.
Deep Fission’s new public offering on Nasdaq follows a more traditional IPO route, valuing the company at up to $1.66 billion. That’s a significant figure for a company that struggled to raise $15 million in funding a year ago.
What’s even stranger is that the picture painted in the S-1 filed on May 20th is even bleaker than the picture filed with the SEC in December. The schedule for turning on the first reactor is behind schedule. It also said last December that it hoped to achieve a critical mass where the nuclear chain reaction would become self-sustaining by July 2026, but it now does not provide an estimate.
Deep Fission notes that it is drilling test wells. I also lost a lot of money.
One thing that hasn’t changed: The new S-1 statement includes the same “going concern” caveat that was in place in December. If Deep Fission doesn’t complete its IPO, it could run out of money in the next 12 months.
In fact, the startup’s financial health has deteriorated in recent months. As of March, the deficit had increased from $56.2 million to $88.1 million. Over the past month and a half, the company’s cash and cash equivalents have decreased by $6.4 million, or about 7%.
On the technical side, Deep Fission says it is currently prioritizing drilling operations. Perhaps it’s a tacit admission that drilling a hole in the ground is easier said than done.
The company said it began drilling the first of three test wells in March. These wells will be used to collect data “up to 6,000 feet deep.” At 8 inches in diameter, it is considerably smaller than needed on a commercial scale.
Transitioning from test 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 no specific size has yet been determined. Even at the lowest level, 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, it will be difficult to finalize the reactor design.
So what has changed since December that will lead to bigger offers at nine-figure valuations? The company has received $80 million in equity investment, including $20 million from data center developer Blue Owl, with which it signed a non-binding MOU for the future power plant. Still, it wasn’t enough to prevent a going concern warning. It’s possible that Deep Fission is relying on some positive information that was omitted from the S-1, but that’s hard to believe considering what’s involved in the IPO.
It’s more likely that the company and its backers will try to capitalize on investor excitement about fissile power. Last month, nuclear fission startup X-energy went public through a large-scale IPO. But unlike Deep Fission, X-energy is generating revenue and is well ahead of the Nuclear Regulatory Commission’s licensing process. It’s a useful contrast and a reminder that valuation and progress are not the same in a sector where enthusiasm can run far ahead of technological and regulatory reality.
It’s unclear what factors are driving Deep Fission’s IPO, but technological or commercial progress doesn’t seem to be one of them.
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