Nuclear Startup Deep Fission Announces Second Public Offering Attempt—Many Questions Remain!

This week, a news headline sounded oddly reminiscent. Nuclear startup Deep Fission has unveiled its intentions to go public, with a goal of attracting investors for the construction of underground reactors aimed at powering AI data centers.

Wait, didn’t I report on this previously? I could have sworn I did.

Oh, that’s right; I did. Last September, Deep Fission disclosed its public listing through a reverse merger with Surfside Acquisition, a Delaware shell company. This move allowed the private company to take over an already publicly listed entity to achieve a market entry, raising $30 million through a concurrent private placement at $3 per share. Now, it seeks to raise $157 million via a Nasdaq IPO priced around $24 to $26 per share. I can definitely see why there’s confusion.

It appears the earlier public listing was just a superficial arrangement. While the reverse merger with Surfside was finalized, making Deep Fission a reporting company with SEC obligations, its stock never actually entered the market. The firm intended to list on the OTCQB, a platform for developing companies that don’t meet the criteria for larger exchanges like NYSE or Nasdaq. However, searches for Deep Fission on OTCQB yield no results, and the firm, in its S-1 filing, stated that its stock was never publicly traded.

In response to inquiries from TechCrunch, Deep Fission chose not to comment, citing its quiet period before the IPO.

Deep Fission’s forthcoming public offering on Nasdaq is taking the more traditional IPO approach, with a valuation that could reach up to $1.66 billion. This is a significant sum for a company that just a year ago struggled to secure a $15 million funding round.

Even more puzzling is the portrayal in the S-1 filed on May 20, which appears less optimistic than what was presented in the December filing with the SEC. The timeline for launching its first reactor has been extended, and while it previously aimed for criticality—when a nuclear chain reaction becomes self-sustaining—by July 2026, no current estimate has been provided.

Deep Fission does indicate that it is currently drilling a test well, but it has suffered significant financial losses.

One consistent element: The new S-1 still includes the “going concern” warning that was present in December, signifying that if Deep Fission fails to complete the IPO, it may deplete its funds within the next year.

In fact, the startup’s financial standing has worsened recently, with its deficit swelling to $88.1 million from $56.2 million as of March. Over the last month and a half, the company’s cash and cash equivalents have decreased by $6.4 million, or roughly 7%.

On the technical front, Deep Fission states that it is now focusing on drilling, perhaps acknowledging that this process isn’t as straightforward as it appears.

The company commenced drilling for its first of three test wells in March. This well is designed to collect data “up to 6,000 feet deep.” With an eight-inch diameter, it’s considerably smaller than what will be needed for commercial operations.

Transitioning from a test well to a commercial scale will likely present substantial challenges. Deep Fission states it will require boreholes measuring between 30 to 50 inches in diameter and extending a mile deep, although the specific dimensions are yet to be finalized. Even at the lower end, these boreholes would exceed typical sizes used in the oil and gas sectors. Until Deep Fission determines the viable borehole size, finalizing its reactor design will be problematic.

So, what has changed since December that justifies a larger offering at a nine-figure valuation? The firm did secure an $80 million equity investment, including $20 million from data center developer Blue Owl, which also signed a non-binding MOU for future power plants. Nevertheless, this hasn’t been enough to remove the going concern warning. It’s possible that Deep Fission has some undisclosed positive information not included in the S-1, though given the stakes of the IPO, that seems unlikely.

It’s more probable that the company and its investors aim to capitalize on the growing interest in fission power. Just last month, nuclear fission startup X-energy completed a successful IPO. However, unlike Deep Fission, X-energy is generating revenue and is much further along in the licensing process with the Nuclear Regulatory Commission—underscoring the fact that in a domain where excitement can overshadow technical and regulatory realities, valuation and progress are not synonymous.

While it’s unclear what is propelling Deep Fission towards its IPO, it does not appear to be driven by technological or commercial progress.