Nuclear Startup Deep Fission to Launch Second Public Offering—Many Questions Remain Unanswered!

This week, a news headline caught my eye as it felt oddly reminiscent. Nuclear startup Deep Fission has announced its intention to go public, seeking investment for the creation of underground reactors designed to power AI data centers.

Wait, didn’t I write about this already? I could have sworn I did.

Oh, that’s right; I did. Back in September, Deep Fission declared its plans for a public listing through a reverse merger with Surfside Acquisition, a shell company located in Delaware. This approach enabled the private firm to take over an existing public entity to enter the market, raising $30 million through a concurrent private placement at $3 per share. Now, it aims to raise $157 million through a Nasdaq IPO, with shares priced around $24 to $26 each. I can certainly see how that could be confusing.

It appears that the earlier public listing was just a façade. Although the merger with Surfside was finalized, making Deep Fission a reporting entity with SEC responsibilities, its stock never actually traded on the market. The company aimed to list on the OTCQB, which serves 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 noted in its S-1 filing that its shares have never been publicly traded.

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

Deep Fission’s upcoming Nasdaq offering takes a more traditional IPO route, with a potential valuation of up to $1.66 billion. This represents a substantial leap for a company that struggled to secure a $15 million funding round just a year ago.

Even more puzzling is the portrayal in the S-1 that was filed on May 20, which seems less hopeful than what was indicated in the December filing with the SEC. The timeline for launching its first reactor has been delayed, and while it previously aimed for criticality—when a nuclear chain reaction becomes self-sustaining—by July 2026, no revised timeline has been given.

Deep Fission does mention that it is currently drilling a test well, but it has faced significant financial challenges.

One constant: The new S-1 still includes the “going concern” warning that was part of the December filing, indicating that if Deep Fission fails to complete the IPO, it may run out of funds in the next year.

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

Technically, Deep Fission states that it is now focused on drilling, perhaps acknowledging that this process is more complex than it appears.

The company began drilling 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 is much smaller than what will be necessary for commercial operations.

Transitioning from a test well to a commercial scale will likely pose considerable challenges. Deep Fission notes that it will require boreholes measuring between 30 to 50 inches in diameter and extending a mile deep, although specific sizes remain undecided. Even at the lower end, these boreholes would surpass typical dimensions used in the oil and gas industries. Until Deep Fission determines the appropriate borehole size, finalizing its reactor design will be difficult.

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

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

While it remains unclear what is propelling Deep Fission towards its IPO, it does not appear to be based on technological or commercial advancements.