Is it too late or early to invest in nuclear fusion?

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Nathan Myhrvold keeps such a low profile that we cannot help but wonder how many times we have sat across from the billionaire at a cafe, and even took his latte at the Starbucks counter even though he was in line ahead of us. So his new role spearheading a very public media campaign on behalf of nuclear power over the last year has surprised many, but not likely his friends in the scientific community who are equally as passionate about nuclear fusion.

 

The former Microsoft chief technology officer is concerned that the Japanese nuclear disaster at Fukushima following the 2011 earthquake has given nuclear power a bad reputation. His Intellectual Ventures incubated TerraPower, a maker of a traveling wave reactor that can produce power for 60 years without requiring refueling with depleted uranium. The company plans to commercialize the technology by 2020.

We do not typically associate nuclear power with the sexy, nimble technologies favoured by venture capitalists, but in the technology world nuclear fusion has always been sexy, and now it is a futuristic technology that is almost here.  It is nuclear fission used by  the nuclear power plants at Three Mile Island, Chernobyl and Fukushima that are the cause of nuclear’s bad rep.

Myhrvold’s press junket is really a public information campaign. Through Youtube videos, podcasts and Fortune interviews, he wants to make sure we know the difference between nuclear fission and fusion. The most important difference is that with nuclear fusion — the combining of atoms — if the reaction goes out of control, the reactor will stop and cool down whereas under nuclear fission a nuclear meltdown can occur and release radioactive particles. Moreover, nuclear fusion produces a small amount of radioactive materials in the way of waste and no greenhouse gases.

A number of venture capitalists and other high profile private equity investors have been investing in nuclear fusion in recent years.  Here is a roundup:

TerraPower – Intellectual Ventures, Khosla Ventures, Charles River Ventures, Bill Gates

Tri Alpha Energy - Goldman Sachs, New Enterprise Associates, Venrock, Vulcan Capital (Paul Allen)

General Fusion – BDC Venture Capital, Bezos Expeditions (Jeff Bezos), Braemar Energy Ventures, Cenovus Energy, Chrysalix Energy Venture Capital, GrowthWorks Capital

Even with the presence of so many billionaires in the nuclear fusion market, there is still an attractive market for angel and seed capital. A number of nuclear fusion companies are seeking investors. More typical of this market is The Netherlands Convectron Natural Fusion – the company says it is recreating the phenomenon of ball lightening that sometimes appears in thunderstorms — which is seeking investors in depository receipts starting at 100 euros.  Here is another example. One of our readers has pointed us to the Crossfire Fusion Reactor. The project is taking donations on its website.

Until a few billionaires recently bought into the dream of nuclear fusion, it has primarily been pioneered by brilliant scientists tinkering away in their garages. You can play the long tail and invest in these entrepreneurs, or wait for the companies backed by the billionaires to do IPOs. Despite Nathan Myhrvold’s publicity machine, those IPOs are likely to be postponed for awhile; misconstrued or not, nuclear power of any kind has become part of the public referendum on the safety of nuclear reactors.

Nuclear fusion is not about to go away, though. Those who have invested in nuclear fusion were never expecting a quick return. They believe in, and are passionate about, the technology, and are not likely to seek an exit strategy regardless of public sentiment.

Remember that just a few months ago we were talking about how the iPad was killing off Windows. Now Windows 8 is making a stealth comeback.  (Did we mention that Bill Gates is the Chairman of TerraPower?) Among the world’s scientists and technologists, there is a passion factor attached to nuclear fusion that cannot be quantified and fit into an analytical model.