Latest / The Startup Exit Podcast with Fexingo: IPOs, Acquisitions, and Founder Liquidity Events / Deep Fission Nuclear SPAC Returns What Founders Should Know
Transcript
- Lucas: So Deep Fission, the nuclear startup that tried to go public through a SPAC back in 2024, is giving it another shot. They announced a new merger agreement this week with a different blank-check company. Luna: I saw the headline on TechCrunch — the subheading was basically 'I have questions,' which feels about right. What's different this time? Lucas: A lot, actually. The first deal valued the company at around $500 million, and it fell apart when one of the institutional backers pulled out during the SEC review process. This time, the valuation is lower — sources say closer to $350 million — and the terms include a minimum cash condition of $100 million in the trust, which is higher than the first deal. Luna: So they're basically admitting the first valuation was too aggressive, and they're trying to make the math work with more realistic assumptions. Lucas: That's exactly the read. And it's not a bad strategy, because the nuclear sector has actually had a decent run in public markets over the past year. A few small modular reactor developers have seen their stocks double. But the catch with Deep Fission is that they're not just another SMR play — they're doing this 'deep borehole' concept where the reactor is buried a mile underground. Luna: Which means the regulatory pathway is completely untested. The Nuclear Regulatory Commission hasn't licensed anything like that. Lucas: Right. And that's the tension. On one hand, the SPAC structure gives them a path to public capital without the traditional IPO roadshow, which is good for a capital-intensive business that might not have the revenue to attract institutional anchor investors. On the other hand, SPACs have a terrible track record in deep tech — especially when the technology still faces major regulatory milestones. Luna: What's the redemption rate looking like for this SPAC? Because that's always the key number. If too many shareholders pull their money out before the merger, the trust shrinks, and the deal falls apart. Lucas: We don't have the final numbers yet — the merger still needs to be approved by the SPAC's shareholders. But the sponsor, a firm called Aldebaran Capital, has committed to covering redemptions up to a point. They've also done something interesting with the earnout structure: the founders get additional shares only if the stock trades above $12 for 20 out of 30 trading days after the merger. Luna: So they're trying to align incentives. If the stock languishes, the founders don't get the full payout. That's a smarter deal than a lot of the 2021 SPACs where everyone cashed out immediately. Lucas: Exactly. And that's actually a good lesson for founders who are considering a SPAC exit in this environment. The market has learned from the excesses of a few years ago. You can't just throw a SPAC at any company and expect it to work. The terms matter, the financial backing matters, and the underlying business has to be able to tell a credible story to public market investors. Luna: Speaking of credible stories — what's the actual science? The deep borehole concept involves drilling down about a mile, sealing the reactor in a containment vessel, and then backfilling the hole. How close are they to a working prototype? Lucas: They've done lab-scale tests and some computer simulations. They also secured a site in Idaho for a pilot project, but they haven't started construction. The timeline they're projecting is commercial operation by 2032. That's a long horizon for public market investors, who are used to thinking in quarters or maybe a couple of years. Luna: And yet, look at the market. NVIDIA's down over 3% in the last five days. Tesla's up almost 4%. There's clearly a rotation happening — investors are looking for the next big story, and nuclear has a certain appeal. It's clean, it's baseload power, and it's not AI. Lucas: That's a good point. The ARK Genomic Revolution ETF, ARKG, is up over 9% in five days. Not nuclear, but it shows that thematic money is on the move. Deep Fission is trying to catch that wave. But the question is whether SPACs are the right vehicle for that kind of long-horizon story. Luna: If these conversations are useful for what you're building or running, it's worth mentioning that listener support is what keeps this show independent and ad-free. Lucas: Yeah, we don't run ads, and that's intentional. We'd rather spend the time on the actual analysis. If you find value in that, you can support the show at buy me a coffee dot com slash fexingo. Luna: And it genuinely helps us keep putting out episodes like this one. So, back to Deep Fission — what happens if this SPAC also falls through? Lucas: If it fails, the company likely has to go back to private fundraising. But the nuclear market is crowded right now — there are a lot of startups chasing the same venture capital dollars. A failed SPAC would be a real negative signal, and it might force them to accept a much lower valuation in a private round, or even consider a sale. Luna: So the stakes are high. For the founders, this is probably the best liquidity event they're going to get in the near term, given the regulatory timeline. If they can't access public capital now, they might have to wait another three to five years. Lucas: Exactly. And that's the broader lesson for founders in capital-intensive industries. SPACs are often presented as a shortcut to public markets, but they come with their own set of risks — redemption risk, valuation risk, and the constant pressure of having public shareholders while you're still trying to prove your technology works. Luna: Do you think the SEC is going to be more or less strict this time around? Because the first deal failed during their review. Lucas: I think the SEC is going to be equally strict, if not more. They've been burned by SPACs before, and they're paying close attention to projections and forward-looking statements. Deep Fission's S-4 filing will be heavily scrutinized. Any aggressive claims about the timeline or cost of the borehole technology could trigger additional review. Luna: So we're looking at a potential closing in Q4 2026 or early 2027, if everything goes smoothly. That's a long wait for a deal that could still fall apart. Lucas: Right. And in the meantime, the company has to keep spending on R&D and site preparation, which means they need to manage their cash burn carefully. They raised about $50 million in private funding last year, but that won't last forever if the SPAC takes another six months to close. Luna: It's a real balancing act. And it's a useful case study for any founder thinking about taking their company public via SPAC. The terms, the timing, the regulatory environment — all of it has to line up. Lucas: I think the biggest takeaway from the Deep Fission story is that a SPAC is not a magic wand. It's a financial instrument with specific mechanics, and it works best for companies that are already close to generating revenue or have a clear, near-term catalyst. For early-stage deep tech, it's a much harder sell. Luna: And yet, here they are trying again. That takes a certain kind of conviction — or maybe just a high tolerance for risk. Lucas: Probably both. And we'll be watching to see if the second time is the charm, or if the nuclear SPAC story ends up being another cautionary tale.