Sachin and Adam
00:16:16 · Sachin, Carrie von Muench
[00:16:16] S1: And what was the process of structuring this kind of financing? It seems like you got it all laid out. Obviously, you've been on the venture side before. Was this kind of a first to market way of structuring how you guys have done this round? I know that like in biotech, you know, there's been this kinds of stage gated funding for a while, but as far as I'm aware, it's not as common in in things like nuclear. [00:16:38] S0: Yeah. I had certainly hadn't seen it done in fusion before and not just just because I haven't seen it done doesn't mean it hasn't been done, but like I hadn't seen it been... I hadn't seen it be done in this way in in a hard tech, particularly for a series a of this size. Yeah. Billion dollars out of the gate is a pretty substantial amount of capital to raise and deploy against a project. The the examples that we sort of drew inspiration from were largely in biotech Yeah. Because, again, similar dynamics, not a lot of market risk, technical risk primarily. You know, if you deliver x technical thing at the end of the road, you've built something really valuable. You can build a plan to deliver that, and you can agree with your investors about what progress looks like on that plan. But I really like it. It it aligns incentives so well. It's like nobody cares about the intermediate stuff. All that matters is how quickly and capital efficiently can we deliver this big goal. Let's set up the financing to maximize the probability of that outcome.
00:16:38 · Carrie von Muench, Sachin
[00:16:38] S0: Yeah. I had certainly hadn't seen it done in fusion before and not just just because I haven't seen it done doesn't mean it hasn't been done, but like I hadn't seen it been... I hadn't seen it be done in this way in in a hard tech, particularly for a series a of this size. Yeah. Billion dollars out of the gate is a pretty substantial amount of capital to raise and deploy against a project. The the examples that we sort of drew inspiration from were largely in biotech Yeah. Because, again, similar dynamics, not a lot of market risk, technical risk primarily. You know, if you deliver x technical thing at the end of the road, you've built something really valuable. You can build a plan to deliver that, and you can agree with your investors about what progress looks like on that plan. But I really like it. It it aligns incentives so well. It's like nobody cares about the intermediate stuff. All that matters is how quickly and capital efficiently can we deliver this big goal. Let's set up the financing to maximize the probability of that outcome. [00:17:26] S1: And how aggressive did you lay out the milestones? Right? There's philosophies on this. There's like the mask approach, is like half the time that it logically takes to do that, but obviously, for you guys, you need to hit the milestones. Otherwise, the funding may not come through. So how did you how do you go about, like, structuring how aggressive you actually make these milestones? [00:17:43] S0: You mean on... Like, with respect to schedule? [00:17:45] S1: Yeah. Yeah. Yeah.
00:17:45 · Sachin, Carrie von Muench, Adam Miller
[00:17:45] S1: Yeah. Yeah. Yeah. [00:17:46] S0: Think we... Our our goal generally is to make promises and keep them. And that's not to say you can always perfectly predict everything, but that's typically how we have structured this work. We tend to go for ambitious but achievable. Yeah. And that's, yeah, that's broadly how we've how we've done this so far. I will say that that level of structure and discipline has made it possible to go from series a capital into groundbreaking on a major project in less than three years [00:18:11] S2: Yeah. [00:18:11] S0: Which, to my knowledge, hasn't been done before in our field. Again, maybe it hasn't. I'm not aware. Maybe it has been done in China, but I haven't seen it. And the body of work to make that possible, right, includes big team doing a full engineering design effort, making sure you've got a full bottoms up cost estimate, building and validating the component, showing that they work, going through and qualifying a really large base of suppliers that hasn't delivered these these kinds of systems all of the development work, all of the community engagement, permitting, and licensing work to get this thing built. Huge body of work on the part of our team to to derisk this project to the point where we could make... Break ground. And I think a lot of that was possible because we had so much structure and discipline around the road map from the beginning.
00:18:11 · Carrie von Muench, Adam Miller
[00:18:11] S0: Which, to my knowledge, hasn't been done before in our field. Again, maybe it hasn't. I'm not aware. Maybe it has been done in China, but I haven't seen it. And the body of work to make that possible, right, includes big team doing a full engineering design effort, making sure you've got a full bottoms up cost estimate, building and validating the component, showing that they work, going through and qualifying a really large base of suppliers that hasn't delivered these these kinds of systems all of the development work, all of the community engagement, permitting, and licensing work to get this thing built. Huge body of work on the part of our team to to derisk this project to the point where we could make... Break ground. And I think a lot of that was possible because we had so much structure and discipline around the road map from the beginning. [00:18:50] S2: With the roadmap you said before, so if you achieve all those different states like net facility gains, steam turbines, once you do all that and you prove it out, is that then just a obvious pathway towards tens of billions of dollars of revenue? Because once you've done that, we need cheap, clean, abundant energy. Is it as simple as that? Like, this is gonna take over the energy market?
00:19:09 · Carrie von Muench
[00:19:09] S0: Yeah. So long as you build it in a way that's scalable. Right? Like, if you're... It it all depends on cost, and it all depends on how quickly you can build. And so a lot of our design choices from day one have been tied to deployability. I mean, you guys said it at the beginning. We've got lots of power sources today that work. We just can't seem to build them fast enough. So our job, obviously, is to build fusion machines that work, but also to build them in such a way that we can deploy them faster than anything else out there. And that means a couple of things. That means building in this modular way so you can come down the cost curve and deliver rapidly. That means rightsizing your nameplate capacities for the infrastructure that we have. So right building these things such that they're economical at the couple 100 megawatt nameplate capacity range, you can site them next to 115 kV lines. You don't need to go all the way up to three forty five. That means making sure you're not reliant on rare and expensive materials. So making sure your bill of materials is relatively simple, can be sourced domestically is really important. And it makes... It means making sure your systems are maintainable and serviceable. Right? If you have something that doesn't have high uptime, that only has 40 or 50% capacity factor, then it's gonna be hard to meet the needs of these customers who need five nines reliability. And so for us, yes, we've gotta deliver fusion power systems that work. We've gotta design them such that they're the most scalable source of power out there.
00:20:21 · Sachin, Carrie von Muench, Adam Miller
[00:20:21] S1: And are there kind of any priors that will help us imagine what Pacific Fusion could look like in fifteen years on a company level? Right? Like, you know, I don't know much about the history of of large kind of power companies, but, like, what could what could this look like? [00:20:35] S0: You know, it's an interesting question. Like, what are the right comps for a fusion company? I think one pretty good analogy is that, you know, the fusion industry now is where the space industry was twenty years ago Yeah. Where you had a bunch of government r and d, but not a lot of private companies actually delivering commercial products to customers. And then you saw this transition relatively quickly that has made the space economy as we know it possible. Yeah. I think we're in a similar place with Fusion in terms of the private sector picking up and commercializing things that are possible because of fifty years of public innovation. [00:21:09] S1: Yeah. [00:21:10] S0: And I think in some ways, the challenges... Like, idea that this thing was impossible, x hardware challenge was impossible until someone did it. Yep. That's similar. Right? People say it's impossible until the day it's done. [00:21:20] S2: Yep. [00:21:20] S0: And so I think we're at that kind of moment for fusion. [00:21:22] S2: Yeah. In researching this episode, what's come about is that this is not a physics problem that we're dealing with. It's really an engineer and operational problem. So as COO, what are the biggest challenges of operating a company like this?