Fusion power companies are increasingly partnering with the defense industry to develop laser weapons and nuclear security applications as venture capital funding for climate technology has dried up, according to a report published this week in TechCrunch. The shift marks a return to the sector's origins, when physicists sought peaceful uses for thermonuclear science developed during the Cold War. While fusion startups continue working toward their primary goal of generating electricity for the grid, many are now embracing defense work that provides crucial alternative revenue streams.

Last week, laser-based fusion startup Xcimer announced both a partnership and an investment from RTX, the conglomerate that includes Raytheon, the report states. Under the agreement, Xcimer receives capital from RTX Ventures while RTX explores applications for Xcimer's powerful lasers. The Denver-based company currently runs what it describes as the world's largest privately owned laser system, called Phoenix, which operates at one-tenth the power needed for a commercial power plant but remains powerful enough to attract defense industry attention. Pacific Fusion signed a memorandum of understanding last month with the National Nuclear Security Administration to collaborate on high-energy-density fusion experiments, and recently broke ground on a demonstration facility in New Mexico near Sandia and Los Alamos National Laboratories.

Defense interest in laser technology has surged as drones have transformed modern warfare, creating demand for weapons that can fire quickly and cheaply using electricity rather than expensive single-use missiles. Traditional air defense systems were built to counter larger, human-piloted aircraft that appear in smaller numbers. About ten years ago, a U.S. ally fired a $3 million Patriot missile to destroy a $200 consumer drone—effective but wildly inefficient, according to the report. "It turns out that the facility that we're building also has utility in this world-leading defense application," Keith LeChien, co-founder and chief technical officer at Pacific Fusion, told TechCrunch. Defense applications were "always on our mind," added Carrie von Muench, co-founder and chief operating officer at Pacific Fusion, whose team includes LeChien, a veteran of Sandia National Laboratories, Lawrence Livermore National Laboratory, and the National Nuclear Security Administration.

The shift toward defense partnerships has accelerated because venture capital commitments to climate tech—the funding source that typically bankrolls fusion startups—have stalled, the report explains. Fusion companies have captured a large share of recent climate tech investment, but the technology demands enormous capital, making venture capitalists eager when portfolio companies secure outside money. The defense industry fills that gap. Fusion startups working on laser-based reactor designs prove ideal partners for developing such weapons because their technology compresses fuel targets using laser bombardment until atoms fuse and release energy—the same high-powered laser capability the military needs. Pacific Fusion's demonstration facility will generate fusion reactions far more powerful than those the government currently uses for nuclear weapons experiments, giving it dual-use value beyond its primary mission of proving the company's design can produce more power than it consumes. The national security dimension never truly disappeared: a groundbreaking fusion power experiment in 2022 took place at the National Ignition Facility, which has supported national security work for over 25 years. The recent reconnection between fusion startups and defense customers may be overdue, and it promises to provide willing companies with a valuable financial boost. Yet the pivot also underscores how dependent emerging technologies remain on funding environments that can shift abruptly, forcing innovators to revisit applications they may have preferred to leave behind.