Valar Atomics eyes $6bn valuation as AI fuels nuclear race

Valar Atomics is in talks to raise $1 billion in equity at a roughly $6 billion valuation, with Sequoia expected to lead the round. The three-year-old California startup builds small modular nuclear reactors, a class of factory-built mini-power plants designed to undercut the cost and construction time of traditional nuclear facilities.

The fundraising reflects a sudden shift in the tech sector's energy calculus. Earlier this month, Valar demonstrated its reactor powering an Nvidia AI chip and announced a partnership with the chipmaker to explore nuclear energy for future data centers. Nvidia's involvement highlights a looming crisis: data center electricity demand is projected to surge, yet utilities are years away from delivering sufficient new capacity.

That vacuum has turned nuclear power into a key frontier of the AI infrastructure boom. For a European energy sector closely watching the data center power crunch, the US valuation benchmarks set by Valar illustrate the massive capital now flowing into advanced nuclear technologies once dismissed as too slow or expensive.

Valar's fundraising mechanics are as notable as the total amount. The company has already raised $450 million—comprising $340 million in equity and $110 million in debt—at a $2 billion valuation. Structuring deals in multiple installments at varying valuations has become common in AI-era fundraising, though it can obscure the actual prices different investors pay for the same equity.

The startup faces significant hurdles before it can deliver on its promise of building hundreds of reactors. Its high-temperature, helium-cooled gas technology remains nascent, and it is unclear how long it will take to deploy at an industrial scale. Furthermore, the company is actively battling its regulator, having joined a lawsuit last year arguing the Nuclear Regulatory Commission wrongly subjects small test reactors to the same lengthy licensing process as full-size commercial plants. Litigation in that case has been repeatedly paused, suggesting a potential settlement.

Valar operates in an increasingly crowded field. Competitors include Kairos Power, TerraPower, and NuScale Power, the only small modular reactor developer with U.S. regulatory design approval. The company was founded by 27-year-old Isaiah Taylor, who dropped out of high school at 16, and counts Anduril founder Palmer Luckey and Palantir chief technology officer Shyam Sankar among its backers.