To make money in AI, this early-stage investor is betting on nuclear

It’s been a challenging year for venture capital fundraising, particularly for emerging firms, which raised less capital in 2024 than in any other year in the last decade, according to PitchBook data. And for climate-focused firms, the uncertainty of the looming election has played an outsized role in holding up private dollars.

Tamarack Global, an early stage deep-tech fund based in Connecticut, hasn’t been immune to that environment. Following a $31 million debut fund raised in 2019, Tamarack set out earlier this year to raise $100 million for its second fund, an amount it initially hoped to raise by May. 

The firm didn’t quite meet that goal, but did secure more than double its flagship fund; Tamarack announced today that it closed a $72 million fund earlier this summer.

According to Tamarack co-founder and managing partner Jamie Lee, one particular bright spot for Tamarack amid a challenging landscape for new asset managers has been nuclear — both fusion and fission.

“There’s one thing that AI as an asset class absolutely is going to need, and that’s lots and lots and lots of power,” he said. “[Nuclear power] is how we chose to underwrite it.”

As part of the firm’s $31 million debut fund, Tamarack invested in fusion startup Fuse Energy. In September, Fuse raised an additional $32 million and was valued at more than $200 million. This year, Tamarack reinvested from its second fund.

Tamarack also backed portable fission microreactor company Radiant in that first fund, which in June won Department of Energy approval of the safety design for its tests at Idaho National Laboratory.

And in October, Tamarack doled out more cash from Fund II to Blue Energy, an MIT spinout designing modular reactors that can be manufactured using existing infrastructure, which raised a $45 million Series A.

Of course, the fund also invests in a slew of non-nuclear companies, including orbital transfer vehicle developer Impulse Space and cloud seeding company Rainmaker. One of the fund’s early bets, made public in 2022, was into mobile battery maker Moxion, which went bankrupt earlier this summer after rapid growth and reported mismanagement.

Getting behind the nuclear bet

Lee, a former Goldman Sachs trader, pointed to recent investments by Google and Amazon in small modular reactors as bolstering the firm’s decision to “underwrite nuclear as one of the biggest ways to play the energy transition.”

Those plays are already making “a profound impact on interest in the space,” he said. “It’s impacting our portfolio of companies…in a very positive way.”

Especially in light of the data center boom and rise of energy demand, Lee said, betting on firm power sources like nuclear is a better approach for early stage investors than betting directly on the companies developing large language models, or on the data centers themselves — which are more the realm of private equity.

As far as what exactly Tamarack is looking for in its energy transition play, Lee said he’s focused on business models and timelines.

Blue Energy, for example, is promising to get its SMRs to market in two years instead of ten years, thanks to its plans to leverage existing shipyards for construction. The company plans to build and operate its own plants, selling megawatts to offtakers through power purchase agreements.

“That makes the financial community more willing to underwrite it,” Lee explained. 

Of course, hyperscalers like Google and its peers have adopted an all-of-the-above strategy when it comes to powering their AI ambitions, and have invested in everything from advanced geothermal to green hydrogen.

But Lee said Tamarack is solidly behind nuclear.

“Nuclear is the [energy source] that has the largest endgame opportunity from a venture capital standpoint,” he said. “There are probably other sources of money out there that are interested in other types of projects…but nuclear was without a doubt the number one way we wanted to play this massive demand supply imbalance we have in power.”