Helion could double output of its power plants; plus, startups don’t need to go viral to win customers; and Agent cloud startup Daytona hits $1B valuation

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1:13That's Framer.com slash tcstartups. Rules and restrictions may apply. Fusion startup Helion has been awarded$175 million in federal funding to research, develop, and manufacture advanced semiconductors and power electronics for its fusion power plants. That's according to a company announcement last week. Currently, those devices lose about 5-10 % of the electricity that flows through them. While those losses seem small, they can compound themselves in a complex system like Helion's. David Kirtley, co-founder and CEO at Helion, told TechCrunch, if we can cut that loss in half, that's actually twice the power output of the fusion system.

1:59Helion has been racing to complete its first power plant, Orion, in time to meet a 2028 deadline to provide Microsoft with electricity from the grid. Funding from the award will help Helion build automated semiconductor modules, packaging, and testing capacity to supply the fusion machine that is currently under construction. The new production line to be built in Washington State will be the first in the U.S. to make a class of semiconductor that is used not just in fusion power, but in manufacturing, wastewater treatment, medicine, and defense. Kirtley said there are no U.S. manufacturers right now that do that.

2:39This is absolutely enabling going from zero to 100 for advanced high-voltage and pulsed semiconductors here in the U.S. The three-year award was made by the Department of Commerce under the CHIPS Act, a Biden-era law that seeks to bolster semiconductor module research, development, and manufacturing in the U.S. alongside the federal funding, Helion also announced a fresh$50 million private investment, though it did not disclose the investor. In total, Helion has raised more than$3.2 billion, making it the second-best-funded fusion startup. More than$100 million will be set aside for semiconductor and advanced packaging R &D in Washington state, while approximately$80 million will support R &D efforts in Vermont for advanced semiconductor tooling, design, and process development with Global Foundries.

3:35Separately, Global Foundries has received more than$80 million from the federal government to advance the manufacturing of gallium nitride semiconductors, a type that is widely used in power electronics. Helion's award will also give the government a$175 million non-voting interest in the company based on its Series G valuation. Curtley acknowledged that the R &D funded by the award will not make its way into Orion in time for the launch. Federal contracts can take months to negotiate, but he did say they promised to help improve the efficiency of subsequent Helion power plants, which would improve their competitiveness and cutthroat electricity markets.

4:19Semiconductor efficiency is key to Helion's approach to fusion, which harvests electricity directly from the fusion reactions rather than using them to heat steam to spin a turbine. The startup is developing a reactor known as a field-reversed configuration. Fusion fuel gets injected into both ends of an hourglass-like chamber, where it's heated to form a plasma, the plasmas are then accelerated toward each other using magnetic fields. When they collide, another magnetic field compresses the ball further, raising the temperature to over 100 million degrees Celsius. At those temperatures and pressures, atoms in the fusion fuel start fusing, releasing energy in the process and pushing the plasma outward.

5:04This force pushes against the magnetic field, and that energy is captured by the magnets and capacitors and turned into electricity. Kind of think of how a hybrid car or EV recharges the battery by using electric motors to slow the vehicle. Helion says that approach, known as direct energy conversion, will help future reactors produce more power than they need to operate, a milestone that any fusion power plant must reach if it is to be commercially viable. Efficient power electronics are a key part of the process. The energy sector is not the only place where advanced power electronics could have an impact.

5:45Electric vehicles represent the broadest use today. Consumer electronics could benefit as well, though there the size and power demands are lower than helions. The defense industry is likely to be another beneficiary. Energy weapons have garnered fresh interest as drones have swarmed battlefields and overwhelmed existing air defense weapons. Despite the potential for defense contracts, Kirtley said Helion remains focused on putting power on the grid. Domestic energy supply, national security through energy dominance, and energy security. That's our main focus. Hey there, I'm Travis Hoyam, one of the hosts of Motley Fool Hidden Gems Investing.

6:28Each weekday on Motley Fool Hidden Gems Investing, we talk through the business news you need to know and the stories moving stocks on Wall Street. On weekends, We game plan personal finance strategies and dive into the industry's shaping tomorrow and host the experts, authors, and executives that understand them. Tune in for insights and a long-term perspective on investing and, of course, stock ideas, plenty of them. To quote a listener, it pays to listen. Check us out and subscribe wherever you listen to podcasts.

6:59Getting initial customers as a startup can be one of the most grueling challenges in business. Even when companies manage to snag some early interest, there's no guarantee those customers will stick around. At TechCrunch Disrupt last week, Elia Wallin, founder and CEO of Travel Startup Engine, Gamma founder and CEO Grant Lee, and Crystal Wong. General Partner at Google Ventures, shared some tips on how to attract and retain customers. In the current era, when young AI companies like Cluely and Instinct are building big audiences, not just through their products, but also through their founders' colorful online presences, social media can seem like a magic bullet for reaching early customers.

7:49But founders who want to heighten their business strategy with modern marketing have to be strategic. Gamma, which sells AI-powered presentation software, managed to scale its business exponentially with a social media strategy that deployed influencers through its ambassador's program. The company adopted the plan before influencer-based marketing was a tried-and-true strategy for smaller companies, eventually reaching a multi-billion-dollar valuation. But simply giving influencers a platform and telling them to promote your brand online does not automatically translate to sales, Cecily. There's more to it than that.

8:29If you have a product that can serve many different segments or use cases, then you want to basically have creators that can target each one of those, Cecily. If you have folks that are in consulting versus people that do all their marketing and create all the decks for their CMO, there's all these different segments you might want to go after. Lee said sometimes founders seem to treat creator marketing or influencer marketing as a sort of set it and forget it thing. I think you're better served by really spending a lot of time with these creators because if they're not able to understand how to articulate the value of your product, it doesn't matter how much money you spend, it's just going to fall flat, says Lee.

9:11The effectiveness of social media depends largely on the type of business. Other ways of reaching customers can be just, if not more, effective. Wallen would know his company Engine, which manages lodging and travel bookings for mid-sized businesses, bootstrapped its way to$150 million in bookings before taking on any outside funding. They also had no visible social media strategy at all. For Wallen, traditional sales tactics can be far more useful than a positive TikTok video. He said, We did events and we smiled and dialed. We still have a lot of people picking up the phone. A lot of people who did not grow up with that or don't understand it think that it's outdated or it doesn't work.

9:55But it does. It's a hard thing. There are a lot of companies that just refuse to do it or don't know how to do it well. But they're missing out on a very big offline client base. The phone still works. Wallen also shared an in-person tactic that his company deployed during its scrappy early days, hiring a magician named David to perform tricks for prospective clients at events and encourage them to visit the engine's booth. In short, old-fashioned personal engagement can work just as well, if not better than the latest social media tricks. Wong, who has managed droves of startups and shepherded them to success, said that once you have a customer, a lot of value can be derived from looking at how they use the product.

10:43Wong said, can you look into usage data and figure out if it's recurring, if it's increasing, if they're referring their friends? It can come across in early usage and retention information as well. And then also, do you see some super fans who even want to work at the company, promote the company, be attached to the brand? You need to have ways to create evangelists who are really passionate about the product.

11:10Daytona Platforms announced on Friday that it had raised a$60 million Series B round at a$1 billion valuation led by FirstMark Growth. The company says it has now raised a total of$91 million. The New York-based startup has attracted not just FirstMark, which also led its$24 million Series A back in February, but also a host of well-known angels in its latest round. Daytona says they include Stripe's Patrick Collison, Shopify's Toby Lutka, Perplexity's Erevan Sridivas, Zoom's Eric Yuan, Data Dog's Olivier Pommel, Quora's Adam D 'Angelo, who is also an OpenAI board member, and Mercore's Brandon Foodie.

11:57It also names Qualcomm Ventures' Samsung Next and Okta Ventures as participants. Three-year-old Daytona is building a cloud specifically for long-running agents, which have different infrastructure needs than yesteryear's software, the startup contends. Founder Ivan Burazin said, agents don't work like the long-lived services today's cloud was designed for. They spin up thousands of short, stateful jobs nobody planned in advance, and they need a cloud built for that. Daytona's cloud, he said, is like giving every agent its own computer, where agents have access to sandboxed versions of Linux, Windows, macOS, and GPUs, among other services on the one platform.

12:44That's all for now. For the latest in startup tech news, go to TechCrunch.com.