Valar Atomics, a company focused on developing small modular nuclear reactors (SMRs) — basically compact, factory-produced power plants meant to be more affordable and quicker to deploy than conventional reactors — is reportedly in discussions to gather a new round of funding, as per three insiders familiar with the matter. The three-year-old firm aims for a valuation of approximately $6 billion, with Sequoia anticipated to spearhead the investment, according to those sources.

The Information was the first to disclose the funding negotiations, noting that the El Segundo, California-based startup is working on raising a $1 billion equity round.

Part of this capital was obtained earlier at a lower valuation, the sources informed TechCrunch. Specifically, Valar has secured $450 million — comprised of $340 million in equity and $110 million in debt — at a valuation of $2 billion, as per a Bloomberg report from March.  

Deals arranged in multiple tranches at various valuations, sometimes executed at different intervals, are becoming increasingly prevalent in today’s AI-driven fundraising landscape. Such arrangements can create a false impression that the capital was injected at a singular, uniform valuation. In reality, investors within the same round may end up paying disparate prices for the same entity — a differentiation that is particularly relevant as outsiders attempt to benchmark rapidly growing startups against one another.

Sequoia and Valar Atomics opted not to comment.

Earlier this month, the company demonstrated that its nuclear reactor delivered a small power output to an Nvidia AI chip.   In conjunction with that proof-of-concept display, Valar and Nvidia announced a partnership to investigate using nuclear energy to power future AI data centers.

Valar’s growth is unfolding amidst a wider demand challenge. The electricity requirements for data centers are anticipated to surge dramatically in the coming years, and utility companies in many areas are several years away from providing sufficient new capacity. This gap has positioned nuclear energy — historically hindered by budget overruns and regulatory delays — as an area of heightened interest within the AI infrastructure expansion.

Valar’s investors include Palmer Luckey, the founder of Anduril, and Shyam Sankar, chief technology officer of Palantir. Other players pursuing this opportunity are Kairos Power and TerraPower (supported by Bill Gates), which are developing next-gen reactors targeting technology and industrial clients, as well as NuScale Power, the sole SMR developer possessing U.S. regulatory design approval. (Last year, it received approval for an upgraded, higher-capacity reactor model.)

Valar’s technology relies on a helium-cooled, high-temperature gas reactor. The company states it ultimately intends to construct hundreds of SMRs for data center operations. However, while SMRs are theoretically cheaper to produce than traditional reactors, the technology remains in its infancy, and it’s unclear how long deployment at an industrial scale will actually take.

In a bold move, Valar has adopted a confrontational legal approach toward its regulatory body. Last year, it joined forces with several states and competing startups to sue the Nuclear Regulatory Commission, contending that the agency incorrectly applies the same lengthy licensing procedure for small test reactors that it employs for full-sized commercial facilities. (The case has remained unresolved, with both parties frequently pausing litigation, suggesting that some form of settlement may be forthcoming.)

The company was established by Isaiah Taylor, who left high school at 16. Now 27, he has stated he founded two startups prior to Valar and proudly mentioned that his great-grandfather was a nuclear physicist on the Manhattan Project.