Small Nuclear Reactors: The Startup Boom & Hurdles Ahead

The nuclear energy sector is experiencing a remarkable renaissance. Aging power plants are undergoing refurbishment, and a surge of investment is fueling a new generation of nuclear startups. In the final weeks of 2025 alone, these companies secured a staggering $1.1 billion in funding, driven by investor confidence that smaller nuclear reactors (SMRs) can overcome the challenges that have plagued the broader nuclear industry in recent years. This influx of capital signals a potential turning point for nuclear power, offering a pathway to cleaner, more reliable energy sources.

The Limitations of Traditional Nuclear Power

Conventional nuclear reactors are monumental undertakings. The newest reactors completed in the U.S., Vogtle 3 and 4 in Georgia, exemplify this scale. These facilities require tens of thousands of tons of concrete, utilize fuel assemblies towering 14 feet tall, and boast a generating capacity exceeding 1 gigawatt of electricity each. However, their construction was marred by significant delays – eight years behind schedule – and ballooning costs, exceeding the initial budget by over $20 billion. These issues have cast a long shadow over the traditional nuclear power model.

The Promise of Small Modular Reactors (SMRs)

The new wave of nuclear startups believes the key to success lies in miniaturization. By reducing the size of the reactor, they aim to circumvent the pitfalls of large-scale projects. The modularity of SMRs offers a compelling advantage: if more power is needed, simply add more reactors. Furthermore, SMRs are designed to be built using mass production techniques. As production volumes increase, companies anticipate improvements in manufacturing efficiency, leading to reduced costs. This potential for cost reduction is a cornerstone of the SMR value proposition.

However, the extent of these cost savings remains a subject of ongoing research. Today’s nuclear startups are banking on achieving a positive cost differential, but the magnitude of that benefit is still being determined. The economic viability of SMRs hinges on realizing economies of scale through standardized designs and efficient manufacturing processes.

Manufacturing Challenges: A Critical Hurdle

While the concept of mass production is appealing, execution is far from simple. The experience of Tesla serves as a cautionary tale. The company faced significant difficulties in achieving profitable large-scale production of the Model 3, despite operating within the well-established automotive industry, where the U.S. retains considerable expertise. U.S. nuclear startups lack this existing industrial base.

“I have a number of friends who work in supply chain for nuclear, and they can rattle off like five to ten materials that we just don’t make in the United States,” Milo Werner, general partner at DCVC, told GearTech. “We have to buy them overseas. We’ve forgotten how to make them.” This reliance on foreign suppliers introduces vulnerabilities and potential delays into the SMR supply chain.

Werner’s insights are informed by her extensive experience in manufacturing. Prior to becoming an investor, she held leadership roles at Tesla, spearheading new product introduction, and at Fitbit, where she launched four factories in China. Today, in addition to her investment work at DCVC, Werner co-founded the NextGen Industry Group, dedicated to advancing the adoption of innovative manufacturing technologies.

The Two Core Challenges of Manufacturing

Werner identifies two primary challenges that manufacturers of any size must overcome. The first is capital, often the most significant constraint, as establishing factories is inherently expensive. Fortunately, the nuclear industry currently enjoys a favorable investment climate. “They’re awash in capital right now,” she notes. The substantial funding available to SMR startups provides a crucial foundation for building the necessary manufacturing infrastructure.

However, the nuclear industry is not immune to the second challenge: a shortage of skilled human capital. “We haven’t really built any industrial facilities in 40 years in the United States,” Werner explains. This has resulted in a loss of institutional knowledge and practical expertise. “It’s like we’ve been sitting on the couch watching TV for 10 years and then getting up and trying to run a marathon the next day. It’s not good.”

Decades of offshoring have depleted the U.S. workforce of individuals with experience in both factory construction and operations. “There are for sure some people in the United States who have been doing this, but we don’t have the quantum of people that we need for everybody to have a full staff of seasoned manufacturing people.” This skills gap extends beyond machine operators to encompass all levels of the organization, from factory floor supervisors to CFOs and board members.

Re-shoring Manufacturing and the Importance of Modularity

Despite these challenges, Werner observes a positive trend: many startups, both nuclear and in other sectors, are establishing early-stage manufacturing facilities in close proximity to their technical teams. “That is pulling manufacturing in closer to the United States because it allows them to have that cycle of improvement.” This localized approach facilitates rapid iteration and optimization of the manufacturing process.

To fully leverage the benefits of mass manufacturing, startups should prioritize a phased approach, starting small and scaling up gradually. “Really leaning into modularity is very important for investors,” Werner emphasizes. A modular design allows companies to begin producing small volumes early on, gathering valuable data on the manufacturing process. This data can demonstrate improvements over time, bolstering investor confidence.

The Long Road to Cost Reduction

The advantages of mass manufacturing are not realized overnight. Companies often project cost reductions based on anticipated learning curves, but these reductions may take longer to materialize than expected. “Often it takes years, like a decade, to get there,” Werner cautions. Realistic timelines and expectations are crucial for managing investor expectations and ensuring the long-term success of SMR projects.

Key Trends Shaping the SMR Landscape (Updated 2026)

• Advanced Fuel Cycles: Research into advanced fuel cycles, including thorium and recycled nuclear waste, is gaining momentum. These technologies promise increased efficiency, reduced waste, and enhanced safety.
• Digital Twins & AI-Powered Optimization: SMR developers are increasingly leveraging digital twin technology and artificial intelligence to optimize reactor design, operation, and maintenance.
• Government Support & Regulatory Frameworks: Governments worldwide are providing financial incentives and streamlining regulatory processes to accelerate the deployment of SMRs. The U.S. Department of Energy's SMR Demonstration Program is a key example.
• Increased Private Investment: Venture capital and private equity investment in SMR startups continues to grow, with over $2.5 billion invested in 2026 alone (a 120% increase from 2025).
• Focus on Hydrogen Production: SMRs are being explored as a clean and efficient source of heat for hydrogen production, further expanding their potential applications.

The Future of Nuclear Energy

Small nuclear reactors represent a potentially transformative technology for the energy sector. While significant hurdles remain, particularly in the realm of manufacturing and supply chain development, the current wave of innovation and investment offers a compelling path forward. The success of SMRs will depend on overcoming these challenges and demonstrating their ability to deliver safe, reliable, and affordable clean energy. The industry's renaissance is underway, and the coming years will be critical in determining whether SMRs can fulfill their promise and play a central role in a sustainable energy future.