Nscale’s $900M and Proxima Fusion’s €411M Are Both Bets on Power

On July 7, Nscale closed a $900 million revolving credit facility to keep building AI data centers across three continents. The same day, in Munich, Proxima Fusion raised €411 million, about $468 million, to build a fusion reactor that will not generate a single watt of power until the next decade.

Both bets trace back to the same unresolved problem. Europe does not have enough cheap, reliable electricity to run the AI infrastructure it is racing to build, and this week’s venture capital rebound is concentrated in the handful of companies large enough to attack that problem directly.

Two Records, One Bottleneck

European technology tracker Tech.eu counted more than 70 funding deals worth over €2.8 billion this week, alongside five exits and acquisitions across the continent. Invest Europe, the trade body for the region’s venture and private equity firms, separately reported that venture capital activity had reached its second-highest level on record.

Two deals accounted for a large share of that total by themselves. Nscale’s credit facility and Proxima Fusion’s funding round landed on the same Tuesday, in different cities, chasing different technologies, but both ultimately shaped by the same constraint.

Nscale’s Financing Machine Just Added Another Gear

Nscale builds and rents out AI data center capacity, the specialized computing power that trains and runs large language models. It started in 2024 as a spinout of crypto miner Arkon Energy before pivoting entirely to AI compute, and it has raised money at a pace few infrastructure startups can match.

The new $900 million facility, syndicated across a dozen banks including J.P. Morgan, Goldman Sachs, Morgan Stanley and Deutsche Bank, works like a corporate overdraft. Nscale can draw it, repay it, and draw it again to fund construction across the US, Europe and Asia-Pacific.

That stacks on top of a $1.4 billion loan Nscale closed in February, backed directly by graphics processing units (GPUs), the chips that train AI models, which the company then leases to customers. The new facility is the seventh major financing event in the company’s two-year history.

Including this month’s facility, Nscale has raised more than $6 billion in combined equity and debt since its founding, according to a tally by financial data outlet MLQ.ai. The pace has drawn in Nvidia, Dell, Nokia and Fidelity as investors and put former Meta chief operating officer Sheryl Sandberg and former UK deputy prime minister Nick Clegg on its board.

The rapid climb has invited scrutiny too. Nscale’s only public accounts on file, covering seven months to December 2024, show a $24 million loss, and its $14.6 billion valuation has drawn questions about whether the business rests on solid footing.

You always have some negative commentators. But every dollar is backed by real revenues.

Josh Payne, Nscale’s chief executive and founder, made that case to Fortune magazine amid the scrutiny.

Why the Money Chases Cheap, Clean Power

Nscale’s public footprint stretches from operational sites in Norway and Portugal to a planned campus in Narvik, several UK locations and a large deployment planned for Iceland. Every choice follows the same logic: renewable-heavy grids with stable, low prices.

Nscale closed a $790 million financing round for its Norway campus in May, around the time OpenAI paused its Stargate project in the UK, citing the cost of energy and regulatory concerns.

A separate study by European energy think tank Interface warns Europe’s AI buildout risks stranded assets without grid reform, with siting decisions tied more closely to renewable power availability. Other governments are making a similar calculation. France and India have both moved to court AI data centers despite power squeezes of their own, dangling tax incentives and dedicated grid connections for the same capital chasing Nscale’s model.

Proxima Fusion Bets on a Reactor Two Decades Out

Proxima Fusion is a Munich company spun out of the Max Planck Institute for Plasma Physics in 2023, the first startup to emerge from that research institute. It builds stellarators, reactors that use twisted magnetic coils to contain plasma, rather than the ring-shaped tokamaks used by rivals such as Commonwealth Fusion Systems.

Its new round, led by XTX Ventures and East X Ventures with Google and German utility RWE as strategic backers, values the company at €2.4 billion, comfortably past the billion-dollar line that defines unicorn status. RWE put in €25 million specifically and is partnering with Proxima to build a stellarator power plant on the site of a decommissioned nuclear reactor in Gundremmingen, Bavaria.

Google’s participation marks its first investment in a European fusion company, though it has long backed America’s Commonwealth Fusion Systems and TAE Technologies. The search giant’s own AI operations saw electricity use jump 37% last year, its largest increase ever, which helps explain its growing appetite for new carbon-free power.

Proxima has now raised more than €650 million since 2023, including €95 million in public grants, and the new round unlocks a further €400 million pledged earlier this year by the state of Bavaria. Its demonstrator reactor, Alpha, is expected to cost around €2 billion on its own and is not due to reach net energy gain until the early 2030s, with a commercial plant, Stellaris, planned for later in the decade.

Even at its new valuation, Proxima remains smaller than its American counterparts. Commonwealth Fusion Systems has raised nearly $3 billion toward its SPARC tokamak, and Sam Altman-backed Helion Energy raised $465 million in June at a $15.5 billion valuation.

Is Europe’s Grid Ready for Either Bet?

Not entirely, and the strain shows up first in price. Data centers already draw about 2% of the world’s electricity, up from 1.7% in 2024, and pushback typically intensifies once they cross 5% of a country’s total consumption, according to the International Data Center Authority. The UK already sits at 5.8%.

Michael Brown, global investment strategist at Franklin Templeton, told CNBC the calculus facing new projects is stark: “If I were making the next $7 billion data center, it would be in the U.S. or China.” European industrial electricity prices ran roughly double the US rate and 50% above China’s or India’s last year, according to the International Energy Agency.

Not everyone reads the constraint the same way.

• Nscale’s leadership – points to its bank syndicate and Nvidia-backed contracts as proof its debt-and-equity stack is sound, not overextended.
• Risk analysts – warn that tying billions in debt to GPU collateral leaves the company exposed if chip values fall.
• Norway’s Red Party – argues the country’s hydropower should serve domestic industry before foreign-backed AI data centers.

Some governments are hedging with nuclear power instead. France already draws about 70% of its electricity from its existing nuclear fleet, and Belgium, Switzerland and Italy have all moved to reverse historic bans on new reactors.

Fewer Companies Are Getting the Bigger Checks

Invest Europe’s framing of a rebound lines up with harder numbers from elsewhere. Startup data provider Crunchbase counted $17.6 billion in European venture funding during the first quarter of 2026, up nearly 30% year over year and the second straight quarter of growth.

AI startups claimed more than half of that total for the first time, at $9.2 billion. Deal volume still fell 40% year over year in the same quarter, with seed-stage activity down 44% and early-stage down 30%, while late-stage deals held roughly steady.

Professional services firm KPMG’s own Q1 tracker described a record number of billion-dollar rounds in the same quarter, alongside a market that stayed highly selective and concentrated on companies with clear paths to profitability. Germany, meanwhile, is seeing a burst of new company formation, with more than 3,000 startups registered in the first six months of the year, much of it centered on Hamburg.

The squeeze shows up hardest at the growth stage. European deep tech companies face an annual funding shortfall of up to $24 billion, and roughly 70% of the late-stage capital that does arrive comes from investors outside Europe, according to deep tech investment firm Walden Catalyst.

Nscale and Proxima Fusion are exactly the kind of company that concentration favors: capital-hungry, contract-backed and large enough to absorb billion-dollar checks that earlier-stage founders rarely see.

The Week’s Smaller Deals Still Added Up

Away from the two headline rounds, Europe’s broader deal sheet stayed busy across fintech, defense and acquisitions.

• Lendable – the UK company raised $670 million for global expansion.
• Tekever – the Portuguese company acquired Cloudsweep, reinforcing its commitment to artificial intelligence.
• Wayflyer – the Irish company acquired data platform Conjura.
• Omnidocs – the software company is acquiring Danish IT firm Xink.
• BGF – the UK and Irish investor surpassed €5.8 billion deployed after 15 years backing startups.
• Expeditions – the BAE Systems-backed fund raised €197 million for European defense startups.
• EIFO – the Danish investment fund said it is strengthening Europe’s energy independence.

Both of the week’s biggest bets still have years to prove out. Proxima hopes to secure additional funding from the German federal government later this year, on top of what it has already raised. Nscale’s planned sovereign AI supercomputer site in Loughton, Essex, remains a working scaffolding yard, a Guardian report found, with completion pushed back from the end of 2026 to 2027.