One Austin-based startup may have the answer to a crucial problem that the AI industry is still stuck on: how to power it all.
Aalo Atomics says the answer isn’t the hulking nuclear plants of decades past. Instead, it’s betting on mass-manufactured smaller reactors built to sit beside the data centers they’ll fuel.
That pitch earned the company a hefty check. Aalo recently closed a $100 million Series B, CEO Matt Loszak told Business Insider. Valor Equity Partners led the round, and Harpoon Ventures, Alumni Ventures, and others participated, bringing Aalo’s total funding to north of $136 million.
The startup’s trajectory shows just how tightly AI and energy are now linked. Aalo CEO Matt Loszak said he cofounded the startup “hand-in-hand” with the AI boom.
“When we started the company, we had data centers high up on our list,” he told Business Insider. “Very rapidly, we were like, ‘OK, we have to focus the entire company around this.'”
Loszak and Yasir Arafat, the company’s chief technology officer, founded Aalo in 2023 to make mass-manufactured nuclear power plants. The company’s main product is the Aalo Pod, a small modular reactor built to power data centers. Aalo says one Pod can power roughly 50,000 homes, or one data center, Loszak said.
“Nuclear really is the ultimate underdog,” Loszak said. He called it “the most misunderstood technology I’ve ever seen in my life,” citing skepticism of the safety of nuclear power.
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In August, the Department of Energy selected Aalo to test the company’s experimental power plant Aalo-X, which it plans to complete construction for in 2026, at Idaho National Laboratory under the Trump administration’s Nuclear Reactor Pilot Program. This program aims to speed up testing of advanced reactor designs and authorize deployment at sites beyond national labs.
Aalo isn’t the only company getting a boost from Washington. Ten nuclear companies—including Antares Nuclear, Radiant Industries, Valar Atomics, and Sam Altman-backed Oklo—have been tapped for the DOE’s initiative.
Big Tech companies have also increasingly become interested in leveraging nuclear power to fuel AI ambitions.
Aalo plans to take its technology global
Aalo aims to eventually take its factory-built model global. In the future, Aalo hopes to mass-produce reactors in large facilities like its 40,000 square-foot Austin factory, ship them to sites around the world, and assemble them on location. Over time, Loszak said, the company hopes to work with a network of partner developers who would handle installation and operation of the Aalo Pods.
For now, the company hopes to partner with customers “willing to pay a premium because they value the speed,” Loszak said, namely, cloud giants with data center projects in the works. The company declined to disclose which hyperscalers it’s working with.
Aalo also plans to eventually “bring costs as low as possible to help bring more energy to everyone,” Loszak said. Ultimately, it aims to cut energy costs to around three cents per kilowatt hour, though Aalo’s prices are currently higher than this, Loszak said. Energy costs can vary greatly depending on location, and electricity across all sectors in the US averages about 13 cents per kilowatt hour as of May 2025, according to the US Energy Information Administration.
Aalo will use the new funding to double its staff, growing from about 60 employees now to 120 within the next year. It will focus on hiring engineers and manufacturing talent. That’s a sharp increase for a startup that was just Loszak and Arafat less than two years ago.
Betting on nuclear power
Loszak’s interest in nuclear power is personal. He said he developed asthma while growing up in Canada due to coal-plant smog. Once the country expanded nuclear power, though, Loszak said his symptoms disappeared.
“Lo and behold, smog days went to zero, and my asthma went away,” Loszak said. “I thought, ‘my God, this technology is incredible.'”
Previously, Loszak cofounded Humi, an HR software startup that Employment Hero acquired for over $100 million in January.
Arafat, Aalo’s cofounder and CTO, brings the nuclear chops. He started his career at Westinghouse Electric Company and later worked on MARVEL, an advanced nuclear reactor at the Idaho National Laboratory. Arafat earned his Ph.D. in nuclear engineering at North Carolina State University.
“When I met him, I just knew he was the right guy to partner with. We had really similar values, a similar vision for what nuclear should become, and even a similar sense of humor, which is important because we spend a lot of time together,” Loszak said of Arafat.
Loszak said Aalo’s investor, Valor, is a “special partner” for the startup because of its relationships with big data center projects.
Valor backed Elon Musk’s xAI in a $6 billion Series B in 2024, and the investment firm is in talks with lenders to secure up to $12 billion for xAI’s plan to buy a large sum of Nvidia chips for a new mega-sized data center, The Wall Street Journal reported in July. Valor also participated in AI infrastructure company Crusoe’s $600 million Series D in late 2024.
