One Austin-based startup may have the answer to the key questions the AI industry is still stuck on.
Aalo Atomics says the answer is not a huge nuclear power plant from decades ago. Instead, they bet on small, mass-manufactured reactors built to be next to the fueling data center.
That pitch won a large check on the company. Aalo recently shut down its $100 million Series B, CEO Matt Loszak told Business Insider. Valor Equity Partners led the round, with Harpoon Ventures, Alumni Ventures and others taking part in bringing Aalo's total funding of $136 million north.
The startup trajectory shows how tightly AI and energy are linked. Aalo CEO Matt Loszak said he co-founded a “holding hand” startup with AI Boom.
“When we started our company, we had high data centers on our list,” he told Business Insider. “Very quickly, we were like, 'OK, we have to focus on this and the whole company.” ”
The company's chief technology officers, Loszak and Yasir Arafat, founded Aalo in 2023 to manufacture mass-made nuclear power plants. The company's main product is the Aalo Pod, a small modular reactor built for the power data center. Aalo says one pod can power around 50,000 homes, or one data center.
“The nucleus is truly the ultimate underdog,” Rosack said. He called it “the most misunderstood technology I've ever seen in my life,” citing skepticism about nuclear safety.
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In August, the Department of Energy chose AALO to test the company's experimental power plant AALO-X, which is scheduled to complete construction at the Idaho National Laboratory in 2026 under the Trump administration's nuclear reactor pilot program. The program aims to speed up testing advanced reactor designs and approve deployment at sites beyond the national laboratory.
Aarro isn't the only one who has been getting a boost from Washington. Ten nuclear companies, including Antares Nuclear, Radiology Industry, Valaaat and Okro, supported by Sam Altman, are being tapped for the DOE initiative.
Large tech companies are increasingly interested in using nuclear power to promote AI ambitions.
Aalo plans to make its technology global
Aalo aims to ultimately make factory-built models global. In the future, Aalo hopes to mass-produce reactors at large facilities such as the 40,000-square-foot Austin plant, ship to sites around the world, and assemble them in locations. Loszak said the company would like to work with a network of partner developers that handle the installation and operation of Aalo Pods.
For now, the company hopes to partner with its customers with “because it values speed and is willing to pay a premium.” The company refused to disclose which hyperscalers they were working with.
Aro also ultimately “contributes as much cost as possible to help bring more energy to everyone,” Rossack said. Ultimately, the aim is to reduce energy costs to about 3 cents per kilowatt hour, but Aalo prices are now higher than this, Loszak said. According to the US Energy Information Agency, energy costs vary widely from location to location, with electricity in all US sectors averageing around 13 cents per kilowatt hour in May 2025.
Aalo will use new funds to double its staff and grow from around 60 employees to 120 within the following year. Focusing on recruiting engineers and manufacturing talent. This is a sharp rise for startups that were Rosac and Arafat two years ago.
I'm betting on nuclear power
Rossack's interest in nuclear power is personal. He said he developed asthma while growing up in Canada due to coal plant smog. However, as the country expanded its nuclear power, Rossack said his symptoms had disappeared.
“Look, my smog days have gone to zero and my asthma has disappeared,” Rosack said. “I thought, 'My God, this technique is incredible.' ”
Previously, Loszak co-founded Humi. Humi is a human resources software startup acquired by employment heroes in January for over $100 million.
Aalo co-founder and CTO Arafat brings the nuclear chops. He began his career at Westinghouse Electric Company and later worked at Marvel, an advanced nuclear reactor at the Idaho National Laboratory. Arafat received his PhD. Nuclear Engineering at North Carolina State University.
“When I met him, I knew he was the right guy to partner with. We had really similar values, a similar vision of what nuclear power would turn out, and even a similar sense of humor.
Loszak said Valor, an investor at Aalo, is a “special partner” for the startup due to its relationship with the big data center project.
Valor supported Elon Musk's Xai in 2024 with a $6 billion Series B, and the investment company was reported in July to settle up to $12 billion for its plans to buy large Nvidia chips for Xai's new mega-sized data center in consultation with lenders. Valor also participated in AI Infrastructure Company Crusoe's $600 million Series D in late 2024.
