Proxima Fusion, incorporated in January, wants to build a complex device known as a stellarator and is the latest company to join the emerging fusion industry's effort to generate electricity by fusing atoms.

Although the amount of funding is small at only $7.5mn, it is significant as Proxima is the first fusion company to spin out of Germany's revered Max Planck Institute for Plasma Physics. The institute is the home of the world's most advanced existing stellarator in Greifswald, in eastern Germany, built by government-funded scientists over the past 27 years using supercomputers and advanced engineering.

Little known outside the world of plasma physics, a stellarator is an alternative to the better-known tokamak device, pioneered by Soviet scientists in the 1950s. Both use huge magnets to suspend a floating mass of hydrogen plasma as it is heated to extreme temperatures so the atomic nuclei fuse releasing energy.

Until recently nearly all funding of so-called magnetic confinement fusion has been channelled into tokamaks such as the Joint European Torus in Oxford, England, or the Sparc device being built by the Bill Gates-backed Commonwealth Fusion Systems in Massachusetts.