Jan 28 (Reuters) - Helion, a startup working to generate

electricity from nuclear fusion, on Tuesday said it has raised

$425 million in venture funding from a group of investors led by

SoftBank Group's Vision Fund 2.

The Everett, Washington-based Helion said the funding will

help it speed up the development of its next generation fusion

reactor design, which aims to tap into the same reactions that

power the sun to make carbon-free electricity without

long-lasting radioactive waste. The company has an agreement

with Microsoft ( MSFT ) to begin providing power in 2028.

Helion is among the dozens of public and private groups

looking to crack the key challenge of fusion: how to get more

electricity out of the nuclear reaction than it takes to create

and contain it.

Rather than use fusion to heat water into steam that would

turn a power turbine, Helion uses powerful magnets and

electronic components such as capacitors and thyristors - which

allow power to flow in only one direction - to capture fusion

energy directly through electromagnetic induction.

In an interview, Helion Chief Executive David Kirtley said

the 6,000 massive capacitors and 50,000 thyristors needed for

the firm's current machine were secured from outside suppliers

and often had to be adapted from industrial uses.

Helion, which employs 450 people, plans to start

manufacturing its own capacitors, which will help add about 100

jobs.

"It took years to get all them in-house from external

suppliers, and we need to turn up those rates," Kirtley said.

"That's the goal - to do that all in house in the United

States."

Kirtley said the funding will also help Helion design and

prototype custom thyristors for the next machine.

Other investors in the funding round include Lightspeed

Venture Partners and a major university endowment fund that

Kirtley declined to name.

Also joining the round were Helion's existing investors:

OpenAI CEO Sam Altman; Mithril Capital, which was co-founded by

Peter Thiel; Capricorn Investment Group, Facebook co-founder

Dustin Moskovitz; and steel producer Nucor ( NUE ).