Starcloud raised an additional $10 million in an investment round on Feb. 26, backed by NFX, Y Combinator, FUSE, Soma Capital and scout funds from Andreessen Horowitz and Sequoia
By Ada Jain
Green AI is revolutionizing the artificial intelligence era as Nvidia’s partnership with Starcloud—previously called Lumen Orbit—received the highest seed funding of $21 million in Y Combinator-backed startups’ record.
In December, Starcloud (Lumen Orbit) closed a $11 million investment round at a $40 million valuation. Following that, it raised an additional $10 million in fresh capital on Wednesday, bringing the total seed raise to $21 million.
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Investors included NFX, Y Combinator, FUSE, Soma Capital and scout funds from Andreessen Horowitz and Sequoia Capital.The additional funding comes from previous seed investors and several new venture capital firms in the form of a simplified agreement for future equity, or SAFE.
The startup is providing a strong spike in green AI as it has already caught interest from about 200 investors (VCs). With Trump’s “drill, baby, drill” agenda, aimed at ramping up fossil fuel extraction for the country to become more energy-independent, increasing electricity consumption, and its signal to ditch the Paris Agreement 2015, startups in green AI are likely to offer light amidst the chaos. EU’s Ascend project and Houston-based Axiom space are doing similar work.
With an ever growing focus on climate change, large economies like the United States, China and the European Union have data centres that account for around 2 to 4% of total electricity consumption today. They tend to be spatially concentrated, which means their local impact is pronounced. By 2030, AI data centers are expected to consume 13% of the total electricity consumption in the U.S. which is home to more than half of the world’s AI data centers where huge data servers are stored.
A typical data center can use about 500,000 gallons of water daily. For instance, a 1 megawatt (MW) data center can use up to 25.5 million litres of water annually just for cooling – equivalent to the daily water consumption of approximately 300,000 people. Despite attempts to shift from cooling air to cooling water to lower carbon footprint, many drought stricken areas like Mesa, Ariz, and Utah have seen the brunt of these data centers through the past.
This could explain why Starcloud decided to take the stage. Founded by Philip Johnston, Ezra Feilden, and Adi Oltean in early 2024, the YC-backed startup is set to launch space-based data centers by onboarding Nvidia GPUs for satellite imagery. This would leverage solar energy and thereby reduce the need for energy-demanding AI processing on earth as well as reduce e-waste.
Space data centers offer mobility in data access and are less exposed to natural disasters. This also means access to continuous solar energy and that servers could be naturally cooled by the vacuum of space, helping the United States align with the goals of COP29. Nvidia, whom the startup has partnered with, mentioned in their blogpost “AI at COP29: Balancing Innovation and Sustainability” that accelerated computing is all about doing more with less. It uses special hardware — like GPUs — to perform tasks faster and with less energy than CPUs.
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Starcloud will be launching their demonstrator satellite in July 2025. The success of the startup largely depends on it being able to leverage cheaper satellite costs as it is able to do right now. Rivaling Starcloud, tech billionaire Elon Musk’s venture Starlink has been making inroads with its thriving satellite network, which Musk claims will deliver fast results in the coming years. Maintaining space data centres poses another challenge which could offset some of the hype. Space weather, such as solar flares could disrupt operations, while collisions with debris are also worrisome.