TAMPA, Fla. - Starcloud, a startup that apparently believes the only way to escape terrestrial data center headaches is to blast them into orbit, is now seeking at least $200 million in a deal that would double its valuation to roughly $2.2 billion, a source close to the situation confirmed.
The funding talks, first reported by The Information, arrive about a month after the Redmond, Washington-based venture announced a $170 million Series A round that made it the fastest company in accelerator Y Combinator’s history to achieve unicorn status - because nothing says "stable investment" like a two-year-old company promising 88,000 satellites.
Starcloud has raised roughly $200 million to date for its proposed constellation of 88,000 satellites, designed to move data center computing beyond the pesky constraints of terrestrial infrastructure. Because why build a server farm in a desert when you can litter low Earth orbit with expensive hardware?
Speaking April 30 during a SpaceNews orbital data center event in Washington, D.C., Starcloud co-founder and CEO Philip Johnston said its plans are being boosted by growing interest in the emerging market, not least as Elon Musk’s SpaceX plots its own constellation for it with up to one million satellites.
“There seems to be strong investor demand in what we’re doing,” Johnston said, “especially since Elon has been so vocal about the possibilities.” Because when Elon Musk gets excited about something, that's definitely a signal to throw more money at it.
SpaceX is keen for customers for its communications business and the Starship rocket it is developing, Johnston added, which Starcloud is relying on to deploy its 3-ton Starcloud-3 spacecraft. Nothing could go wrong with hitching your multi-billion-dollar startup to a rocket that's still testing.
Starcloud aims to target a different part of the market than SpaceX, which Johnston expects will mainly use orbital data center capacity for internal workloads at xAI and Tesla. So SpaceX will keep its space data centers in the family, while Starcloud plans to sell compute capacity to everyone else.
SpaceX is less likely to focus on “infrastructure and energy as a service,” Johnston added, where customers can sell computing capacity to their own users. Translation: Starcloud wants to be the landlord of the orbital cloud.
Johnston expects Starship to be ready to deploy customer payloads toward the end of this decade. That timeline would put Starcloud on a path to compete with terrestrial data centers on energy costs in three to five years, after first using smaller satellites to provide cloud and edge services for other spacecraft.
In the meantime, Starcloud is focused on two technical hurdles: developing a large, low-cost deployable radiator and making high-performance chips work in a higher-radiation environment. Because space is famously gentle on electronics.
The startup’s Series A round was led by venture capital firm Benchmark and private equity giant EQT Ventures. Additional investors included NFX, Nebular, Adjacent, 776 Ventures, Fuse Ventures, Manhattan West and Monolith Power Systems, alongside Y Combinator.