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As data center usage heats up, Submer raises $55.5 million to calm things down

TechBrunchBy TechBrunchOctober 3, 20245 Mins Read
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The race for better chips and data center capacity to handle AI workloads continues, but all that activity comes with pitfalls. High processing power means a lot of heat, which has a huge impact on both server operation and the environment.

As traditional cooling methods like air and water struggle to keep up with demand, startups with new approaches are rising to stardom. Among them is Barcelona-based Submer, which just raised $55.5 million at a $500 million valuation to expand its business. The entire rack is submerged within a container filled with a proprietary biodegradable non-conductive material, and the system operates within the container. Co-founder Pol Valls likened the coolant to “amniotic fluid.” Some models also offer the option of capturing heat from their own cooling process for use for other purposes, such as building heating.

Submar's business is already booming. Valls, who co-founded the company with CTO Daniel Pope, said the company's customers include at least one of the world's largest and most well-known “hyperscalers,” which operate dozens of data centers. . Telecommunications companies like Telefonica. Companies like ExxonMobil. Government agencies such as the European Commission. and major research centers. (Valls, now the company's CFO, declined to name several people on the record.)

Thanks to that listing and the pipeline currently being discussed, this round (an all-stock Series C led by M&G, with previous backers Planet First Partners and Norsken VC also participating, along with new investor Mundi Ventures) ) is expected to be valued at approximately $500. 1 million post money, Barth said. You also have the option to raise more money in the round.

The challenges Submer is addressing are partly technical and partly about cost and resource consumption.

Simply put, the data center industry is already an energy-intensive consumer, and AI is bringing it to its trough.

The International Energy Agency estimates that data center consumption in 2022 will be 460TWh (latest figures available), representing 1% to 2% of global energy consumption. The IEA predicts this could more than double to 1,000 TWh by 2026, which it writes is “roughly equivalent to Japan's electricity consumption.”

Meanwhile, a research paper published in May by Goldman Sachs found that ChatGPT searches, on average, “require nearly 10 times more power to process than Google searches.” The paper predicts that data center power demand will increase by 160% by 2030. Other researchers point to the “increasing carbon footprint” of AI and the billions of cubic meters of water needed to cool data centers.

Image credit: Submer (Opens in new window), under CC BY 2.0 (Opens in new window) license.

This is where Submar's technology comes into play. As previously detailed, Valls and Pope came up with the idea to build a better approach to data center cooling due to Pope's previous experience running data centers and Valls' programming expertise. . Valse understood that advances in technology would require more processing power over time, and Pope recognized the limitations of data centers.

They turned to a network of retired industrial engineers and materials scientists to help develop the product. The product includes a coolant (a proprietary non-flammable, biodegradable synthetic mixture with the consistency of water, according to Barth) and a smart container to store the servers. You can install the rack and get it working. Nowadays, Submer offers a variety of immersion liquids and containers, and some models have a water cooling system that keeps the refrigerant cool, running it through a heat exchanger and reusing it for things like heating buildings.

The journey hasn't always been smooth for the startup. In 2016, optimistic about what they had built so far, they applied, but were rejected by Y Combinator.

At the time, Submer's product may have certainly seemed like a modest solution to a very modest business. It took the explosion of computing in recent years, driven by a rapid move to the cloud and subsequent recent AI boom, to truly focus the industry's consciousness and move the company's business forward. .

Barth said the company is currently building an ecosystem where server component companies have enough interest in what Submar has to offer that they are building parts that are compatible with Submar's solutions.

“We have contracts with major server OEMs,” Valls said. “It looks like it takes a lot of time and effort, but we're extending these and it's getting easier and easier.” The proposition is very simple, he said. “Here's the data: Servers last longer and are free of particles, dust, and noise.” These partners include Dell, Intel, and more.

The startup has currently raised around $100 million, according to Pitchbook, and currently stands out among its peers in terms of amount raised and valuation. Other companies taking the liquid solutions approach include Icetope in the UK and two startups in Texas. One of them, LiquidStack, announced funding from Tiger Global just a few weeks ago. Another, Green Revolution Cooling, is supported by the National Science Foundation and the U.S. Department of Defense.

The challenge for Submer going forward is to sign up more partners and customers. It is worth noting that the company recently appointed a new CEO with extensive corporate experience. Patrick Smets initially joined Submar in August 2023 as COO, but was appointed CEO in January 2024.



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