Starcloud in Talks for $2.2 Billion Valuation as SpaceX Stirs Interest
The Takeaway
- Starcloud discusses raising $200 million one month after last funding round
- Startup launched first satellite with Nvidia Hopper chip in November
- SpaceX, Blue Origin stoke interest in orbital data centers, but big hurdles remain
Starcloud, a two-year-old startup building orbital data centers, has told investors it’s in talks to raise at least $200 million at a valuation of around $2.2 billion after the investment, according to a person involved in the deal.
The discussions come just one month after Redmond, Wash.-based Starcloud said it raised $170 million at a $1.1 billion valuation including the investment, which was co-led by early-stage firm Benchmark and private equity firm EQT. The startup’s funding target, following so closely on the last round, speaks to perceived investor excitement over the concept of putting data centers in low earth orbit, where they can take advantage of abundant solar energy. SpaceX CEO Elon Musk has made the concept a key aspect of the rocket company’s upcoming IPO, though many others in the data center industry are skeptical of the technology.
Starcloud aims to provide data centers in space to AI cloud providers like Crusoe and other customers such as the U.S. Department of Defense. But its business is still in its early stages. In November, the startup launched its first satellite—a demonstration satellite with a single Nvidia H100 GPU—aboard a SpaceX Falcon 9 rocket. The company hopes to launch a second, more powerful satellite by the end of this year. Its revenue couldn’t be learned, but it is likely to be small.
The fundraising is also notable because it would be the latest example of a startup selling shares at higher prices in fundraising rounds that are only weeks or months apart. This tactic, which has become even more prevalent during the AI rush, can give the earlier investors large returns on paper quickly and help the company advertise the final, high valuation to customers and employees. But investors complain these fast-follows can be misleading, since the startup may only announce one valuation.
In Starcloud’s case, the startup announced the valuation of its last round, which was split into two tranches. Benchmark led the first, while EQT Ventures, the venture arm of EQT, participated, the company said last month. Both firms co-led the extension funding round. It couldn’t be learned what investors paid for each tranche.
The company was co-founded by CEO Philip Johnston, a former McKinsey consultant and e-commerce entrepreneur; chief engineer Adi Oltean, a former software engineer at SpaceX and Microsoft; and chief technical officer Ezra Feilden, an aerospace engineer who worked at Airbus. Starcloud was part of accelerator Y Combinator’s 2024 summer class.
Starcloud has huge ambitions in an increasingly crowded field where it will go up against the likes of SpaceX and Jeff Bezos’ Blue Origin. Starcloud in March asked the Federal Communications Commission for permission to launch up to 88,000 satellites that would “operate as a distributed datacenter in space.” The filing did not contain details about when or how the company would expect to launch that many satellites, though Starcloud has said it’s designing future satellites to launch from SpaceX’s Starship spacecraft.
However, the Starship program has been delayed for years. And SpaceX has ambitions of using the craft to launch up to 1 million of its own data center satellites, in addition to its own Starlink satellites and missions for other commercial customers and governments. Blue Origin also wants to launch more than 50,000 satellites for AI computing. Only about 25,000 satellites have been launched into orbit in human history, according to the European Space Agency.
