Starcloud hits $1.1bn valuation to build space data centres

US-based space computing startup Starcloud has reached a $1.1 billion valuation after its latest funding round, marking one of the fastest rises to unicorn status among Y Combinator graduates.

The Series A round, led by Benchmark and EQT Ventures, highlights growing interest in orbital data centres as demand for computing power surges.

Starcloud intends to move data processing operations into outer space because this method enables the company to circumvent both energy limitations and existing Earth-based infrastructure systems.

The company has already launched a satellite equipped with an Nvidia H100 chip and plans to deploy more advanced systems, including GPUs based on Nvidia’s Blackwell architecture and server hardware from Amazon Web Services.

The startup is developing a larger spacecraft, Starcloud 3, designed to launch on Starship, the reusable rocket from SpaceX. According to CEO Philip Johnston, data centres built in space will achieve equal cost efficiency with existing ground-based systems when launch expenses decrease to a more affordable level.

The Starship system requires additional time until it reaches operational status, which will allow businesses to use it during the current decade.

Running high-performance chips in space presents major challenges which include cooling requirements and power generation needs and the need to synchronise multiple GPUs. Current deployments remain small compared to Earth-based infrastructure where millions of GPUs are already in use.

Starcloud reports that it has achieved its first achievement with space-based computer systems by training AI models in orbit despite existing difficulties.

The competition in the space race includes Starcloud as one of its contenders. Other tech companies, Aetherflux and Aethero, together with Google Project Suncatcher, which has launched this initiative, are investigating the development of space-based data centres. SpaceX has developed a plan to create an extensive satellite network which will support decentralised computing operations.