Orbital computing infrastructure startup Starcloud has secured $170 million in funding, reaching a valuation of $1.1 billion. This investment highlights the intensifying competition among companies like Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin to relocate energy-intensive AI data centers off Earth.
Leading the funding round were Benchmark and EQT Ventures, reflecting strong investor enthusiasm for space infrastructure projects. These initiatives aim to address the increasing demands on terrestrial energy grids and data center capacities caused by massive AI workloads. Space-based systems provide a significant advantage by offering near-continuous solar power access.
Starcloud plans to deploy an extensive constellation of 88,000 satellites functioning as data centers. The newly raised capital will be allocated toward developing next-generation satellites, expanding manufacturing capabilities, and securing future launch contracts as the company advances toward commercial operations.
Co-founder and CEO Philip Johnston revealed that the primary committed contracts involve other spacecraft, especially Earth Observation and DOW satellites. He also mentioned ongoing negotiations for binding energy offtake agreements with major hyperscalers, which are expected to be announced soon.
In a significant development earlier this year, SpaceX acquired the AI startup xAI and unveiled ambitions to build a million-satellite orbital data center network. Similarly, Blue Origin has expressed comparable goals in this emerging sector.
Meanwhile, Starcloud has established partnerships with leading technology firms such as Nvidia, Amazon Web Services, and Google Cloud. In November, the company launched a satellite equipped with Nvidia’s H100 chip, marking the first demonstration of AI training and inference conducted in orbit. A second launch is planned for October, featuring AWS Outposts technology.
Although space infrastructure offers solutions to power and land limitations on Earth, high launch costs remain a significant obstacle. However, Johnston anticipates that these expenses will decrease sufficiently by 2028 or 2029, making space-based data centers economically competitive with terrestrial facilities.
This latest funding round brings Starcloud’s total capital raised to $200 million. The Redmond, Washington-based company had previously secured $34 million from investors including Andreessen Horowitz and In-Q-Tel, the venture capital arm of the Central Intelligence Agency.
