Starcloud reaches $1.1 billion valuation as AI space race heats up

By Akash Sriram

March 30 (Reuters) – Orbital compute infrastructure startup Starcloud has raised $170 million at a $1.1 billion valuation, as companies including Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin race to move power-hungry AI data centers off-planet.

Led by Benchmark and EQT Ventures, the fundraise underscores surging investor appetite for space infrastructure bets as massive AI computing requirements strain terrestrial energy grids and data center capacity, even as space-based systems offer access to near-continuous solar power. 

Starcloud, which has long-term plans for an 88,000-satellite data center constellation, will use the new capital to fund next-generation satellites, manufacturing expansion and future launch contracts as it moves toward commercial operations, it said on Monday.

“The main customer contracts that are committed are for other spacecraft, particularly Earth Observation and DOW satellites. We are also working on some binding energy offtake agreements with the hyperscalers to be announced in the coming months,” co-founder and CEO Philip Johnston told Reuters.

In February, Elon Musk’s SpaceX acquired his AI startup xAI and revealed plans for a million-satellite orbital data center network. Blue Origin, the space venture of Amazon’s Jeff Bezos, has expressed similar ambitions.

Meanwhile, Starcloud is already working with partners including Nvidia and the cloud units of Amazon and Google.

In November, it launched a satellite carrying Nvidia’s H100 chip, demonstrating AI training and inference in orbit in an industry-first move. 

It now plans a second launch in October featuring Amazon Web Services’ AWS Outposts offering.

While space infrastructure would ease power and land constraints, high launch costs remain a challenge. But Starcloud expects them to fall enough by 2028 or 2029 to make space-based data centers cost-competitive with Earth facilities, Johnston said. 

The latest round brings Starcloud’s total funding to $200 million, with the Redmond, Washington-based company having raised $34 million earlier from investors including Andreessen Horowitz and In-Q-Tel, the Central Intelligence Agency’s venture capital firm.

(Reporting by Akash Sriram in Bengaluru; Editing by Jonathan Ananda)