🦄 Unicorner Startup of the Week:

NetworkOcean

✍️ Notes from the Editors

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Building and operating underwater data centers

NetworkOcean addresses the rising demand for data centers while also considering the growing power requirements. It focuses on mitigating the potential impacts of increased power usage, including higher emissions and strain on the grid. Offering underwater data centers, its goal is to offer cheaper and more sustainable solutions to data centers, all by taking advantage of water cooling in its infrastructure. With a claimed 25% lower operating cost and reduced energy needed to cool the increasingly hotter data centers, NetworkOcean aims to bring a new age for data centers.

🔗 Check it out: networkocean.io

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💰 Business Model

Akin to other data centers, NetworkOcean plans to sell its capacity to those who need data centers and GPUs for various use cases, including training, inference, fine-tuning, and experiments. It aims to charge approximately $2.10 per GPU per hour, which is lower than the standard industry rate.

📈 Traction and Fundraising

• Raised $600,000 Pre-Seed from Y Combinator, Refactor Capital, Z Fellows, Pareto, Climate Capital, and BullMont Capital

• Participated in Y Combinator S24 batch

• Has $1.2 million committed for an upcoming $5 million seed round

• Has signed LOIs with six AI companies

• Has a 1-megawatt data center near completion with projections for $10 million annual recurring revenue

👫 Founders

• Sam Mendel, CEO: Previously founder and CEO @ CreatorCrew, Founder and CEO @ CASHU, Co-Founder and Growth + Production @ Rant!, Student @ Babson College, Student @ Olin College of Engineering

• Eric Kim, CTO: Previously Software Engineer Intern @ Palantir, Software Engineer Intern @ Merge, Engineering Physics + Computer Science @ Cornell

💼 Opportunities

• Founding Mechanical Engineer

🔮 Our Analysis

Recent news on how major players in AI and data, such as Microsoft, Amazon, and Google, have gone as far as to sign deals to use and reactivate nuclear power has brought to the forefront the ever-increasing need for energy and data centers. In addition, Nvidia’s meteoric rise to dominate the computing market has also brought to light the high demand for more powerful and efficient GPUs for AI training, modeling, and other computational use cases.

Historically, data centers have been air-cooled, with fans replacing hot air with cold air. As these centers became more advanced, temperature levels rose, resulting in a greater need for cooling. While water cooling isn’t new (it’s been around for nearly 50 years), it hasn’t been a practical choice, given the increased costs it presents versus air cooling. However, with the proliferation of AI use cases, water cooling has dramatically increased as the choice of cooling for these data centers. 

Data centers have also been a concern for environmentalists and companies due to the tremendous amounts of energy they consume. Companies have been looking for different ways to accommodate this increased AI spending while being environmentally minded. Many different strategies are being used by companies to fuel this need for power, looking at a variety of energy sources to help gain an edge in the growing AI race.

NetworkOcean builds on the prior innovation from Microsoft’s experiments with underwater data centers and has found effective ways to commercialize the idea. The complexity of building an underwater data center in the ocean is offset by saving energy and operational costs, where it has pioneered certain processes to maximize its operational efficiency. It claims a lower failure rate and greater reliability than on-land data centers. In addition, by taking advantage of the open ocean waters, it has also forgone the complications of using freshwater on land for water cooling, adding to its savings and lower price points. Ignoring its competitive prowess, it is also providing a sustainable solution to a growing need. Having gone through Y Combinator’s most recent summer class, the team is well-equipped to lead the charge in an exponentially growing market. Given its strong economic and environmental advancements, we believe NetworkOcean can turn the tide in data servers, becoming the backbone of future computing infrastructure.

📚 Further reading

• Microsoft finds underwater datacenters are reliable, practical and use energy sustainably [Microsoft]

• Hungry for Energy, Amazon, Google and Microsoft Turn to Nuclear Power [The New York Times]

• Liquid cooling enters the mainstream in data centers [JLL]

• Power-Guzzling AI to Drive ESG Debt Sales, Morgan Stanley Says [Bloomberg]

• Unlocking Savings: Why Buying NVIDIA H100 GPUs Beat AWS Rental Costs [TRG Datacenters]

Written by Kanay Jay Shah

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