Lumen Orbit, a Redmond, Washington-based startup, has successfully closed its seed round, raising $11 million at a $40 million valuation, amidst intense investor interest. The company, which was founded in January, aims to build data centers in space, a concept that could revolutionize the way AI companies scale their computing capabilities.

The seed round was led by NFX, with participation from prominent venture capital firms, including Fuse.VC, Soma Capital, and scout funds from Andreessen Horowitz and Sequoia. NFX general partner Morgan Beller will join Lumen Orbit's board as part of the deal. Due to the high demand from investors, the company has since opened up another SAFE round at a higher valuation, allowing more investors to participate.

Lumen Orbit's innovative approach involves building orbital data centers composed of pods that can hold compute and attach to large solar panels in space. The company's goal is to create multi-gigawatt compute clusters by the end of the decade, which would enable AI companies to scale their computing capabilities without the limitations of traditional data centers on Earth. This technology could significantly reduce the cost and environmental impact of AI computing, with CEO Philip Johnston estimating that it could save $130 million in electricity costs alone.

The company plans to launch a demonstrator satellite in May, which will include Nvidia's terrestrial GPUs. This will be followed by another test satellite that is 100 times more powerful the following year. Lumen Orbit's co-founder and CEO, Philip Johnston, emphasized the importance of frequent launches, stating that the company aims to launch at least once a year, in contrast to the typical five-year timeline of many space companies.

Johnston and his co-founder, Ezra Feilden, CTO, drew inspiration for Lumen Orbit from their experience working in the space industry. Feilden has a decade of experience in satellite design, while Johnston worked with national space organizations in the Middle East as a consultant at McKinsey. The childhood friends were initially interested in space solar but soon realized that the energy required to send power back to Earth made it less viable. However, they discovered that data centers in space could be a game-changer, as they would not need to transmit energy back to Earth and could take advantage of the natural cold of deep space to reduce cooling costs.

Lumen Orbit is not alone in pursuing this concept, with Axiom Space also working on orbital data centers. However, the field is still relatively uncrowded, and Lumen Orbit's ambitious mission could pave the way for a new era in AI computing. Industry leaders, including Bill Gates, Sam Altman, and Elon Musk, have all highlighted the potential of space-based data centers to support the growth of AI.

The success of Lumen Orbit's mission relies on the continued decrease in satellite launch costs, which have been trending downward in recent years. If successful, the company's technology could have a profound impact on the AI industry, enabling it to scale at the rate it needs while reducing its environmental footprint.