Karman Industries Secures $20M to Scale Novel CO2-Based Data Center Cooling System
April 14, 2026
As data center power densities surge towards the gigawatt scale, the industry's reliance on conventional cooling methods is being strained, consuming vast amounts of energy and physical space. A startup founded by aerospace veterans is now applying high-tech engineering principles to this critical thermal management challenge, aiming to deliver a step-change in efficiency and footprint.
Karman Industries, a Los Angeles-based startup, has closed a $20 million Series A funding round led by Riot Ventures to scale production of its innovative Heat Processing Unit (HPU). The company, co-founded by tech investor David Tearse and thermal management expert CJ Kalra, is developing a system centered around a high-speed compressor—dubbed the ‘Kompressor’—that leverages carbon dioxide (CO2) as a coolant. The funding has enabled the build-out of its Gigawerx factory and the hiring of engineers from leading aerospace firms like SpaceX and Rocket Lab.
The core of the technology is a CO2 chiller module rated at 10MW. Unlike traditional F-Gas refrigerants, CO2 leaves significant residual energy after its expansion cycle, which Karman's system harnesses to power a turbine, thereby improving overall efficiency. Tearse claims the HPU can achieve up to a 25 percent efficiency improvement over current market-leading solutions in harsh conditions, such as a hot summer day in Texas or Nevada, though specific Power Usage Effectiveness (PUE) reductions depend on system configuration. Crucially, the company states its water-free design and compact architecture can reduce the physical space required for cooling equipment by approximately 80 percent compared to equivalent traditional chiller setups.
"Our high-level thesis was to build the next generation of thermal infrastructure," Tearse explained. "Fifty percent of global energy usage goes towards thermal management, often with antiquated methods. We wanted to approach it from first principles." He emphasized treating server waste heat as an asset rather than a liability, with the HPU designed to facilitate heat reuse for district heating networks, particularly in Europe, or for co-generation.
The development signals a growing trend of applying advanced aerospace and manufacturing disciplines to data center infrastructure. With its factory slated to reach an annual production capacity of 1GW by Fall 2026, scalable to 4GW, Karman is positioning its integrated, holistically designed system as a solution for hyperscalers grappling with the cooling demands of AI and high-density computing. The company is currently in discussions with multiple large-scale operators and plans to begin volume deliveries to customers in 2027.
Source: datacenterdynamics
