Though David Tearse and CJ Kalra work closely with data centers, they know those energy-guzzling power structures are not popular among neighborhood coalitions.
However, the co-founders of Karman Industries envision a city structure that may seem futuristic in the U.S., but popular in countries like Finland and Sweden – where energy from nearby data centers is redirected to heating up restaurants, apartment buildings and factories.
The pair founded Signal Hill-based Karman in 2024 with the goal to replace fossil fuels that heat and cool important city resources, like hospitals and grocery stores. The company has raised around $30 million – with $20 million coming in through a series A funding round in January – to take advantage of heat produced by artificial intelligence-hungry data centers. (The latest round was led by Riot Ventures, a Venice-based venture capital firm.)
While cooling technology has always been a necessary part of cloud computing infrastructure, the heat radiating from these overloaded data centers requires more cooling solutions. Since cooling packages can make up around 40% of a data center’s power needs, this ends up increasing the physical and carbon footprint of already sprawling data centers.
Karman’s solution is a more compact heat processing unit that can shrink a data center’s footprint from anywhere from 60% to 80%, according to the company. That kind of technology has the ability to make data centers less imposing and more useful to local communities. Â
Tearse, co-founder and chief executive, talked with the Business Journal about navigating the data center energy scramble while staying laser focused on the company’s overarching goals.
What was the genesis of your company? How did it come to be?
We founded Karman to build next-generation thermal infrastructure. Fifty percent of energy use goes to heating or cooling, often inefficiently. We aimed to solve these using advancements in turbomachinery, power electronics, motors and advanced manufacturing, combining them into one product.
Alternative energy received record-breaking venture funding in 2025.
Why do you think that is?
Many alternative energy sources rely on technology, not natural resources. Technology follows Moore’s law, becoming cheaper over time. Recently, alternatives to fossil fuels reached a tipping point, competing without subsidies as the cheapest and fastest options in many areas.
Your company was ideated a little before the AI data center craze that started in 2024. What was your goal back then?
Has it changed much from now?
We’ve always been laser focused on building the best technology with a wide range of applications across multiple industries. Data centers (are) the most pressing challenge out there right now and we are completely focused on that market due to unbelievable customer demand.
A lot of people associate the energy hype with AI and data centers. Beyond that, what are some overlooked use cases for a company like yours?
As I mentioned above, 50% of all end energy use goes towards thermal management, so there are many areas we could explore.
Our technology can convert heat into electricity for geothermal or nuclear, replace gas boilers with heat pumps, or provide cryogenic cooling. But data centers are keeping us extremely busy.
What are some bottlenecks facing energy startups like yours? This could be related to logistics, supply chain, or another part of the ecosystem that hasn’t updated to meet demand.
Everything is a speed game right now. Everyone is trying to move and build data centers so fast that the legacy suppliers of cooling technology can’t keep up. That’s our opportunity and we’re moving as fast as we can to meet the demand over the next few years.
You’ve acknowledged in the past that neighborhoods are reluctant to live near data centers. How do you see cities co-existing and even creating a symbiotic relationship with data centers when it comes to energy usage?
Our system is focused on the cooling aspect of data centers vs the power side. Our system effectively addresses specific concerns raised by some communities by using a closed-loop cooling system that eliminates water consumption, saving millions of gallons daily in larger facilities. Additionally, it utilizes a natural refrigerant (CO2), avoiding the use of forever chemicals.
A large part of data center sprawl comes from the cooling systems that need to be included. How does Karman’s platform shrink the physical footprint of what otherwise might feel like imposing data centers?
Our systems design is highly compact, packing 10 (megawatts) of cooling capacity into a single shipping container and our dry-cooler design is less than half the size of tradition systems. These combined result in an over 70% reduction in the mechanical yard which today is almost the size of a data center. This provides a dramatic reduction in the overall size of the data center.
How do you get data center developers to trust new cooling solutions out there over these legacy ones that, while may have problems, are tried and true. Have you had to deal with any reluctance from potential customers?
We engineered the system from first principles while adhering to industrial standards. By integrating advanced technology from other industries – proven through decades of application – we’ve combined these components in an innovative way, with each part possessing a high TRL (Technology Readiness Levels) level. Ultimately, our greatest strength lies in our team. With extensive expertise in designing and delivering products across aerospace, energy, and automotive sectors, our team instills confidence in our customers that our systems will perform reliably and revolutionize their data centers.
