Can this startup cool data centers without water?

What is the worth of water? We may not know until the river runs dry.

However, we will certainly recognize how undervalued it was when staring at dry, cracked sand.

Data centers are becoming one of America's largest water users, chugging millions of gallons to cool servers.

A problem David Tearse, Karman Industries' CEO, has pondered for years.

He may have uncovered a promising solution.

"It's a closed-loop cooling system, so it's filled once," Tearse told The Hustle. "We do not consume water continuously for our system as an evaporative cooling or cooling tower system would use."

Powering up

Karman Industries was launched in 2024 near Los Angeles by Tearse and CTO Chiranjeev Kalra with a simple mission: develop thermal energy systems to enhance efficiency and reduce costs for manufacturers, data centers, and geothermal and nuclear reactors.

"We want to build the next generation of thermal infrastructure layer utilizing technology out of the aerospace and automotive industries," Tearse said. "It's a big-step function change in terms of overall footprint and performance — systems designed much more specifically for the AI workloads."

Simply put: Karman's replacing old industrial heating and cooling systems with rocket and EV technology — using far less energy and water.

According to Karman, the technology delivers:

• Around 300%-1k% efficiency from heat pumps using recycled waste heat — cutting energy consumption by 75%+ compared to gas boilers, per a case study by manufacturing tech company and Karman partner Ketiv.
  
• Twenty-five percent less energy than conventional cooling using Karman's Heat Processing Unit (HPU).
  
• HPUs that eliminate water consumption without drawing from traditional cooling systems.
  
• An 60%+ mechanical yard reduction, freeing up land for compute capacity.

Gaining steam

There are multiple challenges for the ~40-employee Karman, including environmental factors stemming from current data centers and the industry.

And 97% of the water used by US data centers comes from the same source as household water, per a July 2026 Congressional Research Service report.

• US data centers used an estimated 17B gallons in 2023.
• A single 100-megawatt facility can use as much water daily as 2.6k households.

Even after raising over $30m in funding so far, the startup is competing against billion-dollar companies with proven track records of scalability and funding. The big bet that sets them apart:

"We use CO2 as our refrigerant," Tearse says, "which is very different from what's out there today."

On what's next, he said, "There's been quite a bit of traction. I'll be able to share more about that in the coming quarters."