Iceotope: Crafting solutions for cooling the cloud

We might think of the cloud as an immaterial realm, but it’s a profoundly physical thing. Every time you upload a video, check your security camera, or even just send an email, activity takes place in a data centre. These are the engine rooms of the digital age, providing the storage for music streaming to remote working. “The problem is, they use vast amounts of energy—around three percent of all the power produced globally—not only in running the hardware but also in cooling it” says David Craig, Iceotope’s CEO.

That problem is only going to grow. Our data centre usage has long been on an upwards trajectory, but AI is causing that trend to spike. Forecasts estimate that AI will account for around 75 percent of data centre capacity by 2027 (Source: FT)—and global expenditure on data centres is expected to surpass $500bn (Source: Data Centre Dynamics) in the same timeframe. The grid may prove unable to keep up.

If data centres could be cooled more efficiently, it would help with their energy demands. The traditional cooling method is to blow air over components, but these fans-and-refrigerators systems are power-intensive, and air-cooling struggles to cope with the higher temperatures now being produced by the most advanced hardware. One alternative is to build data centres in cold environments, deep underground, or in Nordic countries, but space is limited and you can’t do this indefinitely.

That’s why there’s buzz around liquid cooling. Liquid is better at conducting heat than air but has its own trade-offs. Conventional systems either use ‘tank immersion’ which is space-inefficient, inflexible and requires additional infrastructure, or they use ‘direct-to-chip’ cooling, which channels fluid to individual components but doesn’t remove the need for air cooling entirely. What’s more, water is a precious resource.

Iceotope’s technology is gaining traction. But, for Craig, growth is about more than just the P&L. “Particularly in a deep tech, scale-up business, you have to be able to find other milestones that recognise growth which are non-commercial,” he says. “For example, the kinds of talent that we're able to attract, or the investor base that we're able to attract.” One such milestone came recently: the company has shown it can cool the most demanding 1500W chips, setting a new standard for the industry.

It has been a long and winding road to get to this point. The business was founded in 2006 by the Sheffield University graduate Peter Hopton, but disagreement between board and investors saw the company go into administration in 2011. Hopton raised funds two months later to take control of the company, and a further VC round. Yet it struggled to break through as the management would have liked. “It had, it's fair to say, a tumultuous several years, where there was the kernel of a good idea, but the market was not ready to receive it,” says Craig. “But nonetheless, they were able to raise funding and bring people in.”

Craig was one of those who were brought in, originally as a non-executive director, and in 2015 was asked to serve as chief executive. Under his tenure, it has grown from 18 to 80 across three geographies and revenue has increased 40-fold, a shift that has been driven by three key factors.

• The first was getting the basics in place. “I came in as a bit of a new broom,” says Craig. “The company was staffed with some good people, but people doing the wrong things, and not generating the kind of progress that investors, or indeed the customers, needed.” Iceotope needed to rethink its business model—as well as producing products itself, it now licences its IP to other manufacturers. “That actually allows us to get much more scale of what we sell and removes key barriers to entry for scale adopters.
• The second key factor was establishing a culture defined by clear values. “It's important to treat people right, and to do the right thing. So, we've often taken really difficult decisions - we've turned down valuable contracts that were either the wrong marketplace, the wrong companies, or had the wrong terms and we've had the courage to do those things,” says Craig. By doing this, they’ve found it easier to attract and retain high-quality talent.
• The third factor was having an international focus. America is a priority territory because many of the global cloud service providers have their headquarters in the US. They also do business across the Middle East, Asia and Europe. Craig’s advice for making that work? Ensure you’ve got the right banking partner.

Iceotope banks with HSBC UK. “As we are expanding to these different jurisdictions and looking at how we grow and build the business, they want to be with us and support us,” says Iceotope’s CFO, Simon Jesenko. Not only does the bank’s international footprint help them handle the complexities of operating across multiple currencies and regulatory environments, but it’s able to offer a personal level of service. “I've only positive words to say about Lee Manterfield, our account manager. He's been very approachable, really responsive, he’s been open to different suggestions. And every time we talk, he's trying to figure out how best to help us in our journey,” says Jesenko. “I've worked with many high street banks in the past, and I've never had that level of engagement.”

Craig says this partnership will be vital as Iceotope aims to scale further. The plan is to establish relationships with more of the world’s largest server manufacturers and cloud providers, wherever they are, and he believes the opportunity ahead is significant. “Liquid cooling in data centres is in its infancy. The rate and pace of adoption, particularly as AI rolls out, will go insanely exponential,” says Craig. “And increasingly organisations are moving to new territories, like Saudi Arabia, like Dubai, Kenya, and so on. So, all these areas, all these countries, will start to consume ever more as well.”

As the company goes on this journey, Craig will draw on what he has learned from scaling the business to where it is now. So, what are the most important things that experience has taught him—what tips would he want to share with other entrepreneurs? “I think sticking to your knitting really matters,” he says. “The strategy, the fundamental underpinning vision, [of Iceotope] has not changed one iota since day one.” His other crucial piece of advice is to focus unrelentingly on building and maintaining credibility with customers.

Together, those two principles can function as a guide to almost every decision. “Use that as a polestar,” he says. “And constantly seek towards that.”