Iceotope, a Sheffield-based company that makes liquid cooling systems for AI and high-performance computing hardware, has raised $26 million in a Series B funding round. The company has been working on this technology since 2005, steadily building out a product designed for a problem that is now hard to ignore: the sheer amount of heat that modern AI systems produce.
AI hardware runs hot. Very hot. As AI workloads grow more demanding, the servers and chips powering them generate heat at levels that most data centers were never built to manage. According to Iceotope, next-generation processors are pushing rack power densities toward one megawatt and beyond. To put that in perspective, a megawatt is enough electricity to power roughly 1,000 homes. Blowing cold air through server racks, the method the industry has relied on for decades, simply cannot keep up at those levels. Even newer approaches, like direct-to-chip liquid cooling, which targets individual components rather than the whole system, fall short when it comes to broader real-world deployments.
The Series B round was led by Two Seas Capital and Barclays Climate Ventures, with continued backing from existing investors Edinv, ABC Impact, Northern Gritstone, and British Patient Capital.
The cooling industry is at a turning point. Air-based cooling was the default for most of computing history, and it worked well enough when power loads were modest. That is no longer the case. According to projections cited by Iceotope from SemiAnalysis, the installed base of liquid-cooled AI accelerators is expected to grow from roughly 3 gigawatts to 40 gigawatts within two years, driven by major cloud providers and data center operators taking on AI workloads that older systems cannot handle.
The challenge is also moving beyond large facilities. As AI technology spreads into hospitals, factories, and telecommunications infrastructure, so does the need for effective thermal management. Edge deployments, meaning computing infrastructure located closer to where data is generated rather than in a central data center, tend to operate in tighter, less controlled environments. They have stricter limits on noise, water use, and physical space. Iceotope says its system is built to work in all of those settings.
"With AI adoption rapidly increasing globally, Iceotope's liquid-cooling technology offers a timely and innovative solution to the mounting limitations of traditional cooling systems. Its approach not only meets the escalating demands of AI and high-performance computing but also materially advances datacenter sustainability. Aligned with Barclays Climate Ventures' mandate to invest in commercially scalable climate technologies, we believe Iceotope is strongly positioned in a growing market and capable of significantly improving energy efficiency in a critical sector." — Steven Poulter, Head of Barclays Climate Ventures
The new capital will go toward three priorities: product and engineering development, growing the company's patent portfolio, and building out ecosystem partnerships. On the partnership side, the aim is to get Iceotope's technology into the market faster by working with system integrators and original equipment manufacturers, rather than pursuing every customer directly. That kind of channel strategy lets a smaller company reach a wider market without having to scale its sales operation at the same pace as its technology.
Iceotope currently holds 219 patents, granted and pending. Continuing to invest in that portfolio signals the company expects competition to intensify as liquid cooling moves from a niche solution to a standard requirement across the industry.
"We've spent years developing a robust, differentiated IP portfolio and products purpose-built for AI infrastructure, and we're ready to scale at precisely the moment the industry demands more advanced, sustainable cooling technology. The opportunity ahead – both directly with customers and through our partner ecosystem – is significant." — Simon Jesenko, CEO and CFO of Iceotope
Iceotope started in 2005 as a research project focused on making computing more energy-efficient. Over time, it developed what it calls precision liquid cooling: a chassis-based system, meaning the cooling is built into the server enclosure itself, and surrounds all hardware components in a thermally efficient liquid rather than directing coolant only at specific chips. The system runs near silently and uses far less water than conventional data center cooling, which typically relies on large water-intensive cooling towers.
The practical advantage is flexibility. Iceotope says its technology can be deployed in nearly any environment, from a large hyperscale data center to a hospital campus or a manufacturing plant, without fundamental changes to the cooling architecture. That range of compatible environments is not standard in the industry. The company has existing relationships with Dell, HPE, and Meta, and has worked with global supercomputing centers. Simon Jesenko serves as both CEO and CFO.
Two Seas Capital and Barclays Climate Ventures co-led the Series B. Barclays Climate Ventures is the climate-focused investment arm of Barclays bank, with a focus on technologies that can reduce energy consumption at commercial scale. Edinv, ABC Impact, Northern Gritstone, and British Patient Capital all returned for this round, having backed the company in earlier stages.
The mix of a bank-affiliated climate fund and a financial capital firm reflects the two-sided interest in liquid cooling: it solves a real engineering problem, and it offers a measurable improvement in the energy and water efficiency of AI infrastructure.
