A Bethesda startup has raised $8.85 million in outside investment to scale the building of its modular data centers, which can be deployed over the course of one night under certain conditions.
The funding brings Flexnode's total capital infusion to $12.35 million following a $3.5 million grant it won from the Department of Energy's Advanced Research Projects Agency - Energy program.
Andrew Lindsey, CEO and co-founder of Flexnode, told me this seed round — led by San Francisco's Zacua Ventures as part of the venture capital firm's inaugural fund — also included an extension. The company first began seeking investment in early 2022, and it managed to pick up financial support from the Maryland Technology Development Corp., which does business as TEDCO, along the way. That came during a time when many investors pulled back from backing risky tech startups amid competing high interest rates.
"This took some time," Lindsey said during a video interview. "Really, all the capital we've raised is strategic, so we found out who we would ultimately be working with to scale this out, and we brought them in from a capital raise perspective to further enable that process."
With the funding secured, Lindsey said Flexnode is ready to start growing rapidly.
It'll bring its first of several liquid-cooled modular data centers online this year. If the right infrastructure is already installed at a given site, Lindsey said this could be done in a matter of hours — though he noted many of Flexnode's customers will require a tailored approach that could see these modular data centers deployed over a series of months. He said Flexnode's data centers can be as small as a four-rack configuration or as large as a 36-rack grouping, all of which will be in a high-density power capacity setting.
"If you have a group that has existing long leads, electrical supply chain infrastructure in place, we can have something in place overnight," Lindsey said. "But if you want us to go into a greenfield location and want to build from scratch, there's a process that we're going to go through just like every other building company around, things like permitting, planning and zoning. We certainly won't just drop our data centers in there like the Bird scooters."
He described Flexnode's customers as being those who might need a type of data center that's more rugged and complex than a smaller modular and container-based solution, but less expansive than the megastructures proliferating in and around Ashburn, the data center capital of the world. Lindsey said ideal clients include builders, real estate firms and systems integrators as well as managed service providers and cloud service providers.
"What we do is we bring a grouping of both, we give the configurations, the predictability, the speed of the modular [data center] and beyond and we also give the flexibility, adaptability and long-term lifecycle from the traditional build," Lindsey said.
Flexnode employs 16 people full-time, most of whom are based throughout the Mid-Atlantic. The company is using a WeWork location in Bethesda to conduct in-person business, though Lindsey said the initial process of scouting for more space has begun as Flexnode looks to potentially more than double its workforce before the end of the year with the addition of about 15 to 35 more people.
Lindsey declined to disclose specific revenue figures. Raising a Series A is one of the many tasks that come next, he said.
"What that means for us is scaling out considerably where our focus is to really embrace this global solution that we've developed and a global ecosystem of partners that allows us to get ahead of that curve," Lindsey said. "We believe that the the solutions that we've built out are very much applicable in the United States, but carry over globally and we plan on pursuing that with our Series A."
