Peak XV Partners with Indian Startup C2i to Revolutionize AI Data Center Efficiency

Revolutionizing AI Data Centers with Innovative Power Solutions

In the realm of artificial intelligence data centers, power efficiency is emerging as a critical factor in driving scalability. Recognizing this shift, Peak XV Partners has thrown its support behind C2i Semiconductors, an Indian startup dedicated to developing plug-and-play, system-level power solutions that aim to reduce energy wastage and enhance the economic viability of large-scale AI infrastructure.

C2i, an abbreviation for control conversion and intelligence, recently secured $15 million in a Series A funding round led by Peak XV Partners, along with contributions from Yali Deeptech and TDK Ventures, bringing the total investment in the two-year-old startup to $19 million.

The impetus behind this investment stems from the escalating energy demands of data centers worldwide. Reports indicate that electricity consumption from data centers is poised to triple by 2035, with projections suggesting a 175% surge in power demand by 2030 compared to 2023 levels. Much of this strain arises not from electricity generation but from the inefficient conversion processes within data centers, resulting in energy losses ranging from 15% to 20%, as highlighted by C2i’s co-founder and CTO, Preetam Tadeparthy.

According to Tadeparthy, the trend toward higher voltages, such as the shift from 400 volts to 800 volts, is likely to continue. In response to these challenges, C2i was founded in 2024 by former Texas Instruments power executives, including Ram Anant, Vikram Gakhar, Preetam Tadeparthy, and Dattatreya Suryanarayana, alongside Harsha S. B and Muthusubramanian N. V.

By approaching power conversion, control, and packaging as an integrated platform, C2i aims to reduce end-to-end losses by approximately 10%, resulting in significant energy savings and cost reductions. This approach is expected to have cascading benefits in terms of cooling expenses, GPU utilization, and overall data center economics.

Tadeparthy emphasized that these enhancements directly impact the total cost of ownership, revenue generation, and profitability. For Peak XV Partners, the allure lies in how power costs influence the economics of AI infrastructure on a large scale. Rajan Anandan, the managing director of the venture firm, highlighted the significance of energy expenses in data centers, which become the predominant ongoing cost post the initial capital investments.

Anandan emphasized that even marginal improvements in energy efficiency, ranging from 10% to 30%, can translate into substantial savings, amounting to billions of dollars. As C2i progresses with its silicon designs and validation processes, the efficacy of its system-level power solutions will soon be put to the test with data center operators and hyperscalers.

Headquartered in Bengaluru, C2i has assembled a team of 65 engineers and is expanding its operations in the U.S. and Taiwan to cater to early deployments. Redesigning power delivery from end to end represents a significant departure from traditional practices in the data center industry, where established players dominate with lengthy qualification cycles.

While many startups focus on enhancing individual components, C2i’s holistic approach involves synchronizing silicon, packaging, and system architecture concurrently. This capital-intensive strategy, seldom ventured by startups, can take years to validate in real-world environments.

Anandan stressed that the key challenge now lies in execution, with the startup facing technological, market, and team-related risks. The next six months will be critical for C2i as it awaits feedback on its silicon designs and customer validation processes.

The investment in C2i also underscores the maturation of India’s semiconductor design ecosystem in recent years. Anandan likened the current state of semiconductor design in India to the early stages of e-commerce in 2008, highlighting the burgeoning engineering talent and government-backed incentives that have facilitated the emergence of globally competitive semiconductor products from the country.

As C2i embarks on validating its system-level power solutions with customers in the coming months, the outcome will determine the extent to which India’s semiconductor industry can assert itself on the global stage.