Large data centers can consume up to 20 million liters of water per day, an annual volume comparable to the needs of a mid-sized town. With more than 5,400 data centers in the United States alone, total water use now spans several billion liters each year. As digital infrastructure expands and AI workloads intensify, reducing the water footprint of cooling systems is a top priority for data center developers.
Innovation in direct-to-chip, immersion, and hybrid cooling is creating new pathways to support long-term data-center growth while lowering reliance on freshwater resources. These technologies are attracting growing interest from investors who recognize the operational and sustainability benefits of advanced cooling. Projections indicate that data center cooling could become a $40–45 billion market by 2030, with liquid cooling representing a significant share at around $15–20 billion.
This final article in our Data Center Water Consumption Series builds on our earlier coverage of emerging technologies and startups. It examines who is investing, which regions are attracting the most capital, and how these trends are shaping the future of data center cooling.
Equity investment surges to $2.7B in 2025
Investment in data center water consumption solutions between 2020 and 2023 averaged around $300 million before accelerating sharply over the past two years. Funding in 2024 increased fivefold to exceed $1.5 billion, and 2025 has become the strongest year to date with investment reaching $2.7 billion.
This acceleration is anchored by several landmark deals in 2025 such as:
- US-based Crusoe raised $1.4 billion in Series E funding, lifting its valuation to $10 billion and reinforcing market confidence in liquid cooling at scale.
- Swedish company EcoDataCenter secured €450 million ($486 million) to expand hydro-powered, low-water facilities.Â
- Corintis in Switzerland raised $24 million in Series A funding to advance chip-level microfluidic cooling.
Additionally, debt contributed to the rise in funding from 2024 onward. Debt financing, which had remained close to $160 million per year, increased to $521 million in 2024 and then more than doubled to $1.15 billion in 2025. This shift was primarily driven by multiple debt rounds raised by Crusoe and one by EcoDataCenter.Â
Grant funding remains limited, totaling only $10 million over the past six years.
Fewer deals but larger rounds define 2025 funding
Deal activity in data center water consumption solutions has shifted significantly between 2023 and 2025. While 2024 recorded 22 transactions totaling $1 billion, only six deals have closed in 2025, amounting to $1.4 billion.
Deal activity accelerated through 2023, which marked the peak of early innovation in advanced cooling systems. Pre-seed, seed, and early-stage rounds all increased during this period.
Activity moderated in 2024 and 2025 across all stages. This shift is driven by market consolidation and growing investor selectivity as only commercially viable technologies advance to scale.
Liquid cooling dominates funding as AI workloads accelerate
Data center cooling is undergoing clear consolidation, with liquid cooling now accounting for 84 percent of all solutions via 139 deals. Direct-to-chip and immersion cooling dominate because they handle high-density and AI workloads more efficiently while reducing overall water usage.
Hybrid cooling represents 15.5 percent of solutions and is gaining importance in regions facing growing water stress. The segment recorded 39 deals, including a noticeable spike in 2023, as operators sought options that balance performance and lower water consumption.
Dry cooling remains marginal, with just 0.1 percent adoption and four deals. Its higher energy demand and limited suitability for hyperscale facilities continue to constrain commercial uptake.
US dominates but Brazil emerges as the new investment hotspot
Global investment in data center cooling remains highly concentrated, with North America leading funding activity from 2020 to 2025. This dominance is supported by hyperscale data center expansion and early-scale adoption of liquid cooling across major U.S. markets.Â
Asia, however, shows the most notable acceleration in 2025 as countries such as Singapore and India invest in AI-ready, water-efficient data centers due resource constraints and sustainability commitments.
At the country level, the United States continues to attract the largest share of capital, while Australia gains visibility with approximately $0.2 billion in investment driven by Firmus Technologies.
South America joined the investment landscape in 2024, marked by Scala Data Centers securing a $500 million debt round in Brazil.
The broader surge in 2024 of $1.5 billion originated from the United States, Brazil, and several European markets including the United Kingdom, France, Sweden, and Spain. In 2025, the doubling of funding to close to $2.7 billion is primarily driven by the United States, Switzerland, and Australia.
Overall, while investment is spreading across more regions, capital remains largely concentrated in a select group of high-performance digital-infrastructure markets that are modernizing cooling systems to address rising AI workloads, higher power densities, and growing water-efficiency requirements.
VC dominance continues while corporate investment ramps up
The investor landscape for data-center water-efficiency solutions is dominated by venture capital. VC has led overall activity for the past five years and is on track to peak again in 2025 reflecting confidence in scalable cooling technologies that can support rapidly expanding AI workloads.
Strategic investors—both corporates and CVCs—are showing great interest. Their activity has grown from just 2 deals in 2020 to 12 deals as of November 2025, indicating a clear shift from exploratory engagement to direct investment in cooling solutions. Over the past six years, strategic investors have completed 38 deals, compared with 91 by venture capital.
Government funding and private equity remain limited, contributing only marginally to the overall capital mix.
Together, these trends show that while VC continues to drive early-stage innovation, strategic investors are rapidly expanding their role as water-efficient cooling becomes integral to digital-infrastructure resilience and long-term capacity planning.
Scaling data center cooling solutions
The past two years have redefined the trajectory of investment in data-center water consumption solutions. Major equity rounds, expanding debt participation, and the entry of new regional markets have created a more mature and strategically aligned funding landscape. With liquid cooling firmly established as the leading technology and corporate investors deepening their involvement, the industry is now progressing from early innovation to deployment.
Ensuring this momentum continues will require long-term capital commitments and sustained coordination between operators, policymakers, and technology providers.
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