Calgary’s emergence as hub for technology and cleantech has been a bright spot in an otherwise dismal Alberta economic story.
The chief executive officer of a company that helps banks of computers run cooler, reducing the electricity they draw, says part of the city’s attraction is the talent in oil and gas. That and affordable space compared with Silicon Valley has contributed to the growth of his company, which just completed a funding round.
That squares with what local leaders have touted as advantages for the tech sector as they plot a path to make up for the decimation of the energy industry since late 2014, when oil prices collapsed. Pressure on that sector has only increased since the start of the COVID-19 pandemic, and it’s led to major layoffs.
“A lot of the experience people have in oil and gas makes for quite an easy transition for us, especially when we get out of the key engineering functions and we look at project management, program management, administrative,” says Steve Walton, CEO of CoolIT Systems, which develops liquid cooling technology for microprocessors and other computer components and sells it globally.
“There are a lot of systems and processes that were created in the oil and gas industry that transition very nicely for us and have really set up our frameworks internally, so that’s been a benefit.”
Other Calgary tech companies, such as Attabotics Inc. and RS Energy Group, have drawn scientific, engineering and managerial talent from the oil and gas sector, and have experienced major growth in recent years.
CoolIT is an unusual startup – in that it was established two decades ago to concentrate on desktop computing as microchips became more powerful and ran much hotter. Its technology includes heat exchanges and fluid distribution units that allow liquid to circulate around the servers in racks.
Early on, its technology was popular among high-end gamers. But since 2014, it has concentrated on data centres around the world and their ever-growing banks of faster and faster servers that require cooling.
Air conditioning is antithetical to the imperative to lower emissions in the fight against climate change, as the electricity demand is immense. Mr. Walton quotes estimates that air conditioning systems at data centres account for 8 per cent to 10 per cent of all energy used in the United States. Some companies have located their servers in frigid locales, such as Iceland, to keep equipment chilled naturally.
“This is a significant solution to that,” he says. The technology saves 29 per cent to 50 per cent of the electricity cost in a data centre.
CoolIT’s proprietary cooling technology caught on, and after struggling with some growing pains, the company brought Mr. Walton in last year. He is a veteran of the global private-equity world, who even launched an online course for drummers that featured some big names in the field as instructors. Because of the pandemic, he’s been running the company from his home base in Los Angeles.
Now, he’s shepherding the next phase of growth for CoolIt after a recent equity funding round from Business Development Bank of Canada’s cleantech fund and London-based nVent Electric PLC, which builds data-centre infrastructure. Mr. Walton declined to give the value of the financing, saying only it was worth more than $10-million (”eight figures”). As part of the financing, BDC and another existing partner bought out a stake that was held by Inovia Capital, the venture capital fund.
“They’re going to encourage more research into improving nano materials and other materials that they can use to improve even the efficiency that they have today,” says Brent Holliday, CEO of Garibaldi Capital Advisors, CoolIT’s financial adviser. “Their goal is to get too close to 100 per cent of the heat being removed at the source.”
Mr. Walton expects sales of more than $110-million this year, up from $95-million in 2020 and $65-million in 2019. CoolIT is about to start construction on a 15,000-square-foot innovation centre in Calgary for design work and showcasing its products. It is also planning new such facilities in Taiwan and the United States.
The Calgary location is handy to major customers in the Seattle area and in Silicon Valley, and it remains much more affordable than either, Mr. Walton says. “That’s really helped the company because we’ve been a traditional startup. We’ve never been overly funded, we’ve never had $100-million cheques printed up for us. It’s always been piecemeal and friends and family up until this point.”
Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at firstname.lastname@example.org.