As AI data centers reach their power limits, Peak XV supports Indian startup C2i to solve the bottleneck

In scaling AI data centers, power is rapidly outpacing compute as the primary constraint. This shift has led Peak XV Partners to invest in C2i Semiconductors, an Indian startup that develops plug-and-play system-level power solutions aimed at minimizing power losses and enhancing the economics of large-scale AI infrastructure.

C2i, which stands for Control Conversion and Intelligence, secured $15 million in a Series A funding round led by Peak XV Partners, alongside contributions from Yali Deeptech and TDK Ventures, bringing the startup’s total funding to $19 million over two years.

This funding comes in the wake of soaring energy demands in data centers globally. Research from BloombergNEF forecasts that data center power consumption is set to nearly triple by 2035, while Goldman Sachs Research projects a 175% increase in data center energy demand by 2030 compared to 2023, equivalent to adding another country to the top 10 energy consumers.

The challenge primarily lies not in generating electricity, but in efficiently converting it within data centers, where high-voltage power must be scaled down by thousands of times before it reaches GPUs. According to C2i co-founder and CTO Preetam Tadeparthy, this conversion process currently results in energy losses of about 15 to 20 percent.

Tadeparthy mentioned to ToolsMixAi, “What used to be 400 volts has already grown to 800 volts and is likely to keep rising.”

Established in 2024 by a team of former Texas Instruments executives—Ram Anant, Vikram Gakhar, Preetam Tadeparthy, Dattatreya Suryanarayana, alongside Harsha S. B and Muthusubramanian N. V—C2i redefines power delivery as a cohesive, plug-and-play “grid to GPU” system connecting the data center bus to the processor.

By integrating power conversion, control, and packaging into a single platform, C2i projects a reduction in end-to-end losses by about 10%—equating to approximately 100 kilowatts saved for every megawatt consumed—resulting in lower cooling costs, enhanced GPU utilization, and improved overall data center economics.

Tadeparthy noted, “All of this impacts the total cost of ownership, revenue, and profitability.”

For Peak XV Partners, who underwent a separation from Sequoia Capital in 2023, the investment underscores how energy expenses can influence the economics of large-scale AI infrastructure. Rajan Anandan, managing director at the venture capital firm, stated to ToolsMixAi that energy costs become the most significant ongoing expenditures for data centers post-initial server and facility investments, with even slight efficiency improvements holding substantial value.

“Reducing energy costs by, let’s say, 10 to 30 percent, represents a considerable sum,” Anandan explained. “We’re talking about tens of billions of dollars.”

Claims will be rigorously evaluated soon. C2i anticipates that its initial two silicon designs will return from manufacturing between April and June, after which it intends to validate performance with data center operators and hyperscalers who have expressed interest in reviewing the findings, as per Tadeparthy.

Headquartered in Bangalore, the startup has assembled a team of around 65 engineers and is establishing customer-facing operations in the U.S. and Taiwan as it prepares for initial deployments.

Power delivery remains one of the most established components of the data center stack, traditionally dominated by large players with solid financials and lengthy qualification periods. While many emerging companies focus on enhancing individual components, transforming end-to-end power delivery necessitates simultaneous alignment of silicon, packaging, and system architecture—a capital-intensive endeavor that few startups pursue and can take years to validate in real-world settings.

Anandan highlighted that the critical factor now is execution, noting that all startups grapple with technology, market, and team risks when placing bets on industry evolution. In C2i’s case, he believes the feedback loop should be relatively swift: “We’ll know in the next six months,” Anandan remarked, pointing to the upcoming silicon and early customer validation as pivotal moments for testing the thesis.

This strategic investment reflects the advancements in the Indian semiconductor design ecosystem in recent years.

“You should view semiconductors in India as analogous to e-commerce in 2008,” Anandan asserted. “It’s just getting off the ground.”

He emphasized the richness of engineering talent in India, noting a growing segment of global chip designers are based there, along with government-backed design incentives that have lowered registration costs and risks, making it increasingly feasible for startups to develop globally competitive semiconductor products from India instead of merely serving as design centers.

As C2i starts validating its system-level power solutions with clients, the likelihood of these conditions yielding a competitive global product will soon become apparent.