A Deeper Dive Into The Data Center Subindustries

A Deeper Dive Into The Data Center Subindustries

In November, we started to look into data centers and all of the industries that support the space. However, it’s such a booming industry, we decided to do a deeper dive using our research platform.

To give you a general sense of this sector’s growth, it’s expected that the data centers powering generative AI will grow at a 23% compound annual rate through 2030. Commercial real estate reports show nearly “insatiable demand from users” with data centers expanding and currently unable to meet users’ demand. In the U.S., the largest data centers are in northern Virginia, but markets in the south and west are quickly picking up pace and starting to grow as well.

Our first blog post looked at data center security, the AI infrastructure, energy management and cooling solutions. When doing research, the expansive industries that support data centers are incredibly robust. A handful of the results include:

  • Real estate: Facility design, modular and pre-fabricated data centers, construction and engineering, real estate development
  • Power and energy: Electricity, back-up power supply, energy efficiency solutions
  • Cooling and HVAC: Liquid cooling solutions, HVAC
  • Security: cybersecurity, physical security, alarm systems and monitoring
  • Logistics and supply chain: inventory management, shipping and installation, hardware and component supply
  • Legal and risk management: insurance providers, regulatory compliance providers
  • Managed services and cloud providers: managed hosting services, colocation providers and edge computing providers
  • Waste management and recycling: electronic waste recycling and sustainability practices

We can’t cover all of these topics in just one piece, so we decided to look at the players behind modular and pre-fabricated data centers, the insurance providers for data centers and electronic waste recycling.

Modular and Pre-Fabricated Data Centers

Who knew that modular and pre-fabricated data centers existed? After a quick search on our deal-sourcing platform we found hundreds of companies in the modular and pre-fabricated data center space that are flourishing. For any investors looking to jump on the trend, it’s worth noting that the top results in this space are all private companies.

The top companies that came up in the United States when searching for modular and pre-fabricated data centers? It turns out that not only are modular data centers alive and well, but even floating data centers exist.

Here’s a number of the modular and pre-fabricated data centers that our algorithm surfaced as most relevant in the United States.

  • Data Center Delivered: Private company, based in New York, NY, founded in 2011, 51-100 employees
  • Server Domes: Private company, based in Portland, OR, founded in 2014, 1-10 employees
  • Data Specialties: Private company, based in Buena Park, CA, founded in 1991, 11-50 employees
  • TECFusions: Private company, based in Tampa, FL, founded in 2023, 50-100 employees
  • Novva: Private company, based in West Jordan, UT, founded in 2020, 11-50 employees
  • Nautilus Data Techs: Private company, based in Pleasanton, CA, founded in 2013, 11-50 employees

To get a more comprehensive understanding of these companies’ standing, it’s always useful to look at their comparables. Here’s what we find when viewing the comparables for our top company, Data Centers Delivered.

As you can see – with the exception of the third company that went through an acquisition – all of the companies show strong growth and have estimated valuations in the billions. It’s a strong space.

Insurance Providers for Data Centers

Just like any other business, it’s important to insure data centers against risk. Risks range from physical damage to data breaches to managing harmful substances. However, you can’t use a regular insurance company to cover a data center. Instead, data centers need specialty providers that understand the unique risks and liabilities associated with their companies.

When searching for specialty insurance providers that cover data centers, our top results include the following companies:

  • Insureon: Private company (subsidiary of Hellman & Friedman), Chicago, IL, founded in 1997, 101-250 employees
  • Big Insurance, Private company, Emmett, ID, founded in 1981
  • BiBerk, Private subsidiary of Berkshire Hathaway, Omaha, NE, founded in 2015, 101-250
  • Volaris Insurance Group, Private subsidiary of Charlesbank Cap Partners, Tampa, FL, founded in 1986, 11-50 employees
  • At-Bay, Private company, San Francisco, CA, founded in 2016, 251-500 employees, considered a unicorn and projected to need funding in the next six months

Looking at the comparables for Insureon, this appears to be a quickly growing area when you look at the median EBITDA and the estimated valuation of the comparable companies.

And if you go into our platform, you’ll find that Q3 2024 treated these companies well. The publicly recorded revenue include the following for each of these companies:

  • CNA Financial: $3.6B in Q3 2024
  • Kemper: $1.2B in Q3 2024
  • Bowhead Specialty Holding: $116.7M in Q3 2024
  • Arthur J Gallagher Co: $2.8B in Q3 2024

Electronics Recycling for Data Centers

Recycling on its own has been a hot topic in private equity, so recycling at data centers sounds like a promising sector that’s likely in growth mode. Using our search feature, here are the top companies we found that specialize in electronic recycling specifically for data centers.

  • Ewaste: Private company, based in Victor, NY, founded in 1995, 101-250 employees
  • R3eWaste: Private company, based in Phoenix, AZ, founded in 2015, 11-50 employees
  • Data Center Recycler: Private company, based in Arvada, CO, founded in 2012, 11-50 employees
  • All Green Electronics Recycling: Private company, based in Irvine, CA, founded in 2008, 51-100 employees

Rather than highlight comparables here, we thought it would be interesting to see who is participating in acquisitions in the electronic recycling sector. Here are the top several companies that came back on a worldwide basis.

Of course, this is just a tiny peak behind the curtain of the many, many sub-industries that support data centers and some select information about them.

Interested in learning more about how you can make the most of the data center boom? Reach out!