As global demand for cloud computing, AI, and data processing accelerates, the energy demand for data centers is skyrocketing, now accounting for approximately 1.5% of global electricity usage—a number expected to double by 2030. Addressing this growing energy demand requires breakthrough technologies that can enhance efficiency without compromising performance.
In this interview, we speak with Graham Carey, an energy expert at Emerald, about the firm’s investment in NLM Photonics, a game-changer in data transmission efficiency. Graham shares insights into why this investment matters, how NLM’s photonic solutions stand out, and what the future holds for energy-efficient data centers.
Q: To start, can you share what attracted Emerald to NLM Photonics as an investment opportunity?
Graham: We’re always looking for companies that bring disruptive innovation to critical industries, and NLM Photonics fits that profile perfectly. Data centers are the backbone of our digital economy, but they consume an immense amount of energy. NLM’s technology enables a significant leap forward in energy efficiency for data transmission, which is a critical performance and energy bottleneck for modern data centers. Their approach addresses both performance and sustainability, making them an ideal candidate for our investment portfolio.
Q: Can you elaborate on the specific technology NLM Photonics is developing and why it’s a game changer for data centers?
Graham: NLM Photonics is developing a new class of materials—called organic electro-optic materials—that make it possible to build much faster and more energy-efficient components for the fiber-optic links inside data centers. These materials are used in optical modulators, which are the parts that translate electrical signals into light so data can travel across fiber. What’s exciting is that NLM’s materials can do this with dramatically less power and at much higher speeds than today’s standard technologies. This matters because as data centers—especially those powering AI—get bigger and faster, the performance of these links becomes a limiting factor. NLM’s technology helps remove that bottleneck, enabling faster data movement while also easing the energy burden, which is a growing concern for hyperscalers and infrastructure operators.
Q: Why is investment in companies addressing the data center energy challenge so critical right now?
Graham: The world is undergoing a massive digital transformation, with the rise of AI, cloud computing, and streaming services driving exponential increases in centralized data processing. Data centers now account for roughly 1.5% of global electricity consumption (around 400 TWh), and that number is expected to double by 2030. Without innovation, the energy demand will become unsustainable.
At the same time, regulatory and corporate sustainability goals are pushing for more efficient solutions. Companies are under increasing pressure to reduce their carbon footprints, and data center operators need to find ways to scale operations without proportionally increasing power consumption. That’s why investing in energy-efficient infrastructure, like what NLM Photonics is developing, isn’t just a necessity—it’s a tremendous business opportunity.
Q: How does Emerald assess investment opportunities in this space? What criteria do you look for in a company like NLM Photonics?
Graham: We follow a rigorous evaluation process that considers both technological impact and market potential. First and foremost, we look for companies that are solving real, large-scale problems—like data center energy consumption. The second key factor is the strength of the technology itself. We conduct extensive due diligence to assess whether the company’s solution is truly innovative, scalable, and differentiated from existing approaches.
Beyond the technology, we also evaluate the team. Founders and leadership play a huge role in a company’s ability to execute. NLM Photonics has an exceptional team of experts with deep experience in photonics, semiconductors, and data center infrastructure. Lastly, we assess the commercial viability—whether there’s a strong market pull and a clear path to adoption. NLM checked all of these boxes for us.
Q: Data centers are a competitive space with many emerging solutions. What makes NLM Photonics stand out compared to other energy-efficient data transmission technologies?
Graham: That’s a great question, and you’re right—there’s a lot of innovation happening in data center infrastructure right now. What makes NLM Photonics stand out is the combination of performance, efficiency, and manufacturability. Their materials enable optical modulators that operate at extremely high speeds—think terabits of data per second—and with up to 50% less power than conventional solutions. But just as importantly, NLM’s technology is designed to work with existing silicon photonics manufacturing processes, which means it can be adopted without overhauling how things are built today. In contrast, many other next-gen approaches either don’t scale well, require exotic materials, or come with significant integration headaches. NLM’s ability to deliver cutting-edge performance in a way that fits into the current supply chain is a big part of what sets them apart.
Q: What do you see as the long-term impact of investments like this on the data center industry?
Graham: The long-term impact is profound. As data demand continues to accelerate, the industry must innovate to avoid an energy crisis. Investments in companies like NLM Photonics drive the development and deployment of new technologies that help data centers expand sustainably. Over the next decade, I expect we’ll see a significant shift toward next-generation photonics solutions becoming the standard for high-performance data transfer, especially in AI-focused data centers.
From an investment standpoint, this also represents a tremendous financial opportunity. Companies that provide efficiency gains without sacrificing performance are well-positioned for strong growth. More broadly, these innovations will contribute to achieving global sustainability goals while keeping our digital economy running efficiently.
Q: Finally, for entrepreneurs developing innovative solutions in this space, what advice would you give them when seeking investment from firms like Emerald?
Graham: My advice would be to focus on three main areas. First, be very clear about the specific problem you’re solving and why your solution is superior. Investors are looking for technologies that deliver tangible impact and commercial value.
Second, build a strong team with diverse expertise. Investors place a lot of weight on the ability of a company’s leadership to execute and scale effectively.
Third, demonstrate market traction and a viable path to adoption. Whether it’s pilot projects, strategic partnerships, or early customer engagement, having evidence that the industry is ready for your solution significantly strengthens your investment case.
More on energy at Emerald:
Emerald invests in NLM Photonics to drive energy efficient data center technology
Accelerating Action: Barbara Burger shares CVC leadership lessons in energy
Tech you should know about: the data center energy challenge
Contact us: Contact Emerald Venture Capital | Sustainable Innovation