Silicon Valley's garages have a long history as incubators of technology.

Bill Hewlett and Dave Packard launched Hewlett-Packard in a garage in Palo Alto while Steve Jobs and Steve Wozniak worked on the first Apple computer in a garage in Los Altos. It may be a little early to add Phil Hughes to this list of tech titans, but the beginnings of his firm are similar. Hughes built a new energy efficient system for cooling servers in what may be the 21st Century version of the family garage -- TechShop.

Hardware start-ups are generally an expensive proposition and founders often must seek venture capital funding for to design and develop prototypes and products. But Hughes, a system engineer who also has many years of semiconductor marketing and engineering experience, and co-developer Bob Lipp, a semiconductor designer, eschewed the venture capital route when they decided to build a fanless, liquid cooling system for server and storage systems.

The new system replaces the standard heat sinks and fans in servers with a heat riser, such as a block of aluminum, which draws heat to a thermal layer placed on both sides of the server lid. From there, the heat is moved to a cold plate with circulating fluid running through it.

Removing fans from a server reduces energy needs by between 10% to 40%, depending on the ambient temperature

Hughes said that the energy saved should be at the high end of those estimates when the technology is scaled. For example, Hughes estimated that a 5,000 server deployment could cut costs by up to 44% because of power savings, reduced cooling plant costs and other scaled-back expenses.

Hughes said he has not decided on a next step for the new technology and his company, Clustered Systems Co. But early models of the technology proved strong enough to win a state energy grant, and Hughes this week delivered a 36-server rack to a Sun Microsystems facility for testing under the Chill Off program run by Data Center Pulse, a non-profit group of data center professionals.

(Watch a video of some Hughes' early work on the new technology)

Hughes and Lipp began the project in a home office and garage more than two years ago. They paid the development costs out of their own pockets -- Hughes said the project was likely too small to attract interest from venture capital firms. And, he added, the path to securing venture capital is often "a big distraction. And, of course, you lose control."

The developers were forced to leave their own garage to get access to the tools needed to build the technology. They found help about a mile from Hughes' home at TechShop, a company founded in 2006 to provide product developers with equipment ranging from hand tools to CNC milling machines to 3D printers along with classes on how to use them. The company operates similar to gyms and health clubs, providing members who pay $100 a month with access to the equipment.

"We were in the process of discovery, because neither one of us were officially mechanical engineers, we were both electrical engineers," said Hughes. Nonetheless he said that both of them believed they had enough experience to take the project on.

Hughes said that turning to TechShop is "an excellent way of getting a company going."

For instance, Hughes said he had no experience using a milling machine. As soon as he started working with one, Hughes said with a laugh, he "started cussing almost immediately. There are all sorts of things you can do wrong."

TechShop staff taught Hughes and Lipp to run the machine. And, he noted, they turned to a professional manufacturer firm to put together the racks

TechShop CEO Mark Hatch said the shop attracts serious entrepreneurs like Hughes as well as hobbyists. TechShop is possible because of the falling prices of sophisticated machine equipment. At about $17,000 today, milling machines "are now the cheapest [point] in history," said Hatch. A decade ago, themachines cost some $250,000.

"You can now innovate on disposable income," said Hatch.