Deep Tech's New Frontier: Global VC Funds Target Physical AI and Energy Transition
July 27, 2026, 9:36 am
Two venture capital firms, sharing a name and similar fund sizes, recently amplified deep tech investment. Transition Ventures (US/UK) secured $150M for Fund II, pivoting to "Physical AI." This targets critical infrastructure for advanced AI. Simultaneously, Transition VC (India) launched its $150M Fund II. It champions energy and industrial deep tech. Both firms underscore a global shift. They back tangible, real-world technological solutions. This marks a new era for deep tech venture capital.
Venture capital flows into a new landscape. Two distinct firms, both bearing the "Transition" name, recently closed significant funds. Each raised approximately $150 million for their second vehicles. Their investments signal a global pivot. They target fundamental, physical infrastructure. They back innovation in AI, energy, and industrial technology. This underscores a worldwide drive toward tangible, hardware-centric solutions.
Transition Ventures, a US/UK firm, secured $150 million for its second flagship fund. This oversubscribed fund boosts its total assets past $300 million. David Helgason, co-founder of Unity Technologies, leads the firm. Transition Ventures previously focused on early-stage climate technology. Now, its central thesis is "Physical AI." This mandate uses next-generation machine intelligence. It rebuilds, perfects, and safeguards essential real-world infrastructure.
This strategic shift responds to immense pressure. Generative AI demands exponential compute power. Electrical grids face new, unprecedented strain. Vital material supplies are challenged. Hardware pipelines struggle to keep pace. Transition Ventures offers a direct solution. It targets the "gigawatt-scale" data center bottleneck. Energy grids and computer chip supply chains are now primary problems.
Helgason emphasizes this paradigm shift. "Physical limitations" define the current era. Traditional software-focused venture models have reached a dead end. Transition Fund II invests broadly. Checks range from pre-seed to Series A. It backs deep-tech startups. These firms marry innovative software with physical engineering. The firm operates across the Atlantic. Major hubs include London and New York. Deep tech research moves from Europe to U.S. institutional deployments.
The Transition Ventures team is formidable. David and Ari Helgason bring extensive experience. Kristian Branaes, Clara Ricard, Mona Alsubaei, and David Pacák bolster the team. They possess strong institutional and venture capital backgrounds. Team members have founded or scaled companies. Their collective value exceeds $15 billion. This spans software and deeptech ecosystems.
Their portfolio reflects the "Physical AI" thesis. Olix Computing is a prime example. This photonics computing startup replaces electricity with light. It performs AI calculations with speed. Olix now approaches a $1 billion valuation. Applied Atomics is another notable investment. Ex-SpaceX engineers drive this business. They develop small modular reactors (SMRs). These provide dedicated, zero-carbon nuclear power for data centers. Seneca builds autonomous drone networks. These offer ultra-fast, AI-based forest fire abatement. Invisix specializes in hardware. It focuses on semiconductor metrology. This crucial technology measures and inspects microchips during manufacture. Transition Ventures faced earlier challenges. A climate carbon-removal startup, Running Tide, went bankrupt. The "Physical AI" pivot, however, proved resilient. It resonates strongly with institutional limited partners. The firm reframes climate resilience. Power generation, data center efficiency, and resource use efficiency are now core.
Separately, Bengaluru-based Transition VC also launched its second fund. This fund targets Rs 1,500 crore. This equates to approximately $150 million. Founders Raiyaan Shingati and Mohammed Shoeb Ali lead the firm. Transition VC focuses on engineering-led energy and industrial technology startups. Investments are slated to begin in October 2026. They will span four years. The firm plans to invest $2 million to $5 million in each company. This targets 20 to 23 hardware and deeptech businesses. These operate across the energy demand and supply chain.
Transition VC's Fund II attracts global interest. Institutions, corporate investors, and family offices participate. The firm continues its energy transition focus. It also expands into advanced manufacturing and application engineering. Specific areas include semiconductors, nuclear energy, and geothermal technologies. Next-generation energy infrastructure is also a priority. The firm seeks startups with demonstrated technical feasibility. Early commercial traction is key. However, they need not have achieved product-market fit at scale. Transition VC calls this the "missing middle." Engineering-heavy businesses at this stage often require more funding. Operational support is also crucial for commercial expansion.
Transition VC's first fund closed at Rs 723 crore. It initially targeted Rs 400 crore. Fund I generated impressive returns. It saw an internal rate of return (IRR) of 57%. Multiple on invested capital (MOIC) exceeded three times within three years. Its portfolio includes Emo Energy, a battery technology business. Matel Motion manufactures electric motors. Comminent works on smart-meter communications. CIMWare develops computing hardware. Promethean Energy focuses on industrial decarbonization. Dynolt specializes in power electronics. Hydgen develops hydrogen technology.
These two "Transition" firms operate independently. Their similar names and fund sizes highlight a broader trend. Venture capital is aggressively moving into deep tech. Their distinct geographies and mandates underscore a globalized investment strategy. Transition Ventures addresses global AI infrastructure challenges. Its solutions have wide international applicability. Transition VC, conversely, focuses on India's burgeoning energy transition. It nurtures local deeptech ecosystems. This impacts the national economy with global relevance.
Both firms recognize a critical investment shift. Capital moves beyond pure software plays. It now seeks tangible, physical innovations. This marks a significant market evolution. Deep tech is gaining momentum worldwide. Energy independence drives this trend. Industrial efficiency is another major factor. Climate resilience underpins both imperatives. Semiconductors and nuclear energy feature in both firms' theses. These are foundational technologies. They enable future progress across sectors. The demand for compute power is insatiable. This fuels innovation in novel hardware. It also pushes for sustainable energy solutions. The "missing middle" investment stage, identified by Transition VC, is a global phenomenon. Deep tech requires patient capital. It needs specialized operational guidance to scale. These substantial funds represent significant capital. They flow into complex engineering challenges. They aim to build the future. That future is increasingly physical. It is powered by advanced intelligence. It is designed for resilience and sustainability. Venture capital is indeed evolving. It addresses humanity's grand challenges head-on. These "Transition" funds exemplify this shift. They invest in the fundamental layers of technology. From AI's immense energy demands to India's burgeoning industrial future, capital fuels critical innovation. The global economy demands resilience. It seeks efficiency. It needs sustainable growth. Deep tech is the answer. These firms are paving the way.
Venture capital flows into a new landscape. Two distinct firms, both bearing the "Transition" name, recently closed significant funds. Each raised approximately $150 million for their second vehicles. Their investments signal a global pivot. They target fundamental, physical infrastructure. They back innovation in AI, energy, and industrial technology. This underscores a worldwide drive toward tangible, hardware-centric solutions.
Transition Ventures, a US/UK firm, secured $150 million for its second flagship fund. This oversubscribed fund boosts its total assets past $300 million. David Helgason, co-founder of Unity Technologies, leads the firm. Transition Ventures previously focused on early-stage climate technology. Now, its central thesis is "Physical AI." This mandate uses next-generation machine intelligence. It rebuilds, perfects, and safeguards essential real-world infrastructure.
This strategic shift responds to immense pressure. Generative AI demands exponential compute power. Electrical grids face new, unprecedented strain. Vital material supplies are challenged. Hardware pipelines struggle to keep pace. Transition Ventures offers a direct solution. It targets the "gigawatt-scale" data center bottleneck. Energy grids and computer chip supply chains are now primary problems.
Helgason emphasizes this paradigm shift. "Physical limitations" define the current era. Traditional software-focused venture models have reached a dead end. Transition Fund II invests broadly. Checks range from pre-seed to Series A. It backs deep-tech startups. These firms marry innovative software with physical engineering. The firm operates across the Atlantic. Major hubs include London and New York. Deep tech research moves from Europe to U.S. institutional deployments.
The Transition Ventures team is formidable. David and Ari Helgason bring extensive experience. Kristian Branaes, Clara Ricard, Mona Alsubaei, and David Pacák bolster the team. They possess strong institutional and venture capital backgrounds. Team members have founded or scaled companies. Their collective value exceeds $15 billion. This spans software and deeptech ecosystems.
Their portfolio reflects the "Physical AI" thesis. Olix Computing is a prime example. This photonics computing startup replaces electricity with light. It performs AI calculations with speed. Olix now approaches a $1 billion valuation. Applied Atomics is another notable investment. Ex-SpaceX engineers drive this business. They develop small modular reactors (SMRs). These provide dedicated, zero-carbon nuclear power for data centers. Seneca builds autonomous drone networks. These offer ultra-fast, AI-based forest fire abatement. Invisix specializes in hardware. It focuses on semiconductor metrology. This crucial technology measures and inspects microchips during manufacture. Transition Ventures faced earlier challenges. A climate carbon-removal startup, Running Tide, went bankrupt. The "Physical AI" pivot, however, proved resilient. It resonates strongly with institutional limited partners. The firm reframes climate resilience. Power generation, data center efficiency, and resource use efficiency are now core.
Separately, Bengaluru-based Transition VC also launched its second fund. This fund targets Rs 1,500 crore. This equates to approximately $150 million. Founders Raiyaan Shingati and Mohammed Shoeb Ali lead the firm. Transition VC focuses on engineering-led energy and industrial technology startups. Investments are slated to begin in October 2026. They will span four years. The firm plans to invest $2 million to $5 million in each company. This targets 20 to 23 hardware and deeptech businesses. These operate across the energy demand and supply chain.
Transition VC's Fund II attracts global interest. Institutions, corporate investors, and family offices participate. The firm continues its energy transition focus. It also expands into advanced manufacturing and application engineering. Specific areas include semiconductors, nuclear energy, and geothermal technologies. Next-generation energy infrastructure is also a priority. The firm seeks startups with demonstrated technical feasibility. Early commercial traction is key. However, they need not have achieved product-market fit at scale. Transition VC calls this the "missing middle." Engineering-heavy businesses at this stage often require more funding. Operational support is also crucial for commercial expansion.
Transition VC's first fund closed at Rs 723 crore. It initially targeted Rs 400 crore. Fund I generated impressive returns. It saw an internal rate of return (IRR) of 57%. Multiple on invested capital (MOIC) exceeded three times within three years. Its portfolio includes Emo Energy, a battery technology business. Matel Motion manufactures electric motors. Comminent works on smart-meter communications. CIMWare develops computing hardware. Promethean Energy focuses on industrial decarbonization. Dynolt specializes in power electronics. Hydgen develops hydrogen technology.
These two "Transition" firms operate independently. Their similar names and fund sizes highlight a broader trend. Venture capital is aggressively moving into deep tech. Their distinct geographies and mandates underscore a globalized investment strategy. Transition Ventures addresses global AI infrastructure challenges. Its solutions have wide international applicability. Transition VC, conversely, focuses on India's burgeoning energy transition. It nurtures local deeptech ecosystems. This impacts the national economy with global relevance.
Both firms recognize a critical investment shift. Capital moves beyond pure software plays. It now seeks tangible, physical innovations. This marks a significant market evolution. Deep tech is gaining momentum worldwide. Energy independence drives this trend. Industrial efficiency is another major factor. Climate resilience underpins both imperatives. Semiconductors and nuclear energy feature in both firms' theses. These are foundational technologies. They enable future progress across sectors. The demand for compute power is insatiable. This fuels innovation in novel hardware. It also pushes for sustainable energy solutions. The "missing middle" investment stage, identified by Transition VC, is a global phenomenon. Deep tech requires patient capital. It needs specialized operational guidance to scale. These substantial funds represent significant capital. They flow into complex engineering challenges. They aim to build the future. That future is increasingly physical. It is powered by advanced intelligence. It is designed for resilience and sustainability. Venture capital is indeed evolving. It addresses humanity's grand challenges head-on. These "Transition" funds exemplify this shift. They invest in the fundamental layers of technology. From AI's immense energy demands to India's burgeoning industrial future, capital fuels critical innovation. The global economy demands resilience. It seeks efficiency. It needs sustainable growth. Deep tech is the answer. These firms are paving the way.