SuperSeed launches physical AI seed fund with £50m commitment from BBB

Venture capital firm SuperSeed has launched a new seed-stage fund focused on “physical AI”, backed by a cornerstone commitment of up to £50m from the British Business Bank.

SuperSeed Fund III will invest in early-stage B2B artificial intelligence and software-as-a-service (SaaS) startups applying AI technologies to physical industries such as manufacturing, energy, construction and autonomous systems.

The British Business Bank has made its commitment through its Enterprise Capital Funds (ECF) programme, which aims to increase the supply of equity finance to early-stage UK companies with strong growth potential. The fund has also been accredited by the UK’s National Security Strategic Investment Fund (NSSIF), as was SuperSeed’s previous fund.

As the largest investor in UK venture and growth capital funds, the British Business Bank provides cornerstone commitments to help funds reach their first close and scale their investment strategies.

SuperSeed’s new fund will target seed-stage companies developing software platforms, algorithms and control systems designed to make industrial infrastructure more intelligent. The firm said it would invest across the full technology stack, including both software and integrated hardware solutions.

SuperSeed was founded in 2018 by former technology entrepreneurs Mads Jensen and Dan Bowyer. The firm has launched two previous funds and has invested in 38 companies to date.

Mads Jensen said the fund would focus on businesses applying AI to industries where the UK already has strong industrial capability.

“The companies we back are deploying AI into manufacturing lines, energy infrastructure and construction sites, sectors where the UK has genuine industrial strength and strategic interest,” he said.

“Two years ago most of these were pilots. Today, they are live production systems with paying enterprise customers. That transition is what physical AI means in practice, and it is why the British Business Bank has returned as our cornerstone investor for a second fund.”

Christine Hockley, managing director and co-head of funds at the British Business Bank, said the investment was expected to help attract additional private capital.

“SuperSeed has a strong track record of identifying innovators and a deep understanding of how AI can be applied to sectors of national strategic importance,” she said.

“This cornerstone commitment will crowd in additional private capital, backing innovative companies developing applied physical AI systems that drive and optimise efficiencies in critical business infrastructure.”

Mark Sims, senior director for funds at the British Business Bank, added that the focus on physical AI aligned with efforts to strengthen the UK’s technological capabilities.

“SuperSeed’s focus on physical AI aligns strongly with our ambition to strengthen technological capability in sectors that are central to future economic growth,” he said.

The Bank’s Enterprise Capital Funds programme has backed 52 funds to date, representing more than £2.7bn of finance for early-stage businesses across the UK.