British bank backs SuperSeed Physical AI fund with cash

The British Business Bank has made a cornerstone commitment of up to GBP £50 million to SuperSeed Fund III, a seed-stage venture fund focused on what the firm calls "Physical AI" in sectors including manufacturing, energy and construction.

The commitment was made through the British Business Bank's Enterprise Capital Funds programme. Fund III has also been accredited by the UK's National Security Strategic Investment Fund, as was SuperSeed's previous fund.

Fund III will target early-stage business-to-business companies developing AI software and related systems used in physical and industrial settings. The fund plans to invest across technologies ranging from software platforms and algorithms to control systems and integrated hardware.

Public backing

Owned by the UK government, the British Business Bank invests in venture and venture growth capital funds. It uses cornerstone commitments to anchor fundraisers and encourage additional investors to participate.

The Enterprise Capital Funds programme aims to increase the supply of equity finance for early-stage UK companies and reduce barriers for venture fund managers raising capital. It includes structures intended to attract private sector investors. The programme has backed 52 funds and represents more than GBP £2.7 billion of finance, according to the bank.

Christine Hockley, Managing Director and Co-Head of Funds at the British Business Bank, linked the commitment to applying AI in industries the bank views as strategically important.

"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, including those of the modern Industrial Strategy," Hockley 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," she added.

Fund focus

SuperSeed was founded in 2018 by Mads Jensen and Dan Bowyer. The firm invests in business software and AI companies and has backed 38 companies across two earlier funds.

SuperSeed says its approach draws on founder experience within the investment team, with each partner having founded, scaled and exited technology companies. The firm works with portfolio companies on commercial strategy, enterprise customer access and sales hiring.

Jensen said recent portfolio activity reflected a shift from trials to operational deployments in industrial settings.

"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. 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," Jensen said.

The British Business Bank previously committed to SuperSeed Fund II in 2022. Mark Sims, Senior Director for Funds at the bank, said the latest commitment aligned with the bank's priorities for technology development and economic growth.

"SuperSeed's focus on Physical AI aligns strongly with our ambition to strengthen technological capability in sectors that are central to future economic growth," Sims said.

"Following our earlier commitment to SuperSeed's Fund II in 2022, we are pleased to continue our support for SuperSeed as it backs founders turning advanced AI into real-world impact across the UK economy," he added.

Portfolio examples

SuperSeed's portfolio includes businesses developing AI products for industrial processes and physical operations.

Ai Build develops generative algorithms and computer vision software for large-scale 3D printing used by aerospace and defence manufacturers. Customer deployments have reduced manual intervention by up to 86%, according to SuperSeed.

OctaiPipe runs federated learning agents on energy-intensive industrial systems. Using real-time thermodynamic simulation, it has reported energy savings of up to 30%. ABB is a strategic investor and distribution partner.

Hive Autonomy builds fleet management and autonomy software for industrial vehicles used in warehouses and construction sites. The software enables multiple machines to be coordinated by a single human operator.

SuperSeed has also backed All3, a residential construction business founded by Rodion Shishkov, who previously built and exited Samokat. SuperSeed said All3 combines AI-driven design software with automated manufacturing and autonomous assembly, enabling housing construction up to 50% faster.

Fund III will focus on seed-stage companies applying AI in physical industries, including manufacturing, energy, construction and autonomous systems.