Transition Ventures Raises $150M for AI Infrastructure
Transition Ventures, the early-stage investment firm co-founded by David Helgason, has successfully closed a $150 million Fund II, increasing its total assets under management to over $300 million. This fund marks a strategic pivot from its original climate-focused investment thesis to concentrate on what Helgason terms ‘physical AI’—startups that are focused on rebuilding real-world infrastructure using artificial intelligence.
The New Focus: Physical AI
The global market for physical AI is projected to grow significantly, from $81.6 billion in 2025 to an astounding $960 billion by 2033, according to Grand View Research. This shift comes in the wake of Transition’s experience with Running Tide, an ocean-based carbon removal company that collapsed due to insufficient demand in the voluntary carbon market. Helgason described the experience as challenging but has since redefined Transition’s investment strategy.
Founded in 2021, Transition Ventures initially utilized the Planetary Boundaries framework for its investments, but Fund II aims to address the urgent energy demands created by the AI boom, which has led to an increased need for energy solutions. Helgason states, “The classic VC model of backing more of the same, incremental improvements, has run out of road. Founders shouldn’t have to choose between a fund that can help them scale and one that aligns with their values.”
Portfolio Highlights
Transition’s new fund backs several innovative companies, such as:
- Olix: A London-based photonics computing startup aiming to develop optical AI chips that outperform existing technologies.
- Seneca: A San Francisco-based company specializing in autonomous wildfire suppression drones.
- Applied Atomics: Focused on small modular nuclear reactors for powering data centers efficiently.
- Upway: A platform for refurbished e-bikes, showcasing the firm’s commitment to sustainable transport solutions.
Competitive Landscape and Future Outlook
Transition Ventures now competes with firms like Breakthrough Energy Ventures and Lowercarbon Capital, which concentrate on climate and energy technologies. However, Transition’s unique approach broadens the scope beyond just climate impact to include critical AI infrastructure. As the deep tech funding landscape continues to evolve, the question remains whether this pivot is a genuine strategic evolution or a necessary concession to shifting investor appetites.
Overall, Transition Ventures’ commitment to solving real-world challenges through innovative technologies positions it to make a significant impact in the evolving landscape of AI and infrastructure.
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