SuperSeed’s new VC fund to power industrial Physical AI startups

0:00Hello and welcome to PathFounders, the new tech media brand for entrepreneurs, investors, investors, and operators with me, Mike Butcher. AI is leaving the chat window and entering the real world, showing up in factories, energy systems, construction sites and autonomous infrastructure. We're talking about AI systems designed to navigate messy, unpredictable environments such as in industrial settings. And that shift, of course, is starting to reshape how capital is allocated. In the first three quarters of 2025 alone, physical AI, so-called scale-ups, raised$16 billion, according to Crunchbase.

0:40And physical AI, as it's called, is even getting physical in the shape of humanoid robots. The market for humanoids is currently valued at$2 to$3 billion and is even projected to surge to$40 billion by 2035. So today we're looking at a fund that hopes to sit right at the center of that transition of AI into the physical world, backing AI startups in, for instance, industrial infrastructure. Superseed is a London-based VC firm founded by former operators, and one of them is joining me now, Dan Bauer, co-founder of Superseed. Dan, welcome to PathFounders. Bada-bing, bada-boom, loving your intro, Mike.

1:22Great to be here. Thank you for having me. You're welcome. Well, we'll get to the reason why we're having you on the pod right today. But before we get into this, SuperSeed was founded by you and Mads Jensen in 2018. You're both former operators. Do you want to just give us a little quick potted history of SuperSeed and how it got started and where it is today? Sure, sure, sure. So Mads and I met about nearly 11 years ago. We were working with a mutual friend, helping him with a small portfolio of companies. We both just sold a couple of businesses and we were helping him. I was running a couple of the businesses and trying to do two quick turnarounds within the portfolio.

2:04Mads was working with Simon kind of behind the scenes on the strategic side. And we got chatting and working, as you do, over a pint. And we were kind of just musing and we were angeling. We just sold. So we were just messing around in the startup world. And he said to me, why don't we set up a fund? So I think between us, we've got maybe 60, 70 angel investments. And it just felt like a natural progression, founding and then kind of learning your craft and then angel investing. Okay, this works, this doesn't. And then having a bigger pot of cash to go and do that. And we looked at the market and it just became absolutely apparent that no one in Europe really had an operator background.

2:44No one had started a business. I think the stats at the time, they're better now, but the stats at the time were whatever six seven eight percent of vc firms in europe and the uk and i do include uk and europe still um don't have no operator experience have no founding experience i think how can you invest in pre-rev pre-seed seed startups without even knowing how the machine works and then we looked at the american models you look at andreese and their platforms and how they supported startups and now they help them commercialize and open black books and that's what we did so we put five million quid aside mainly our own money did fund one went okay this kind of works invested in 16 companies very small tickets two three four hundred k very early in the days everything's doubled now so all the quantums you can just pretty much double but in those days it was you know you could take a fairly substantial slice of a business for three four hundred k and then we raised 50 and then we're about to close another 80 maybe slightly more than 80 in our third fund which we're which we're just closing now so that's the i don't know if that was too long or too short but that's the that's the that was the genesis right yeah no it's interesting you went from operating to angel to vc i mean as you say in europe especially there's very few operators in vc i suppose the big standouts uh were the original gangsters like nicholas zenstrom and brent hoberman but um but yeah very few and far between and although more now more now which is great and you see more recycling aren't we so i mean and you're on that you're on the sharp edge of all that you're seeing all this recycling going on and i think 25 percent of 25's unicorns were in europe forget where they're listed for a minute but they're still in europe doing stuff and recycling and spinning out and i think that's just fabulous love it yes well uh yeah tarvit from originally from transfer wise then wise now at plural so you know we're getting these operators back into into the system so it's important as you said you just launched your third fund with a 50 million pound cornerstone commitment from the british business bank you're aiming did you said for 80 eventually well i think we're gonna go i think we're gonna go past 80 we're capped at 100 so it'll be it'll be 80 to 100 somewhere great and i i was really interested i wanted to dig into this a little bit more with you uh i know that you're accredited accredited now by the uk's national security strategic investment funds uh you've you're very into the industrial applications of AI and physical AI.

5:12Tell us a little bit about this, the thesis that you're doing with the funds, this physical AI mixed with, you know, physical environments, and also there's clearly national security and defense implications. Yeah, I mean, it's a little bit of a blurry language set, as in how do you define physical AI? How do you define AI in the real world? So the way that I define it, and I think everyone has a slightly different turn of phrase. To me, it's the intelligence layer that sits between all of these incredibly smart foundational models and the real world. And the real world, to me, in business being manufacturing, supply chains, energy, construction, all of what have historically been extremely hard areas to automate, digitize, step into the modern world.

6:04and now we have these incredible toolkits that will allow us to do that and we see so many news stories about AI but really it's all the kind of the cool sexy stuff upstream which is whatever Anthropic has done or the latest fight between Sam Altman and this and what's Daria and what's Gemini slightly leapfrogging opus in the benchmarks and we hear all these things and they become even My mum, who's in her 80s, will talk to me about AI. So it's become very much part of the common language. But really, we haven't actually applied it in business, let alone applied it in business within what I call physical AI, which is this intelligence layer between these incredibly smart toolkits and getting them behind the scenes, transforming how we make a glass or ship a suit or, you know, run a business.

6:58There's a whole raft of actual application of technology that's still to come through, even though it feels like everything is AI. It's not. And we haven't really, it hasn't really embedded in our workflows yet, let alone into the deeper, darker sides of our business worlds, which are these energy provision and management and construction and how we do that on sites and how we build buildings or how we run factories or supply chains and all that stuff so that's the thesis of i mean the other thing just to just to say to you is and you probably know this is we were doing this back when ai was ml so 10 years ago when mads and i started investing it was exactly the same thesis it was what you know it was ai machine learning in business and you know sass then I guess and now it's the model has slightly changed but it's exactly the same thesis how can you get the smartest technology behind the scenes to improve how what we call make move and manage it's the it's the really difficult bits the the tricky bits where it's normally a guy with a clipboard or a spreadsheet stuck on a you know windows 98 laptop on in the field that how do we automate that that horrific stuff yes and we saw just uh the other day a new company in the UK called Isambard raise 50 million to do AI in component manufacturing and a very interesting model of franchise system.

8:25So it's like, you know, AI is obviously trying to get down and down and dirty into those kind of manufacturing settings. And also, I know that you are looking at things like energy and re-industrialization. You know, tell us about the sort of the differences, Because it's going to be a difficult, different ride for you, say, from a VC investing in pure SaaS. And, you know, are you do you feel you've got everything you need to go deep into these these different environments? Well, I mean, it's a really hard question to answer. Do we have everything we need? I mean, we are still in even with 100 million fund, we are still minnows.

9:09right if you look at the states everything is 10x across the pond we were looking at whatever the latest anthropic and open ai raises and then you look at how much money has been deployed in the whole of europe forget ai forget forget the sectors forget the the investing machinery i mean we we're about our entire european investment quantum is pretty much one foundational models series c round I mean, we just don't have the capital in the UK and Europe. It's just, we have been just, every time we feel like we're catching up, and we were growing four times as fast as the States, we've just been punched in the face.

9:51And if you look at all the VC firms over in the States, they're not even VC firms anymore. Sequoia's, the Andreessen's, they're RIAs, they're registered investment advisors. So they can go from early, early stage, own the field, and go all the way into public markets and they can follow you all the way through and they can hedge, they can do a little bit of PE, a bit of M &A, so they can do much more than the venture model allows. So Europe has got a hell of a lot of catching up to do. I was looking at Accel. Somebody was posting about Accel today, investing in Lovable, Legora. I've forgotten the other two.

10:28There were four big firms, but then you look at how many investments Accel have done in that same period of time. they've done like 140 they do like the best part of 100 a year you can't you just can't we just don't have that that kind of firepower as a as a venture firm and across europe i do believe that europe has been woken i do believe that trump has given us permission effectively to go solo and go alone and he's woken the beast we still need pension capital we still need all of these savings pots enabled like you have 401ks in the states we still need the the institutional and the back office capital to come through but supersede as an early stage physical ai investment vehicle you know we've got so much to do um how much can we do i mean it's we're going to do 30 companies with this 100 mil it's you know we're not going to change the world but we are working in areas that are extremely important for the UK.

11:30So getting our infrastructure. And if we just get one or two out of that 30 to make meaningful inroads into how we create energy networks or how we transform the construction industry or the planning cycle or supply logistics for food and ag tech, if we just get one or two, and there are other firms who are obviously now jumping on the same bad wagon of resilience, defence, infra, physical AI, And I kind of bucket them all a little bit in the same bucket. Not quite, but in that same bucket. And we get the follow-on capital, which isn't just the Yanks, so the series ABCs and beyond. We're going to, I mean, we have to do, we have no choice.

12:08Friendshoring, onshoring, reshoring is our future. Everything else has been thrown up in the air by Trump and Russia, Ukraine, and Israel, Gaza, and now the states in Iran. It's just been thrown up in the air. So we need to protect our borders and our infra and our energy supply and our food supply. So I want to make sure that we are having a meaningful impact in all of those worlds. I totally get it. And there's no getting away from what's going on geopolitically right now. But in the cold light of day, let me ask you, is sovereign technology a thesis? Is it a category or is it a kind of a meme almost?

12:49I think it's an energy and we can be either negative, derisory, pejorative about the term or we can embrace it. Being Brits will probably be the former, will probably be, you know, cynical miseries about it. I still believe that the movement and the energy underneath pervades and it will because what's great is that we're speaking to LPs, to our investors in our funds now and they are having much more emotional conversations than just financial or return profile conversations so they want to talk to us about right we need to we need to support this we need to step up we need to get involved we need to get engaged and it and that's being an emotional creature i'm not i'm not a pure vc being an emotional that's music to my ears um so it isn't a thesis, I think it's an energy or a broader bucket of feeling towards something.

13:46And then you can pick your strategy or thesis underneath. So many people are now getting purely into defense, including kinetics, which is unusual. I mean, you've seen in Germany, even LPs like Porsche, who were like, no guns, no bombs, no missiles, have absolutely, you know, gone 180. Same with Deutsche Telekom and a few. And I don't know so much on the UK side, but I think that was almost okay anyway. But in Germany, that was very rare. And they've gone, nope, 180, we are now all in, whether it's bombs, kinetics, drones, whatever we're in. And I know that that's a pretty ugly and sensitive conversation, talk about things that kill people.

14:28But it is the world that we live in, and there is a brutal reality around that. So I think to answer your question, Sovereignty is the broad bucket, but there will be these kind of vertical, more vertical thesis strategies that will apply like physical layer or resilience or defence or wherever you live. Well, it's very interesting, isn't it? And I mean, the geopolitics are inescapable. Leave us with leave us with a kind of a takeaway about your your ideas about where this goes. Are you going to be investing in some humanoid robots, for instance? I'm not that bullish on humanoid robots. I don't follow Elon's three robots to every human.

15:14I don't think that's where robotics will end up. I think where robotics will end up is in factories. Have you seen the half-humanoids where they've got no legs and they're just arms doing stuff? and you've got the the non-human so the very very functional very vertically specific robotics that you wouldn't know and they're they're they're robotic arms yeah they don't look they you know they don't they don't look like um optimus they they're just they're just functional things that live on a factory line i think that's where i'm not convinced that we'll be living in iRobot where you know I'll send a message to my maid to go and you know do the laundry or fill the dishwasher maybe I'm not quite there yet I haven't quite jumped the shark so no I mean where we invest is in the is in the intelligence layer that may control aspects of robotics or you know federated learning that will allow them to communicate on the edge or other aspects we won't do the physical hardware the Chinese are doing a fantastic job of that and there are some some UK provision of that some European provision of that but I'm not I'm not massive on on the humanoid robotics but I do believe that there is a there is going to be I mean we've got what 50 60 ,000 manufacturing job openings in the UK alone I mean how many in the states I don't know so I mean when Trump is going to bring the manufacturing jobs home like dude there's look at the job openings no one wants these jobs now so there is i think there is a lot to be done and we are going to see incredible leaps in efficiency and productivity and how we get things made and how we get them moved or the logistics that run them and that i think is an incredibly exciting thing to watch and then we have to be very very conscious and very careful as to what that means for jobs and what that means for the for the human on the other side of that equation which is Not my job, but it's something I'm very conscious of.

17:16Yes, you're absolutely right. And we're going to have to watch what happens with the roboticisation of society. Perhaps it might even help us out to some extent, especially with the ageing populations and what have you. It would be remiss of me to cut this off without mentioning your excellent podcast, Upside, which I'm a great fan of and a great listener to. And yeah, so do you want to be the all in for Europe? Madster is my business partner. He's desperate to be the all in for Europe. I just use it as an excuse to find, meet and understand and learn about the most incredible things that are going across the world, but obviously focusing in on Europe and European venture startups investing, which is what Upside is all about.

18:08Mads would love to be who would he be he'd want to be Freeberg who's the science guy I think Mads would love to take that and I think he sees me as a Calacanis idiot and that's fine you know yeah I'm not a massive fan personally but I think some of their opinions are unforgivable so no is the short answer but yeah I think Mads would be going well I've encountered Calacanis a few times myself and I think you're definitely a different character there you go that way um well dan bauer who's the co-founder of super seed thanks so much for joining path founders