VCs Pour Billions Into Physical AI As The Next Wave Of AI Investing Takes Shape
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Q1 2023
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Mary Ann Azevedo
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Funding to physical AI companies is booming in 2026.
Venture investors appear to increasingly see physical AI as the next leg of the broader AI boom. Notably, according to a recent article in The Wall Street Journal, many firms known for early bets on software, internet services and social media companies are writing more checks to companies building “physical technologies and materials tied to the artificial-intelligence boom.”
Crunchbase data backs this up.
In the first half of 2026, global venture funding in the space totaled $47.4 billion across 521 deals, per our data. That’s up dramatically — almost 4x — compared to the second half of 2025 when physical AI startups raised $12 billion across 470 deals. It’s also up significantly — by nearly 80% — from the $26.4 billion raised across 436 deals in the first half of 2025.
To give you an idea of just how much more money is going into physical AI companies, here’s a comparison. In the three years spanning 2022 to 2024 combined, venture investors put a total of $41.9 billion into physical AI companies — still several billion less than we’ve seen raised in just the first half of this year alone.
And before we go any further, I should clarify that by our criteria, physical AI includes industries such as robotics, autonomous vehicles, aerospace, drones, industrial automation and sensors.
Noteworthy deals
Several multibillion-dollar megadeals drove the spike in H1 investment. One very large deal in particular accounted for nearly one-third of all venture dollars: Mountain View, California-based Waymo’s $16 billion Series D raised in February. Alphabet, Dragoneer Investment Group, DST Global and Sequoia Capital co-led the financing, which was raised at a staggering $126 billion valuation.
Other companies that have brought in large rounds this year include:
In May, defense tech startup Anduril Industries raised another $5 billion in funding at a $61 billion valuation — double the $30.5 billion valuation it received less than a year earlier.
San Diego-based Shield AI in March landed a $2 billion Series G round co-led by Advent International and JP Morgan Chase. Its valuation jumped to $12.7 billion.
In March, Austin-based Saronic, a defense tech startup focused on autonomous sea vessels, raised $1.75 billion in Series D funding, bringing its total funding to around $2.6 billion. Kleiner Perkins led the round, which set Saronic’s valuation at $9.25 billion — more than double its Series C level in 2025.
Exits
The physical AI space has also produced several notable exits so far in 2026, although activity has been more concentrated in aerospace, defense and drones than in areas like robotics.
SpaceX has been the clear outlier, raising $75 billion in its June IPO at a $1.77 trillion valuation. Other notable public debuts include Herndon, Virginia-based space intelligence company HawkEye 360, which raised $416 million, and Arlington, Virginia-based autonomous drone maker Aevex, which raised $320 million. On the M&A side, one of the most notable deals was Mobileye’s roughly $900 million acquisition of Tel Aviv’s humanoid robotics startup Mentee Robotics, a transaction the company explicitly tied to its push into physical AI.
Investor POV
Ryan Ziegler, general partner at Edison Partners, told Crunchbase News via email that while funding in physical AI has historically been concentrated in robotics and humanoids, defense, and foundational models, he sees the opportunity as much broader. Physical AI, in his view, represents the convergence of software, hardware, sensors and IoT, and services across a wide variety of real-world applications. What is changing, according to Ziegler, is AI’s ability to process data from those systems at such a scale and speed to generate useful operational insights, while the underlying hardware becomes cheaper and more accessible.
“Even our mobile phones now have LIDAR scanners on them,” he noted, “democratizing the ability to map objects and spaces.”
For Edison Partners, the appeal is particularly strong in high-value, traditionally analog industries where physical AI can become mission-critical infrastructure. Ziegler pointed to manufacturing, supply chain, utilities, agriculture, transportation, government, and physical and spatial intelligence as areas of interest. Many of these companies resemble vertical software businesses, he said, with “attractive unit economics, large deal values and multi-year deployments,” while their combination of software, sensors and hardware can generate...