Transition Ventures Closes $150M Fund II to Back AI and the Physical World
TL;DR
London-based Transition Ventures has closed its $150 million Fund II, taking total assets under management above $300 million and pivoting hard into the intersection of AI and the physical world. Founded in 2021 by Unity co-founder and former CEO David Helgason, the firm started life as a climate-focused early-stage fund and has now repositioned around power, AI infrastructure, robotics, industrial systems, critical minerals and deeptech. Fund II will write checks from inception through Series A. The portfolio already includes OLIX (photonics computing hardware reportedly valued at around $1 billion), Applied Atomics (small modular nuclear reactors for data centres), Seneca (autonomous wildfire suppression drones) and Upway (refurbished e-bikes), among others.
Key Takeaways
This is the cleanest "climate fund pivots to AI infrastructure" repositioning we have seen in 2026. Climate as a category has been losing institutional LP appetite for 18 months, while AI infrastructure is consuming every available marginal capital dollar. Transition has not abandoned climate, but it has redefined it as a theme, not a sector, and reorganised the portfolio strategy around the physical bottlenecks the AI buildout is creating: power generation, semiconductors, data centre cooling, critical minerals and industrial automation. That is a smart read of where the capital actually wants to go in 2026, and it preserves the firm's underlying thesis without breaking it.
The "AI plus physical world" wedge is becoming a real category, and Transition is well-positioned for it. The firm's stated frame is investing in companies that "mold atoms, not just bits." That maps directly onto the most contested venture frontier of 2026, where Eclipse, Lux, BMW i Ventures, Convective, Bessemer's deep-tech sleeve and a handful of others are competing for the breakout physical-AI deals. Transition's combination of European footprint, US deal access through its New York office, and a credible operator-led founder story under David Helgason gives it a sharp competitive position in that field.
Doubling AUM in roughly two years is a strong commercial signal. Fund I closed in 2024 at a similar scale and the firm reports it was about halfway through deployment at the time of the Fund II raise. Coming back to LPs with another $150 million in a difficult fundraising environment, on a portfolio that already has at least one likely unicorn in OLIX, tells you LPs were prepared to underwrite the Fund I track record on TVPI mark-ups rather than realized DPI. That is the right LP behaviour at this point in the firm's life, and it gives Transition meaningful capital depth for the next 24 to 36 months.
The bench is unusually deep for a Fund II shop. The Helgason brothers anchor the firm, but the operating muscle sits with Kristian Branaes (Atomico and CPP background), Mona Alsubaei (Union Square Ventures climate fund alum, NY-based), Clara Ricard (Balderton alum, Forbes 30 Under 30 Europe 2024), and David Pacák (Earlybird and Picus Capital background). That is a top-tier emerging-manager team. Most firms at this AUM scale do not have this much pedigree on the bench.
Fund Overview
Fund Name: Transition Ventures Fund II
Fund Size: $150 million
Total Firm AUM: $300 million+
Stage: Inception through Series A
Check Size: Early-stage emerging-manager profile, with reserves to follow Series A breakouts
Geography: Cross-Atlantic, with primary offices in London and New York
Focus: AI infrastructure, industrial systems, robotics, energy (with emphasis on power for data centres including SMRs), critical minerals and broader deeptech, framed under the "AI plus physical world" thesis
Headline Portfolio: OLIX (photonics computing, reported valuation around $1B), Applied Atomics (small modular reactors for data centres), Seneca (autonomous wildfire suppression drones), Upway (refurbished e-bikes), Skye (industrial energy optimisation), Electricity Maps, Invisix (semiconductor metrology)
Why This Fund Matters
Three things make Transition Ventures Fund II worth paying attention to beyond the headline number. The first is the cleanness of the strategic repositioning. The firm could have stayed under the climate label and slowly bled relevance as institutional LPs reweighted, or it could have rebranded entirely and lost the goodwill of its original LP base. Instead it found a coherent reframe, climate as theme rather than sector, that lets it back the same kinds of founders, write the same shape of checks, but pull into an investment universe where capital is currently flowing rather than retreating. That is harder to pull off than it sounds, and most climate funds that have tried it in 2026 have ended up with confused positioning and confused LPs.
The second is the specific edges in the portfolio. OLIX, photonics computing for AI inference, sits in exactly the part of the AI infrastructure stack where European deeptech has a real shot at competing with Silicon Valley, because the underlying photonics IP often originates in European universities and national labs. Applied Atomics, building small modular reactors for data centres, is the canonical bet on the merger of AI and power that has become the most important strategic question in venture this year. Seneca's wildfire suppression drones are a physical-AI bet at the intersection of climate adaptation and defense dual-use. None of these are generic climate bets, and none of them are generic AI bets. They are precisely the hybrid category that the new fund positioning is designed to back at scale.
The third is what it implies about the AI-plus-physical-world category more broadly. If a firm of Transition's scale, with David Helgason's profile and Atomico-, Balderton- and Index-grade investing talent on the bench, is committing $150 million to inception-through-Series-A in this category, it is a signal that institutional LPs are now prepared to underwrite the wedge as a distinct asset class rather than a sub-bet inside climate or inside generalist deeptech. Expect at least two more dedicated AI-plus-physical-world funds to close in Europe before the end of 2026.
The skeptical counterpoint worth airing: climate funds that pivot to AI infrastructure can find themselves competing for the same five deals as every generalist AI infrastructure investor, and the differentiation can collapse fast. Transition will need to keep its physical-world edge sharp, which means continuing to back things like Applied Atomics and OLIX where most generalist AI funds will simply not have the conviction or the technical underwriting to compete. The hardest discipline for the firm over the next two vintages will be saying no to AI infrastructure deals that are technically interesting but do not fit the physical-world wedge.
The Team
Transition was founded in 2021 by David Helgason, the Icelandic entrepreneur best known as the co-founder and former CEO of Unity Technologies, the real-time 3D and gaming platform that went public on the NYSE in 2020 at a market cap north of $13 billion. Helgason brings both the operator credibility of having built a category-defining technology platform and the personal network into engineering-led founders, which has been instrumental in Transition's sourcing.
His brother Ari Helgason sits on the partnership and came from Index Ventures, bringing Series A and B underwriting muscle and an investor network across European and U.S. growth-stage firms. Kristian Branaes joined as a co-founding partner in London and brings a background that combines the Canadian Pension Plan and Atomico, giving the firm rare credibility on both the LP-side institutional perspective and the European venture pattern-matching side. Mona Alsubaei was hired into the New York office shortly after launch from Union Square Ventures' climate fund, anchoring the firm's U.S. presence and bringing a deeptech-and-frontier sourcing network. Clara Ricard joined from Balderton, made the Forbes 30 Under 30 Europe 2024 list, and has become one of the most active early-stage sourcing partners on the firm's European bench. David Pacák rounds out the senior investing team with prior experience at Earlybird and Picus Capital, giving Transition deep coverage of the German and CEE deeptech ecosystems.
This is, candidly, the kind of bench most $300M emerging managers do not have. It is closer in profile to the early-team composition of a firm that ends up at $1B+ AUM by Fund III or IV.
Early Portfolio
The named portfolio reflects the AI-plus-physical-world thesis with precision. OLIX is building photonics computing hardware for AI inference workloads, with a reported valuation in the order of $1 billion. Applied Atomics is developing vertically integrated small modular nuclear reactors specifically targeted at data centres and heavy industry, which sits at the dead centre of the AI-meets-power thesis. Seneca builds autonomous drones for wildfire suppression, using physical AI to address what is increasingly a year-round commercial and government procurement opportunity. Upway, more of a Fund I legacy bet, refurbishes e-bikes at scale and recently announced a $60M Series C. Other portfolio names include Skye, an AI-driven industrial energy optimisation platform aimed at heavy industry decarbonisation, Electricity Maps for grid-aware electricity carbon intensity, and Invisix for semiconductor metrology. The portfolio is consistent: every name is in some way picking up a physical-world bottleneck that AI is either creating or about to disrupt.
What This Means for Founders
If you are building at the intersection of AI and the physical world, Transition Ventures Fund II is now one of the most credible inception-through-Series-A checks you can target in Europe or on the U.S. East Coast. The firm has the bench depth to lead at seed, the capital reserves to follow into Series A, and the operator credibility through David Helgason to be useful at the board level. The thesis fit will be sharp: if your company is genuinely AI-meets-atoms, expect a fast decision. If your company is fundamentally a software AI play with a thin physical-world wrapper, expect a polite pass.
The trade-off founders should understand is that this is a multi-partner firm with strong views and a tight thematic lens. You will not get a 48-hour term sheet. You will get a thorough technical and commercial diligence process, and the partners will want to see real engineering depth and a credible path to industrial customers. For the right founder, that diligence depth is a feature, not a bug, because the partners who sign that term sheet will then go to bat for you with the same level of seriousness during the next financing round.
Fund Momentum Take
This is one of the most strategically coherent fund repositions we have seen in 2026. Transition has solved the climate-fund-in-an-AI-world problem better than almost any peer, kept its underlying physical-world thesis intact, and added genuine depth to the team. The portfolio choices, particularly Applied Atomics and OLIX, demonstrate that the AI-plus-physical-world wedge is more than a marketing line. The firm is actually picking the deals that fit the thesis.
The honest risks: emerging managers at this AUM scale typically struggle with two transitions. First, growing from a $150M fund to a $300M-plus fund requires re-tooling reserves, deal pace, and ownership targets in ways that often catch teams off guard. Second, pivoting positioning in the middle of an investment vintage can confuse founders who were originally pitched the firm under a different thesis. Transition will need to manage both transitions carefully through the next 24 months.
Our bet: Transition Ventures returns to LPs with a Fund III in the order of $250 to $350 million by mid-2028, with at least one realized exit from Fund I providing DPI cover for the raise. OLIX, given the reported valuation arc, is the most likely candidate to deliver that exit through either a strategic acquisition or a late-stage growth round that gives Transition the option to sell secondaries. Watch the Applied Atomics narrative arc closely. If the SMR-for-data-centres thesis hardens into actual customer commitments from hyperscalers, that single position could carry the fund.
Frequently Asked Questions
How large is Transition Ventures Fund II?
The fund closed at $150 million, taking total firm assets under management above $300 million.
What does Transition Ventures invest in?
Companies at the intersection of AI and the physical world, with concentrations in AI infrastructure, industrial systems, robotics, energy (including small modular nuclear for data centres), critical minerals and broader deeptech. Stage ranges from inception through Series A.
Who founded Transition Ventures?
David Helgason, the Icelandic entrepreneur who co-founded Unity Technologies and served as its CEO during the period that established Unity as the dominant real-time 3D and gaming platform.
Who is on the senior investing team?
David Helgason, Ari Helgason, Kristian Branaes, Mona Alsubaei, Clara Ricard and David Pacák, with previous experience between them at Unity, Index Ventures, Atomico, the Canadian Pension Plan, Union Square Ventures' climate fund, Balderton, Earlybird and Picus Capital.
What are the most notable portfolio companies?
OLIX, a photonics computing hardware company reportedly valued at around $1 billion; Applied Atomics, a small modular nuclear reactor company targeting data centres and heavy industry; Seneca, building autonomous wildfire suppression drones; and Upway, the refurbished e-bike platform that recently announced a $60 million Series C. Additional names include Skye, Electricity Maps and Invisix.
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