Venture capital is experiencing a historic pivot away from software and toward robotics and physical AI, with global investment in the sector jumping from $4 billion in 2019 to $26 billion in 2025. This shift reflects a fundamental change in how investors view technology's future, moving from screens to warehouses, hospitals, construction sites, and beyond.

What's Driving the Robotics Boom Right Now?

Several forces are converging to make robotics an attractive investment category. Hardware components like sensors, cameras, and actuators have become significantly cheaper and more capable. Artificial intelligence now allows robots to move beyond rigid, preprogrammed behaviors and adapt to real-world conditions. Talent from companies like Tesla, Waymo, and Amazon has brought proven expertise in deploying technology outside controlled environments. Additionally, labor shortages and geopolitical pressure to rebuild supply chains have made automation increasingly urgent.

The scale of opportunity is staggering. Companies in the robotics and physical AI space raised more than $23 billion in 2026 alone, demonstrating investor appetite for the category. This represents a dramatic acceleration from just a few years ago, when hardware was considered a liability in venture capital circles.

How Are Top Investors Positioning Themselves in Physical AI?

• Sequoia Capital: The legendary venture firm is backing robotics startups through partners like Stephanie Zhan, who invested in Skild AI, a company developing a general-purpose "brain" for robots across different tasks and applications.
• Bessemer Venture Partners: Jeremy Levine and Talia Goldberg are leading the firm's robotics strategy, backing companies including Waymo, Mind Robotics, Foxglove, and ANYbotics, which makes four-legged robots for industrial inspection.
• Lightspeed Venture Partners: Raviraj Jain is investing in foundation models and AI systems for robotics, including early-stage bets on companies building the software layer that will power next-generation machines.
• DCVC: Matt Ocko, cofounder and managing partner, has positioned the firm as a leader in deep-tech investments, backing companies delivering "existentially necessary and valuable results in the physical world."
• Lux Capital and Red Glass Ventures: Investor Salil Zuberi has backed companies including Applied Intuition and Foundry Robotics, though he warns the space is "overheated, overcrowded, and a bunch of noisy investments are being made."

Sequoia's involvement reflects the firm's broader thesis that robotics represents the next major wave of value creation. Partner Stephanie Zhan, who invested in Skild AI alongside Lightspeed's Raviraj Jain, represents a new generation of investors who believe robotics will be to the next decade what software was to the last.

Are Hardware Investors Worried About Hype?

Despite the enthusiasm, experienced robotics investors are sounding cautionary notes. The rush has attracted what industry veterans call "hardware tourists," investors with little experience in the category who are drawn by hype and may underestimate how difficult it is to build machines that work reliably outside of demonstrations.

"My yellow flags are up. The space is overheated, overcrowded, and a bunch of noisy investments are being made. People will lose money. We are somewhere near the top of the hype curve," said Salil Zuberi, founder of Red Glass Ventures.

Salil Zuberi, Founder of Red Glass Ventures

Some investors are also skeptical about specific robotics trends. Anand Agarwal, who backed Kiva Systems before Amazon acquired it for $775 million in 2012, has publicly argued against humanoid robots. He wrote in a Wall Street Journal op-ed that humanoids would prove to be a "parlor trick" with few practical uses. His portfolio reflects this thesis, focusing instead on warehouse drones and factory automation.

Where Is the Real Opportunity in Robotics?

Investors are increasingly focused on the software and AI layer rather than the hardware itself. Aidan Madigan-Curtis, an investor at Eclipse who previously worked on operations at Apple and Samsara, explained this shift clearly.

"For a long time, the hardware was the hardest part about robotics. The real frontier now is the intelligence layer and building true embodied AI," said Aidan Madigan-Curtis, investor at Eclipse.

Aidan Madigan-Curtis, Investor at Eclipse

This focus on AI models and software explains why investors like Stephanie Zhan at Sequoia and Raviraj Jain at Lightspeed are backing foundation model startups and companies building general-purpose "brains" for robots. The theory is that just as large language models (LLMs) provide the foundation for many AI applications, foundation models for robotics will allow multiple companies to build on the same underlying intelligence layer rather than training each robot from scratch.

Bessemer Venture Partners has framed this moment as robotics' "GPT-2.5 moment," suggesting that models are improving but the gap between impressive demonstrations and real-world deployment remains significant. This framing suggests that the biggest returns may come not from the robots themselves, but from the companies that build the foundational AI systems that power them.

What Does This Mean for the Broader Venture Capital Landscape?

The robotics boom represents a fundamental shift in how venture capital allocates capital. For decades, the industry chased software companies that could scale without factories, supply chains, or physical infrastructure. Hardware was considered a liability. Now, as software growth cools and AI moves from chatbots into the physical world, the calculus has reversed.

Matt Ocko noted that this represents the arrival of "the cool kids" to deep tech, referring to a broader recognition that companies delivering results in the physical world represent some of the most valuable opportunities available. The term "deep tech" itself, which Ocko and Steve Jurvetson coined decades ago, is experiencing a renaissance as investors recognize that the next generation of transformative companies may look more like Tesla or SpaceX than like traditional software startups.

For founders and investors watching this space, the message is clear: the robotics boom is real, capital is flowing, and the winners will likely be those who focus on building the foundational AI systems and software that enable robots to work reliably in the real world, not just in controlled demonstrations.