Robotics and physical AI startups raised $27.6 billion across 1,009 deals in 2025, more than double the previous year’s total, according to PitchBook figures cited by Fortune. Bain Capital Ventures investor Ajay Agarwal says cheaper hardware and better AI are widening the opportunity for machines that work in the physical world.
Watch Desk analysis
What happened
Fortune’s interview with Agarwal looks back at his early bet on Kiva Systems, whose warehouse robots brought shelves to workers rather than sending workers to fetch products. Amazon bought Kiva eight years later for $775 million; Bain told Fortune its investment returned 26.6 times its original amount.
Agarwal now sees a broader opening for robotics. He points to components such as cameras, sensors and batteries becoming cheaper as smartphone and electric-vehicle makers buy them at scale. He also argues that more capable AI gives machines a better chance of adapting to unfamiliar situations and the awkward edge cases that come with operating in the real world.
Why it matters
The story is more than a victory lap for an investor who backed a successful company. The reported funding figures suggest capital is flowing into robotics and physical AI at a much larger scale, while the combination of cheaper components and more capable AI may make some machines more practical to build and deploy. That is a useful shift to watch, though funding totals alone do not tell us which companies will deliver useful products.
Our read
The best part of Agarwal’s argument is its focus on the unglamorous ingredients: a real problem, hardware that can do the job, and a customer willing to use it. AI may help robots handle more of the real world, but a compelling funding round is not the same thing as a dependable machine on a factory floor. The next proof point is whether these bets produce systems that work outside the pitch.
What to watch
- Whether robotics and physical AI funding remains above its 2025 level.
- Which companies turn cheaper components and improved AI into working deployments.
- Whether customers report measurable benefits from robots in warehouses, construction and other physical settings.
Discussion spark: Should investors favour robotics companies solving proven workplace problems, or back ambitious physical-AI ideas before the market is clear?
Sources and evidence
- Source update (9 November 2026, 12:53 UTC)
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