British Business Bank, the UK government’s economic development bank, has invested £50 million in a fund for B2B AI and SaaS startups.

London-based venture capital firm SuperSeed will deploy the capital through SuperSeed Fund III, which targets the application of AI in physical industries such as manufacturing, energy, construction and autonomous systems.

SuperSeed said portfolio companies will build software platforms, algorithms and control systems for industrial infrastructure, along with integrated hardware to deliver complete “physical AI” solutions across the full stack.

The British Business Bank investment comes through its Enterprise Capital Funds programme, which aims to increase the supply of equity capital to early-stage UK companies with long-term growth potential and to lower barriers to entry for new venture capital fund managers. The programme has backed 52 funds to date, representing more than £2.7 billion of finance.

SuperSeed Fund III is accredited by the UK’s National Security Strategic Investment Fund (NSSIF).

The British Business Bank describes itself as the largest investor in UK venture and venture growth capital funds, and says its commitments help companies plan strategy more effectively and at greater scale.

“SuperSeed has a strong track record of identifying innovators and a deep understanding of how AI can be applied to sectors of national strategic importance, including those of the modern industrial strategy,” said Christine Hockley, managing director and co-head of funds at British Business Bank. “This cornerstone commitment will crowd in additional private capital, backing innovative companies developing applied physical AI systems that drive and optimise efficiencies in critical business infrastructure.”

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