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London-based artificial intelligence start-up PhysicsX has raised $135mn from investors, valuing it at almost $1bn, as it becomes the latest company to benefit from a surge of interest in defence technology.
The six-year-old start-up, founded by two former Formula 1 engineers, uses AI to better design products across the manufacturing and defence industries, such as engine and drone components.
The deal, which has seen it attract funding from Siemens and Singapore state-backed Temasek, comes amid a flood of investor appetite for defence groups as a highly charged geopolitical environment spurs nations all over the world to increase military spending.
“We’ve seen a real inflection and an increased appetite to engage from customers in Europe . . . certainly in aerospace and defence, but also in sectors like automotive and in materials,” PhysicsX co-founder and chief executive Jacomo Corbo told the Financial Times.
“That this is happening across these industries at the same time reflects, I think, a general European and western awakening that it’s time to reindustrialise,” he added.
PhysicsX, which has signed deals with Rio Tinto and Leonardo Aerospace, employs more than 150 people between London and New York.
Corbo — who met co-founder Robin Tuluie when they both worked for the Renault F1 team — said the start-up was aiming to capitalise on renewed demand from European and North American companies looking to maximise manufacturing efficiency.
“One of the things which has changed in Europe is there has been an uptick, an expectation that orders will increase, and this has led to a more aggressive stance in R&D,” he said. “[Companies] are looking to change the way they do engineering which is tied to spending with us.”
The deal, which also included backing from Atomico and Applied Materials, will take total funding raised to $175mn and value it at just under $1bn, according to a person familiar with the matter.
The deal comes after German defence tech group Helsing announced a €600mn funding round this week, led by Spotify founder Daniel Ek’s investment company, valuing it at €12bn and making it one of Europe’s most valuable start-ups. European drone makers Quantum Systems and Tekever were both valued at more than €1bn last month.
Laura Connell, a partner at Atomico, said the PhysicsX investment showed how the company was capitalising on a “tipping point” of technological development.
“Yes, there’s a . . . geopolitical element to what’s going on in Europe, but there is also a broader global conversation about fundamentally how do we do more with less,” she said.
Corbo — who sold his previous start-up data analysis firm QuantumBlack to McKinsey in 2015 — said the company was proud to be European and retain its primary headquarters in London, despite other UK start-ups feeling pressure to move across the Atlantic.
“We see a massive opportunity and imperative for our technology across the European industrials base, and we’ve high conviction that this is the right time to build a company like ours out of Europe,” he added.
