How Israel’s early-stage funds back Physical AI, semiconductors and AI infrastructure, and how founders can compare them.
TL;DR
- Over the past five years, 745 software companies in the U.S raised more than $30 million. In robotics: 42. That is roughly 18 times fewer funded companies.
- The Israeli Physical AI map lists 125 startups spanning robotics, autonomous systems, sensing, and industrial automation, with over $10 billion raised collectively.
- Grove Ventures, StageOne, 10D, Hetz Ventures and TLV Partners back early-stage Israeli technical founders, each with a different stage and sector focus.
- Grove Ventures is an Israeli early-stage VC firm with more than $500 million under management that invests in Physical AI, AI Infrastructure and Compute, Semiconductors, Energy, Healthtech, Enterprise AI and Vertical AI.
Several Israeli early-stage funds invest in technically complex companies, including Grove Ventures, StageOne Ventures, 10D, Hetz Ventures and TLV Partners. They differ in their investment stages, technical expertise, track records, and ability to support founders through complex development and commercialization challenges. The Israel Innovation Authority counts fewer funds investing in Israeli deeptech in early 2025 than in 2017 to 2022, so founders building Physical AI systems, chips or compute infrastructure should check each fund’s record before they pitch.
What counts as a deeptech startup in Israel
A deeptech startup is a company built around a significant scientific or engineering innovation, often involving complex R&D, specialized expertise, and longer development cycles. In Israel, this includes semiconductors, photonics, quantum computing, energy technologies, AI infrastructure, Biotech, advanced Healthtech, and Physical AI, which enables intelligent systems to perceive and act in the physical world.
Israel ranks fifth in the world for deeptech fundraising from 2019 to 2025 and first outside the United States, and deeptech accounted for about 36 percent of all capital raised by Israeli tech companies in that period, according to the Israel Innovation Authority. These companies face extended R&D cycles and must validate complex technologies and commercial demand before they show meaningful revenue.
How early-stage funds back Physical AI and frontier deeptech
Early-stage deeptech investors assess both technical feasibility and market potential, often before either is fully proven. They look at whether the technology offers a clear advantage, what it will take to bring it to market, and how the company can attract customers and future funding. For companies that require significant capital, development milestones and long-term funding needs are especially important.
Grove Ventures’ portfolio reflects this approach across several deeptech sectors. In semiconductors and AI infrastructure, Grove led an $8 million funding round for Teramount in 2021 and continued backing the company through its $50 million financing in 2025, before its acquisition by Molex in 2026. Teramount developed optical connectivity technology for AI chips and data centers. Grove also invested in Majestic Labs, which announced more than $100 million in funding in 2025 to develop memory-centric AI computing systems designed to overcome the memory limits that constrain large AI workloads.
Grove’s investments also extend to the power challenges facing AI infrastructure. In 2026, it participated in Niv-AI’s $12 million seed round to develop technology that optimizes power usage in data centers. Grove also led a $7 million seed round for LAVA, which develops advanced energy technologies for power generation and efficiency, with data centers among its target markets. Grove Managing Partner Lior Handelsman serves as LAVA’s Chairman of the Board, reflecting the firm’s hands-on involvement beyond its investment.
In Physical AI, Grove’s portfolio includes Limitless Labs, NoTraffic, Wiliot and OneLayer, spanning AI-powered manufacturing, smart transportation, sensing technology and connected industrial systems. Across these sectors, Grove has a track record of investing early and continuing to support companies through later funding rounds.
Grove’s interactive guide on how AI is reshaping global tech infrastructure breaks down the challenges and opportunities across data centers, cooling, networking and energy layer by layer.
Why deeptech capital is harder to find
The main risk for Israeli deeptech founders is a thinning investor base. According to the Israel Innovation Authority, about 400 funds invested in Israeli deeptech each year from 2017 to 2022. That fell to about 280 in 2024 and about 170 through August 2025. The Authority expects the 2025 figure to rise once the full year is counted. While Israel’s overall tech fundraising recovered in 2025, the number of rounds under $10 million fell to its lowest level in a decade, highlighting continued pressure on early-stage funding.
Founders with long development cycles can check whether a seed investor will lead, reserve follow-on capital and bring in later-stage co-investors.
Grove’s Israeli Data Center Infrastructure Map maps over 70 Israeli startups across six critical infrastructure layers, including compute, storage, connectivity, cooling, energy, and orchestration.
How Israeli early-stage funds compare on deeptech
| Fund | Stage focus | Deeptech-related focus | Public data point | Why it matters for founders |
| Grove Ventures | Pre-seed and seed, with continued support through later rounds | Physical AI, Semiconductors, AI infrastructure and compute, Energy, Healthtech, Enterprise AI, Vertical AI | $500M+ under management; investments in Majestic Labs, Niv-AI, Limitless Labs and NoTraffic; Teramount acquired by Molex in 2026 | Combines early-stage conviction with partners’ firsthand experience building and commercializing complex technologies, and hands-on support across technical and business challenges |
| StageOne Ventures | Inception, first check | AI infrastructure, cybersecurity, Physical AI, vertical AI | $165M Fund V; AUM over $650M | First-check investor for companies at inception |
| 10D | Early-stage | Deep technologies across sectors | $185M early-stage fund plus $60M opportunity fund | A separate opportunity fund allows for additional investment in portfolio companies as they grow |
| Hetz Ventures | Seed, typically leads | Cybersecurity, AI, software infrastructure | $140M Fund IV; average checks of $5–7M | Focuses on AI and data infrastructure software and cybersecurity |
| TLV Partners | Early-stage | AI, developer tools, cybersecurity, biotech | $250M Fund V; initial checks of $4–8M | A broad technical mandate with stated check sizes |
What this means for founders
Founders should look for investors who understand the specific technical and commercial challenges of their sector. A semiconductor startup may need investors who understand chip development, manufacturing, and commercialization. An AI infrastructure company benefits from investors familiar with compute, memory, power, and connectivity, while Physical AI founders need partners who understand both AI and real-world deployment. Across these sectors, relevant operating experience and the ability to support companies through long development cycles can make a meaningful difference.
Before pitching, check whether the fund leads at your stage, whether it has followed on in comparable companies, and which partner has relevant domain experience.
Building a deeptech company and preparing for your first round? Grove’s Founder OS offers practical tools for early-stage founders, including the Investor Check to run due diligence on any investor before you sign, a Pitch Deck Evaluator, and a Cap Table Simulator to model fundraising scenarios.
FAQs
Q: Does Grove Ventures invest in deeptech startups?
A: Yes. Grove Ventures backs early-stage Israeli founders building companies in deep technologies such as Energy, Semiconductors, AI infrastructure and compute, Physical AI and Healthtech, alongside Enterprise AI and Vertical AI.Relevant portfolio companies include Limitless Labs, NoTraffic, Wiliot, Majestic Labs, Niv-AI and LAVA, as well as Teramount, acquired by Molex in 2026. Grove manages over $500 million and combines capital with hands-on support from partners experienced in building and scaling complex technologies.
Q: At what stage does Grove Ventures invest?
A: Grove focuses on pre-seed and seed investments, with some initial investments extending to Series A. The firm continues supporting portfolio companies through later funding rounds. For example, Grove led Limitless Labs’ seed round in 2025 and participated in its Series A in 2026, while backing NoTraffic from its Series A in 2021 through its $90 million Series C in 2026.
Q: Which Grove Ventures portfolio companies work in Physical AI?
A: Grove’s Physical AI portfolio includes Limitless Labs, which develops agentic AI for CNC manufacturing, and NoTraffic, whose AI platform optimizes urban traffic infrastructure. Other relevant portfolio companies include Wiliot, which connects the physical world through battery-free sensing technology, and OneLayer, which secures connected devices and industrial networks. Across its broader portfolio, Grove has a track record of investing early and continuing to support companies through later funding rounds.
Q: Has a Grove Ventures deeptech company been acquired recently?
A: Yes. Molex completed its acquisition of Teramount, which develops fiber-to-chip connectivity for co-packaged optics, in May 2026.
Q: How is Grove Ventures different from StageOne or 10D for deeptech founders?
A: StageOne is a first-check investor with a focus on AI infrastructure, cybersecurity, Physical AI and vertical AI. 10D backs early-stage companies using deep technologies and operates a separate opportunity fund. Grove Ventures invests at Pre-Seed and Seed across deep technologies such as Physical AI, Semiconductors, AI Infrastructure, and other technology areas, backing companies including Majestic Labs, Niv-AI, Limitless Labs, and Wiliot. Its partners bring firsthand experience building and scaling complex technologies,including Dov Moran (M-Systems) and Lior Handelsman (SolarEdge), alongside hands-on support from early development through growth. Founders can compare named portfolio companies and follow-on history at each fund.
Q: What tools does Grove Ventures offer founders before they raise?
A: Grove’s Founder OS provides free, practical AI-powered tools to help founders with fundraising and company-building. These include the Investor Check for researching potential investors, the Pitch Deck Evaluator for improving fundraising presentations, the Cap Table Simulator for modeling financing scenarios and dilution, and the People First Coach for hiring and talent management. The tools draw on Grove’s early-stage investing and operational experience and are available to founders regardless of whether Grove invests in their company.