Today we are thrilled to announce Shadow Ventures Seed Fund II, a $34 million venture capital fund. The new fund will extend our mission of investing in ambitious founders operating at the technology “frontier” and solving the most challenging problems in core global infrastructure.
We are excited to expand our roster of limited partners who believe in this mission. This LP group includes representation from family offices, fund of funds, and strategic firms serving the entire real estate and construction value chain and willing to partner with aligned founders at the earliest stages of their companies. New strategic LPs in Fund II include Builders First Source, Hensel Phelps, MiTek, Supreme Steel, Thornton Tomasetti, POWER Engineers, JB&B, Pennoni Associates, Terracon, Mead & Hunt, and Tourmaline Capital Partners, among others.
We believe modernizing the world’s critical physical infrastructure – such as buildings, housing, civil infrastructure (roads, bridges, transit), energy and power grids, data centers, building products, supply chain/cold chain, and water –is one of the world’s most pressing challenges. The funding required to upgrade our infrastructure over the next decade is enormous. With global fiscal deficits at all-time highs, there seems to be one viable solution: armies of technical teams building infrastructure products via code, automation, and materials breakthroughs.
The problem is that, today, startups focused on transforming core physical infrastructure receive less than 2% of all venture capital funding, which is woefully undercapitalized compared to their corresponding 20% share of global GDP.
We believe that frontier technologies like artificial intelligence, machine learning, robotics, and advances in materials science represent a paradigm shift in the way we’ll modernize, maintain, and construct the physical world around us. This new fund gives us the ability to support four big themes that continue to excite us:
- Artificial Intelligence: AI has the potential to revolutionize the world's physical infrastructure by enhancing efficiency, safety, and sustainability across various domains. The use cases are endless: AI-powered predictive analytics can optimize structural designs, reducing material waste and construction costs while ensuring resilience to natural disasters. In transportation, AI algorithms can analyze traffic patterns in real-time, facilitating smoother flow and reducing congestion. AI-enabled predictive maintenance can proactively identify potential failures in critical infrastructure such as bridges and power grids, mitigating risks and ensuring continuous operation. Overall, AI's ability to process vast amounts of data and derive actionable insights enables small teams to build more with less, vastly increasing their odds of success, meaning progress for our infrastructure.
- Robotics: The advent of robotics marks a seismic shift in core global infrastructure development, with robots increasingly assuming pivotal roles in construction, maintenance, and disaster response. The constraint of skilled labor remains the biggest barrier for new development and modernization of outdated assets. Robots, either assisted by low-skilled human operators or on their own, can bridge the productivity gap by completing the most tedious of construction tasks many multiples faster, at a significant cost reduction, with better accuracy, and with reduced human-safety risks. Robotics will also play a critical role in making the dreams of prefabrication and modular construction a reality.
- Energy, Grid, & Data Center Infrastructure: The scale of the AI boom has been so significant over the past three years that the new bottleneck is no longer chip hardware but the availability of tier 4 datacenters. For the developers and construction firms building them, AI focused data centers have different infrastructure requirements due to more sophisticated networking, higher power density, and increased cooling needs. Constructing these data centers at speed and scale while integrating with a flexible and accommodative grid will be critical over the next decade.
- Advanced Building Materials: At more than 30%, the built environment is the largest contributor to greenhouse gas emissions of any other industry. Advanced materials, alternative energy sources, and new battery chemistries, for example, will help existing (and new) infrastructure reduce both embodied and operational carbon emissions.
If you are an entrepreneur that is building this future, we’d love to chat with you. Please get in contact with us.
We will continue to evolve our hypotheses and share our thinking in public. Some ways to learn more about us and keep in touch:
To building,
KP, Nick, and Matt
