Schneider Electric, a venerable industrial giant with a history spanning nearly two centuries, has consistently demonstrated an remarkable ability to adapt and thrive across successive industrial revolutions. From its origins in the 19th century as a steel and heavy machinery company, it has meticulously transformed into a global powerhouse in energy management and automation. Today, through its substantial 1 billion Euro venture fund, SE Ventures, the company is placing a strategic bet on the next monumental transformation: the profound collision of artificial intelligence with the physical world. This paradigm shift is poised to redefine critical infrastructure, from the foundational elements of data centers and the intricate networks of power grids to the dynamic capabilities of robotics and the efficiency of industrial automation, heralding a new era of industrial investment.

This ongoing series focuses on visionary investors dedicated to rebuilding and optimizing the physical layer of our world, having previously featured insights from ex-Meta CTO Mike Schroepfer, founder of Gigascale Capital, and Peter Barrett, a seasoned investor with Playground Global. Schneider Electric’s commitment, channeled through SE Ventures, represents a significant corporate venture capital effort to not just observe but actively shape this emerging landscape.

Amit Chaturvedy, who took the helm as SE Ventures’ global head and managing partner in 2022 after a distinguished career leading corporate investments at Cisco, firmly believes that AI’s most impactful opportunities extend far beyond the realm of pure software. He articulates a clear vision where the burgeoning demand for computational power is increasingly straining existing energy infrastructure, thereby accelerating a profound reindustrialization across advanced economies. In response, SE Ventures is strategically backing startups that are building the foundational technologies underpinning this new AI economy. Their investment scope is broad, encompassing everything from advanced data center infrastructure and robust grid resilience solutions to cutting-edge robotics and specialized industrial AI applications. "We were set up with the intent to figure out where the market is headed," Chaturvedy explains, underscoring the fund’s proactive and foresightful approach.

The growing significance of the energy and industrial sectors, catalyzed by the rapid advancements in AI, has attracted even traditionally tech-focused venture investors to this space. Chaturvedy highlights a critical shift: "Today, the scarce resource in this entire space is the capacity to build – building, real estate, energy, power and electrification gear." This statement encapsulates the core challenge and opportunity that SE Ventures is addressing. The fund’s impressive track record already includes eight unicorns in its portfolio and 12 successful exits, with the most recent being Fabric8Labs, an innovator in 3D metal printing technology, which was acquired by the Tokyo-based electronic manufacturer TDK Corp.

SE Ventures adopts a highly engaged, value-add approach with its portfolio companies, often taking board seats or advisory positions to actively contribute to their growth and strategic direction. A cornerstone of their strategy is fostering commercial relationships with Schneider Electric’s extensive ecosystem. Approximately 80% of the startups in their portfolio establish some level of commercial engagement with a Schneider Electric business unit. This symbiotic relationship often positions the startups as partners servicing Schneider’s vast customer base – a "holy grail" scenario, according to Chaturvedy. While a smaller subset acts as vendors, the primary focus remains on collaborative innovation and market penetration through Schneider’s global reach.

In a comprehensive conversation, Chaturvedy delved into pressing topics such as power scarcity, the modernization of the electrical grid, the imperative for workforce training in the AI era, and the dynamics of reindustrialization, along with notable portfolio companies driving these changes.

On Key Investment Sectors Driven by AI:

Chaturvedy identifies three primary areas of intense focus and investment, particularly influenced by the accelerating pace of AI development.

Firstly, the burgeoning demand for AI infrastructure is paramount. As AI models, whether open-source or proprietary, require immense computational resources for training and subsequent inference, the underlying infrastructure becomes critical. Companies like Together AI, which focuses on model training and inference, exemplify this need. Looking ahead, as the current capital expenditure cycle for new data centers eventually plateaus, the focus will inevitably shift towards optimizing existing infrastructure. "Five years out, when this CapEx cycle starts to come down and new data centers are perhaps not getting created, data center efficiency will become a hot topic," Chaturvedy predicts. SE Ventures is already investing in this future, backing companies like Hammerhead AI, which is tackling these efficiency challenges. The synergy with Schneider Electric is evident, as the parent company is a leading electrification player in the data center space, providing essential gear and equipment. The immediate bottleneck, Chaturvedy reiterates, is the physical capacity to build: "Today, the scarce resource in this entire space is capacity to build: buildings, real estate, energy, power and electrification gear."

Secondly, the profound impact of AI on the electrical grid is a critical area. The energy demands of AI data centers are unprecedented, dwarfing the previous challenges posed by electric vehicle charging. "There are more demands on the grid beyond the electrification of vehicles, and it is 100x or 1,000x bigger than what we saw with vehicles needing to get charged from inside houses," he states. This immense strain necessitates significant investments in grid resilience. While more project developers are entering the market to establish renewable energy sources and other generation capacities, their successful integration still relies heavily on a robust and intelligent grid. Consequently, anything that enhances grid resilience and modernization is a prime target for SE Ventures’ investments.

Thirdly, the transformative potential of AI within the industrial sector is a major driver. Robotics stands out as a clear beneficiary. The advent of general-purpose AI models empowers the same robotics hardware to perform a multitude of diverse tasks that were previously impossible, primarily because the necessary cognition and inference capabilities were not available at the edge before the emergence of large language models. Skild AI, a company within SE Ventures’ portfolio, is highlighted as "one of the most exciting companies at the intersection of robotics and AI," serving as a market-leading indicator of where this sector is headed. Beyond robotics, AI is enhancing field applications. Companies like Axion, another portfolio company, are leveraging AI to capture and analyze warranty data, providing critical insights back to design engineers in large corporations. This demonstrates a broader trend where OEMs and hardware companies are actively seeking specific AI use cases that can deliver transformative improvements to their operations. Customers are increasingly looking for tangible AI-driven transformations, and startups that can facilitate this journey are poised for rapid adoption.

Chaturvedy also emphasizes a critical confluence: the convergence of energy and industrial technologies. "Overlaying on top of this is a confluence that we see and watch from our vantage point," he notes. The imperative for energy efficiency in industrial settings means that energy technologies and industrial technologies must collaborate more closely than ever before. This was not the case historically when energy was cheaper and more readily available. Now, with industrial adoption of AI accelerating, and an aging workforce necessitating automation, the consumption of AI for industrial use cases, once a secondary concern, has become a core business imperative. "This is where the worlds of enterprise and industrial are colliding very quickly in the world of AI," he concludes.

Addressing the AI Energy Bottleneck:

The consensus that energy has become AI’s primary bottleneck is strong, and Chaturvedy offers insights into both short-term and longer-term solutions.

In the short term, solutions are largely focused on optimizing the unit economics of AI data centers, specifically around "tokens" – the fundamental units of computation. "If you think about the unit economics of an AI data center, it’s the tokens," he explains. Generating a token costs electricity, and training or inferring from models requires vast numbers of tokens. The immediate battle is to produce tokens more cheaply and consume fewer of them through more efficient models. This optimization is primarily occurring in the enterprise software space, through clever algorithms and software architectures. Beyond token optimization, data center operators can implement strategies to manage energy consumption more intelligently, such as pushing inference tasks to off-peak electricity rate times or optimizing HVAC (heating, ventilation, and air conditioning) systems, areas where Schneider Electric has significant expertise and offers solutions.

The longer-term solution, however, revolves around generating new capacity, predominantly through renewables. "That’s where I think the whole renewable story, at least in the U.S., becomes very interesting going forward," Chaturvedy remarks. Hand-in-hand with renewables is energy storage, particularly Battery Energy Storage Systems (BESS), which SE Ventures closely monitors as a critical enabler for a resilient, renewable-powered grid. These long-horizon investments in clean energy generation and storage are essential to meet the escalating power demands of the AI era.

Reindustrialization in the AI Era:

The global discussion around reindustrialization in Europe and America is not a matter of choice but necessity, driven by geopolitical realities and supply chain vulnerabilities. Chaturvedy asserts that technologically, the U.S. holds a competitive advantage, fueled by its innovation ecosystem, talented software engineers, and agile approach. This leadership will be crucial in reindustrialization efforts, focusing on advanced robotics, new AI models, efficient data center deployment, and next-generation energy generation. The "holy grail" is AI startups that can enable "lights-out manufacturing facilities," a possibility increasingly within reach.

A significant aspect of this reindustrialization is the transformation of the workforce. With an aging workforce and the impracticality of rapidly training a new generation to match decades of experience, AI emerges as a powerful equalizer. "It is now possible that every blue-collar worker with AI in their hands as an assistant becomes a knowledge worker," Chaturvedy states, challenging traditional definitions of knowledge work. This paradigm shift means AI will empower workers across all sectors, making them more productive and capable.

However, Chaturvedy also acknowledges that not every job will return in its traditional form, given the realities of inflation, cost of living, and societal preferences in America. The strategy will be to leverage AI and robotics intelligently to achieve desired outcomes, rather than simply replicating past manufacturing models. As the economy integrates more AI, it will evolve to a new level, redefining what constitutes GDP and the underlying goods and services.

Regarding the timeline for this transformation, Chaturvedy believes it’s already unfolding in certain industries, with data centers leading the charge due to urgent needs and significant capital investment. Over the next three to ten years, as capital expenditure cycles refresh across different industries, more greenfield projects will emerge that are natively designed around robotics and industrial automation, having fully integrated AI from the outset. "Every new factory that gets online in the next seven to 10 years will have a basic level of productivity that is way higher than a new factory set up 30, 20 or 15 years ago," he predicts, leading to strong returns on investment and scalable capacity.

Reimagining the Data Center Stack:

In closing, Chaturvedy reiterates SE Ventures’ holistic investment approach. They specifically target AI solutions for energy and industry, examining the entire stack from data infrastructure to model training and inference, all the way through to AI agents solving real-world challenges. This comprehensive view also includes enabling layers such as multi-cloud strategies, multi-LLM interoperability, robust cybersecurity, and effective data governance. Ultimately, every industry will develop its bespoke version of this AI stack. SE Ventures believes that the most compelling companies will be those that can demonstrably drive tangible, measurable outcomes within both enterprise and industrial environments, transforming operations and creating unprecedented value.

This strategic investment by Schneider Electric through SE Ventures underscores a clear conviction: the AI buildout is not merely a technological wave but a fundamental force reshaping the industrial landscape, demanding a new cycle of investment in the physical infrastructure that underpins our modern world.