R42 Industrial AI Fund I, LP

Investing at the infrastructure inflection.

We back early-stage companies at the intersection of artificial intelligence and physical-world industrial operations — led by operators who have built, scaled, and exited industrial technology.

$767B
Industrial digital
transformation spend by 2026
$223B
Energy & sustainability
AI equity, 2024
2–4yr
Industrial AI
M&A exit horizon
01 — Thesis

Industrial AI is not a software category. It is an infrastructure investment thesis.

Artificial Intelligence

Intelligence layer

  • Edge AI inference
  • LLM / NLP for OT data
  • Computer vision
  • Multi-agent orchestration
  • Reinforcement learning
Industrial Technology

Infrastructure layer

  • Private 5G / CBRS
  • OT cybersecurity
  • Edge computing platforms
  • Industrial data fabric
  • Connected Worker 2.0
The compounding result

Autonomous industrial operations

Predictive maintenance · Smart manufacturing
Digital twin + reasoning
Why now

Three forces are converging on the plant floor.

01

Industrial transformation

Decarbonization mandates, manufacturing labor shortages, and decades-old control systems reaching end of life are forcing non-discretionary upgrades across heavy industry.

02

AI capability explosion

LLMs now extract value from unstructured OT data, edge inference runs at industrial-grade latency, and computer vision delivers quality and safety at the machine level.

03

Connectivity revolution

Compute is migrating to the machine. Private 5G, OPC UA FX for deterministic control, and IT/OT convergence are eliminating the silos that held industrial data captive.

02 — Approach

Attack the infrastructure gap. Sequenced by market readiness.

Industrial organizations are spending aggressively on digital transformation, but the binding constraint is foundational infrastructure. We invest across the full stack — funded where the market is ready.

50–60%

Phase 1 · Foundation

System migration · OT security · Edge networking · Modern historians · Data brokers
Spending now. Non-discretionary.
Allocation
30–35%

Phase 2 · Intelligence

Knowledge graphs · AI inference · Edge orchestration · Connected Worker 2.0
Growing. Accelerating as Phase 1 matures.
10–15%

Phase 3 · Autonomy

Multi-agent AI · Robotics · Autonomous ops · Digital twin + reasoning
Early-stage. High optionality.

The vast majority of industrial organizations are still in Phase 1. Those attempting to skip ahead are failing.

03 — The edge

Operational diligence no generalist can match.

Industrial decisions are driven by reliability, safety, and total cost of ownership — not feature velocity. Companies that cannot speak the language of operational technology get blocked at the plant gate.

/ 01

We walk the plant floor

We assess technology stacks, evaluate OT integration, and pressure-test commercial models against real operator requirements — 50+ combined years of hands-on industrial experience.

/ 02

We stay disciplined

A rigorous scoring model derived from field intelligence. We invest only where foundational infrastructure readiness supports the use case. No hype-cycle bets.

/ 03

We invest early, across the lifecycle

Among the first investors at pre-seed and seed, with follow-on reserves for top performers and continuation rights through a growth vehicle.

/ 04

We carry exit relationships

Direct relationships with strategic acquirers — Honeywell, ABB, Siemens, Schneider Electric, Emerson, Shell, BP, Republic Services — across a 2–4 year industrial M&A horizon.

04 — Target sectors

Aging infrastructure, labor pressure, and data trapped at the edge.

Five verticals that share the same structural pattern — and the same opening for physics-aware AI.

01

Energy & Utilities

Grid intelligence · predictive maintenance · demand forecasting

02

Manufacturing & Automation

Autonomous factories · robotics intelligence · IIoT analytics

03

Chemicals & Advanced Materials

Catalyst design · pyrolysis optimization · carbon recovery

04

Industrial Safety & Sensing

Gas detection · thermal anomaly · toxic exposure monitoring

05

Circularity & Waste-to-Value

Recycling automation · materials recovery · emissions reduction

Select investments

Early conviction in the companies building the industrial stack.

VOLTSPAN
PYRAXIS
SENTRYX
FORGELINE
STRATA OS
MERIDIAN
NODEWISE
REFOLD

Illustrative placeholders. Fund I portfolio in formation.

05 — The team

Operators who have built, scaled, and exited industrial technology.

Co-General Partner

Prabhu Soundarrajan

  • 20+ years automation leadership
  • Honeywell, $700M P&L
  • 2024 President, ISA (17,000 members)
  • Operating Partner, Kingston Capital
  • 30 patents in industrial technologies
Co-General Partner

Steve Toteda

  • 30+ years communications & industrial systems
  • CEO / President / VP-GM scaling roles
  • Exits: Komodo, Avenda, Dust Networks
  • Fortune 100 industrial OT network
  • Existing R42 advisor & operator
Founder & GP, R42 Group

Dr. Ronjon Nag

  • Founder exits to Motorola, BlackBerry, Apple
  • Silicon Valley Engineering Hall of Fame
  • 40-year innovation pedigree
  • Cambridge PhD · MIT MS
  • Stanford Distinguished Fellow
Exit DNA

A return to what drove the strongest exits — AI applied to physical systems.

Speech & handwriting recognition
Motorola
Speech recognition platform
Apple
Cradlepoint — 4G / 5G
Ericsson
HD maps for autonomous systems
Luminar
Predictive supply chain
E2open
Perspectives

Field intelligence from the plant floor.

We publish what we learn — from the ARC Forum, from diligence, from operators who run the assets. Followed by the people building and buying industrial AI.

Follow the fund on LinkedIn
06 — For founders

Building at the intersection of AI and industry? Tell us.

We invest at pre-seed, seed, and early Series A in companies applying AI to physical industrial operations. If that is you, send us the essentials. Every submission is reviewed by a partner.

Submissions are treated as confidential. We aim to respond within two weeks.

Thank you — we have it.

Your submission is in front of the partners. If there is a fit with the fund's thesis and current pipeline, one of us will be in touch directly.

Get in touch

Backing the companies building the industrial stack.

Co-General Partner
Steve Toteda
Steve.Toteda@BaxterGroup.com
Co-General Partner
Prabhu Soundarrajan
Prabhu.Soundarrajan@BaxterGroup.com
Limited partner access →
R42 Industrial Ventures · Industrial AI Fund I, LP Confidential · May 2026
R42 Industrial Ventures
Industrial AI Fund I, LP

Limited Partner Access

This area contains confidential fund materials reserved for verified, accredited investors. Please sign in to continue.

Demonstration only. Use fund / fund to preview the portal. On the live fund, access follows accredited-investor verification and is not protected by an in-page password.

R42 Industrial VenturesLimited Partner Portal
Illustrative demonstration data. All figures are draft and subject to the final Private Placement Memorandum.
Welcome

Industrial AI Fund I, LP — investor materials.

The fund invests at pre-seed through early Series A in companies applying AI to physical industrial operations, led by operators who have built, scaled, and exited industrial technology. The documents below constitute the confidential offering package.

Fund snapshot

Target structure at a glance.

$15M
Target fund size
$25M
Hard cap
$100K
Minimum LP commitment
1–3%
GP commitment alongside LPs
4–5yr
Investment period
10+2yr
Fund term

Key terms

Summary only. Governed in full by the Limited Partnership Agreement.

StructureDelaware Limited Partnership
Management fee2.5% per annum
Carried interest20%
Preferred return8%
Initial check size$100K – $750K
Follow-on reserves$250K – $1.5M for top performers
Growth capitalSPV / pro-rata co-investment rights
First close~$5M, rolling to hard cap

Return objective

Objectives, not forecasts or guarantees.

5–7×
Target MOIC
25–35%
Target net IRR
In a concentrated early-stage portfolio, a single $200M–$500M exit can return the fund multiple times over. Targets are illustrative and depend on outcomes that cannot be assured. Final terms and risk factors are set out in the Private Placement Memorandum.

Track record

Anchored by the founding partner's personal exit history across AI applied to physical systems.

3 exits
Founder exits to Motorola, BlackBerry, and Apple
11.3×
GP personal portfolio multiple — ~$8.7M invested, ~$98M value, ~24% IRR
90+
R42 Group portfolio companies across AI & deep tech

Portfolio highlights include Healx (161× valuation), Hayden AI (60×), and Bounce Imaging (30×). Detailed track record available in the data room.

Data room

Confidential offering and diligence documents.

PDF
Private Placement Memorandum
48 pp · May 2026
PDF
Limited Partnership Agreement
Draft · May 2026
PDF
Subscription Agreement
Fillable
ZIP
Due Diligence Package
14 files
PDF
GP Track Record — Detail
12 pp
PDF
ARC Forum Field Intelligence
Feb 2026
XLS
Quarterly Reporting Template
Sample

Current pipeline

Illustrative. 14 companies in active diligence across five target sectors.

Voltspan
Energy & Utilities · grid intelligence
Term sheet
Sentryx
Industrial Safety · gas & thermal sensing
Diligence
Pyraxis
Chemicals · pyrolysis optimization
Diligence
Forgeline
Manufacturing · robotics intelligence
Sourced

How to subscribe

Indicate interest with the investor relations contact below. On confirmation of accredited status, LPs receive subscription documents, the LPA, the full diligence package, the quarterly reporting structure, and the capital call schedule.

Investor Relations
Steve Toteda
Steve.Toteda@BaxterGroup.com
Indicate interest