Forget robots on assembly lines. Foundational Industries wants AI to run the entire factory

Foundational Industries raised a $25 million seed round led by BoxGroup and Zigg Ventures to build factories where AI runs the entire operation, starting with data-center hardware. CEO Jonathan Winer argues the U.S. should skip competing with China's advanced manufacturing and instead leverage American AI models and compute to create AI-native factories that can generate a bill of materials and manufacturing process from a customer's product intent in minutes.

Jonathan Winer thinks the U.S. is fighting the wrong manufacturing war https://fortune.com/2026/05/04/america-manufacturing-powerhouse-iran-war-oil-shock/ . His startup, Foundational Industries, just raised a $25 million seed round, Fortune learned exclusively, to build factories where AI runs the whole operation rather than bolting automation onto an old assembly line. The round was led by BoxGroup and Zigg Ventures, with Abstract Ventures, Adverb Ventures, Buckley Ventures, and Offline Ventures participating. Rather than retrofitting a factory with a robot arm https://fortune.com/2026/07/29/chinas-robot-makers-shipped-25x-more-units-than-u-s-rivals-in-2025-so-america-banned-them/ here and a vision sensor there, Foundational makes physical products, starting with data-center hardware, using factories designed from scratch to be run by software. Winer, who spent 25 years at Alphabet’s Sidewalk Infrastructure Partners deploying over $1 billion in capital, told me the seed money isn’t meant to fund a giant factory yet. “What this is allowing us to do is to sort of build a minimum viable product,” he said. “We’ve actually built the entire factory in software already using software emulators.” Foundational’s first customers are data-center developers, neoclouds, and chipmakers who need custom rack enclosures now that new AI silicon runs at different voltages and cooling requirements. They declined to disclose customer names. But Winer’s real argument is about China https://www.a16z.news/p/america-cannot-lose-the-robotics . The common wisdom in Washington is that China’s manufacturing dominance https://www.nytimes.com/2025/09/25/business/china-factory-robots.html?smid=nytcore-ios-share&referringSource=articleShare is built on cheap labor and lower-quality copying. Winer says that’s outdated. “Many of their factories are some of the most advanced automated factories in the world, and they are increasingly using not just international industrial automation, but also homegrown and home produced solutions,” he told me. China https://fortune.com/2026/07/15/china-economy-slowest-growth-three-years-quarterly/ has poured over $1 trillion https://americanaffairsjournal.org/2022/05/guiding-finance-chinas-strategy-for-funding-advanced-manufacturing/ into advanced manufacturing over the past decade, backed by state subsidies and what Winer calls “a really dense industrial ecosystem” that lets new products get designed and launched fast https://fortune.com/2025/12/08/china-1-trillion-trade-surplus-exports-rebound/ . That density is precisely why he thinks a head-on copy of China’s approach won’t work. “We just don’t have the people or the skill sets to do it,” he said. “And even if we did, it’s probably not economically competitive to China.” So Winer’s thesis is to skip that fight entirely and build a different kind of factory. His argument rests on two American advantages: sophisticated AI models and researchers which is now a shrinking talent gap https://fortune.com/2026/04/16/stanford-study-how-has-china-gained-on-us-ai-war/ and far more AI compute. That combination, he says, lets Foundational’s system take a customer’s “product intent” and almost instantly generate a bill of materials and manufacturing process a step that traditionally took months of manual design work . There’s also a structural weakness in China’s model that Winer is betting against. He argues China’s factories https://fortune.com/2026/03/20/china-factory-to-the-factories-component-exports-asean-supply-chains-geopolitics , however advanced, are still built around older-style automation that needs constant utilization to justify state subsidies. “They kind of need to feed the beast now,” he said. His wager is that AI-native factories—cheaper and faster with each one built—can give the U.S. a much-needed edge. See you tomorrow, Lily Mae LazarusX: @LilyMaeLazarus https://archive.ph/o/tzAhs/https://x.com/LilyMaeLazarus Email: lily.lazarus@fortune.com mailto:lily.lazarus@fortune.com Submit a deal for the Term Sheet newsletter here mailto:termsheet@fortune.com . Joey Abrams curated the deals section of today’s newsletter. Subscribe here https://archive.ph/o/tzAhs/https://fortune.com/newsletters/term-sheet . VENTURE DEALS - CAIS https://www.caisgroup.com/home , a New York City-based alternative investment platform for independent financial advisors, raised $170 million in Series D funding. Vista Equity Partners led the round and was joined by AllianceBernstein and others. - Eliyan http://www.eliyan.com/ , a Santa Clara, Calif.-based developer of connectivity technologies designed for AI compute, memory, and networking systems, raised $145 million in Series C funding. Seligman Ventures led the round and was joined by Cisco Investments and Lumentum . - Onyx Security https://www.onyx.security/ , a Tel Aviv, Israel and New York City-based AI control company, raised $113 million in Series B funding. Bessemer Venture Partners led the round and was joined by Cyberstarts , TCV , Conviction , FirstMark , Vintage , QuantumLight , and G Squared . - groundcover https://www.groundcover.com/ , a Tel Aviv, Israel-based observability platform, raised $100 million in Series C funding. One Peak led the round and was joined by Morgan Stanley Expansion Capital and existing investors Zeev Ventures , Angular Ventures , Heavybit , and Jibe . - ChipAgents https://chipagents.ai/ , a Santa Clara, Calif.-based agentic AI platform for semiconductor design, raised $60 million in Series A2 funding from B Capital , Bessemer Venture Partners , Micron , and others. - P-1 AI https://p-1.ai/ , a San Mateo, Calif.-based developer of an AI mechanical and electrical engineer designed for industrial teams, raised $50 million in Series A funding. New Enterprise Associates led the round. - Terminal https://www.withterminal.com/ , a Toronto, Canada-based provider of a unified telematics-integration platform for insurance, fleet-management, and logistics companies, raised $20 million in Series A funding. Battery Ventures led the round. - Centralize https://www.usecentralize.com/ , a San Francisco-based relationship intelligence platform for enterprise revenue teams, raised $19 million in funding. NEA led the round and was joined by Salesforce Ventures , Y Combinator , 20SALES , Ritual Capital , and others. - Henry AI http://henry.ai , a New York City-based AI platform automating back-office knowledge work for commercial real estate teams, raised $16.5 million in Series A funding. FirstMark Capital led the round and was joined by Thomson Reuters Ventures and existing investors. - UnitAI https://www.unitai.co/ , a Boston, Mass.-based physical AI company developing warehouse-automation technology, raised $12 million in seed funding. Prologis Ventures , Dynamo Ventures , and Ground Up Ventures led the round and were joined by eGateway Capital , Recursive Ventures , Think + Ventures , ZEP Fund , and Crosscourt . - Pangram Labs https://www.pangram.com/ , a Brooklyn, N.Y.-based AI detection platform, raised $9 million in funding. Menlo Ventures led the round and was joined by Haystack , ScOp Venture Capital , Script Capital , and Cadenza . - Mirae https://www.miraehealth.com/ , a New York City-based AI-driven continuous care platform for autoimmune disease and other complex chronic conditions, raised $5.4 million in funding. Oxford Science Enterprises led the round. - FAST Metals https://www.fastmetalsinc.com/ , a Stamford, Conn.-based mining technology company, raised $4.3 million in pre-seed funding. New Climate Ventures led the round. - CopySight https://copysight.ai/ , a Los Angeles, Calif.-based AI IP governance company, raised $3 million in seed funding. Mucker Capital led the round and was joined by Taisu VC , Flint Capital , and Yellow Rocks - MASAJ https://www.masaj.me/ , a London, U.K.-based bodywork brand, raised £1.5 million in funding. FIGR Ventures and Sorven Capital led the round. - Dimension https://www.dimensionstudios.co/ , a Los Angeles, Calif.-based social commerce tech company, raised $1.7 million in seed funding from Science Inc. , UpscaleX , OpenSky , and others. PRIVATE EQUITY - CHAOS Industries , backed by Valor Equity Partners , acquired Atropos Group https://www.atroposgroup.com/ , a New York City-based defense technology company specializing in autonomous aircraft systems. Financial terms were not disclosed. - Lafayette Instrument , backed by Branford Castle , acquired Avisoft Bioacoustics https://avisoft.com/ , a Glienicke/Nordbahn-based bioacoustics company. Financial terms were not disclosed. - Vista Equity Partners agreed to acquire Quantios https://quantios.com/ , a London, U.K.-based provider of SaaS solutions to the trust and corporate services industry. Financial terms were not disclosed. FUNDS + FUNDS OF FUNDS - Jump Capital https://jumpcap.com/ , a Chicago, Ill.-based venture capital firm, raised $350 million for its eighth fund focused on tech companies. Subscribe to Fortune Gulf Brief . Every Tuesday, this new newsletter delivers clear-eyed, authoritative intelligence on the deals, decisions, policies, and power shifts shaping one of the world’s most consequential regions, written for the people who need to act on it.