Xpanner, a physical AI startup that retrofits existing construction equipment for autonomous operation, has raised $18 million in a Series B round, the company told Crunchbase News on May 14. Existing backer Korea Investment Partners led the bridge round, with participation from KB Investment Co. (KBIC). The financing brings Santa Fe Springs, California-based Xpanner's total funding to $38 million since its 2020 founding.
Automation-as-a-Service for heavy equipment
Xpanner's flagship product, the X1 Kit, retrofits construction equipment with hardware and software that enable autonomous operation, without the customer needing to replace any existing machines. Customers subscribe to task-specific automation licenses such as piling, material handling, trenching and grading through Xpanner's Automation-as-a-Service (AaaS) model.
“There's no upfront investment, no rip-and-replace,” co-founder and CEO Henri Lee said. “Like a smartphone gaining new capabilities through app updates, customers expand their automation through simple software updates.” Among the company's current customers are construction majors Mortenson, Black & Veatch and Qcells.
Software-economics inside a hardware market
Xpanner is unusually transparent about the unit economics behind its model. The company says revenue grew from $3 million in 2023 to $7 million in 2024 to $21 million in 2025. It reported $8 million in revenue and $1 million in EBIT in the first quarter of 2026, and is targeting $60 million in ARR by year-end. Gross margin sits above 80%, the company said, driven by its subscription AaaS model. Xpanner says it reached monthly break-even in 2025 and is on track for full-year profitability in 2026.
“Strong gross margins, near-zero churn, and rapid account expansion are signals that the value proposition is real and not pilot-driven,” Sangjoon Park, managing director at Korea Investment Partners, said. KBIC director Kiho Lee added that Xpanner's task-specific software approach “can expand wallet share inside accounts without proportional cost,” calling it “a software-economics business operating in a hardware-dominated market.”
A founding team out of Bobcat, Hyundai and Volvo
Originally founded in South Korea and headquartered in the United States since 2023, Xpanner's three co-founders carry decades of operating experience in heavy equipment. CEO Henri Lee spent two decades at Bobcat and Hyundai Infracore. CFO Ryan Park worked at Bobcat and then at the venture arm of Korea's largest commercial bank. CTO David Shin spent 20 years at Volvo Construction Equipment, where he commercialized the first semi-automation features for construction machinery.
Expansion into AI data centers and BESS
The company plans to use the new capital to advance its next-generation physical AI hardware and software platform, deepen core component engineering, and expand its data and AI infrastructure. It is also actively pushing into adjacent verticals, including battery energy storage systems (BESS) and AI data center construction, both fast-growing markets where capacity is constrained more by skilled labor than by equipment availability.
Xpanner sits at the intersection of two sectors drawing record venture capital. Physical AI funding has now eclipsed $37 billion globally in 2026, according to Crunchbase data, beating the $21 billion full-year record set in both 2025 and 2021. Related stories from this month include Sereact's $110M Series B, Robotera's $200M raise, and Vbot's $73M Pre-A funding round.
Reporting based on coverage from Crunchbase News.