Zest is launching its new UrbanTech programme, building on four years of experience in connectivity and artificial intelligence, combining pre-seed investments with rapid product–market fit iteration. The UrbanTech model incorporates an Industry Programme designed to strengthen startups that need to engage with the market and its evolving requirements from the outset in order to scale. UrbanTech enables startups to validate their technologies in real industrial and urban environments, supported by a staged investment programme spanning pre-seed through Series A.
For years, Urban Tech has been framed as the world of smart cities: car-sharing apps, IoT sensors and platforms for monitoring traffic, consumption and air quality. But in 2026, that definition is no longer enough. The fastest-growing—and most structurally significant—trend today is AI-driven urban management: the increasingly deep integration of artificial intelligence into cities’ physical infrastructure. We have moved beyond basic digitalisation into the era of “embodied” AI, which does more than collect data: it interprets, simulates and orchestrates urban networks, buildings, mobility, energy and public services in real time. The World Economic Forum explicitly describes a new era of physical AI for cities, while the global market for AI in smart cities is forecast to expand rapidly through 2034, at a CAGR of 27.8%.
This is the real paradigm shift: cities are moving beyond digitalisation and gradually beginning to operate as intelligent systems.
Urban Tech extends beyond cities in the conventional sense. It involves the strategic application of sensors, connectivity, software and artificial intelligence to the physical assets that underpin everyday life: roads, railways, traffic lights, buildings, energy grids, water distribution, waste management and urban safety. It is where intelligence meets infrastructure. The accompanying document clearly illustrates this evolution: technology is moving from a layer “on top of” the city to an integral part of its networks and operating systems.
The most relevant subverticals are those that directly affect quality of life and regional competitiveness: smart mobility, energy and smart grids, construction and retrofitting, public services, environmental management, urban safety, urban agritech and water tech. What matters most today, however, is that all these verticals are converging around a shared principle: a shift from passive monitoring to intelligent operations.
The forces accelerating this trend are economic as well as technological. AI is taking centre stage in Urban Tech because it can dramatically improve the efficiency of existing infrastructure without requiring it to be rebuilt from scratch.
The first major shift is from data collection to predictive action. Systems are moving beyond observing what happens in cities to anticipating it. They use sensors, real-time data and digital twins—virtual representations of urban environments—to simulate scenarios, anticipate problems and improve traffic management, building operations, logistics and urban planning. The WEF describes digital twins as the operational bridge between a city’s physical and digital dimensions, while the accompanying material highlights how AI has shifted value from hardware to software’s ability to generate insights, predictions and automation.
A compelling example is Spacemaker, founded in Oslo and later acquired by Autodesk. Autodesk describes it as an Oslo-based AI and generative design platform that helps architects, urban designers and property developers make better decisions in the early stages of design.
Its Norwegian origins are no coincidence. The Nordic ecosystem is among the world’s most advanced in sustainability and urban planning, and among the most demanding in regulatory terms. Spacemaker grew by using AI to address the complexity of Scandinavian planning and environmental constraints, helping users simulate light, wind, density, spatial quality and energy impacts.
The impact is tangible. For people, it means healthier, more liveable and better-designed neighbourhoods. For cities and regions, it means better construction, less waste and higher-quality urban environments. For the environment, it means reducing carbon footprints and improving building performance. For the local economy, it means shortening development timelines, reducing inefficiencies and increasing project value. Autodesk also reports cases in which the platform significantly reduced planning time and costs.
The city is moving beyond digitalisation. It is gradually beginning to operate as an intelligent system.
The second pillar is energy resilience, encompassing smart grids, storage, electrification and energy communities. As electric vehicles, heat pumps and distributed generation become more widespread, urban grids are coming under pressure. This makes the integration of energy storage, microgrids and AI-orchestrated energy management one of Urban Tech’s strongest trends. The WEF also links urban transformation to the need for more connected, resilient cities capable of integrating smarter energy infrastructure.
An interesting example is Source Global, founded in Scottsdale, Arizona. Source develops off-grid hydropanels that use solar energy and moisture in the air to produce drinking water, and now operates in more than 40 countries.
Here, too, the ecosystem plays a critical role. Source emerged in the Sonoran Desert, where water scarcity and abundant sunshine are structural realities rather than theoretical variables. Arizona provided the ideal testing ground: an environment where water, climate and energy intersect under extreme conditions, creating an urgent need for decentralised, resilient solutions.
The impact is clear. For people, it means access to an essential resource in areas exposed to water scarcity. For cities and regions, it means less dependence on fragile or overstretched networks. For the environment, it means a more distributed model that uses less energy than transporting water over long distances. For the economy, it means new industrial value chains, greater security for communities and businesses, and regional resilience that also strengthens competitiveness.
The third pillar is public service automation: making urban operations more efficient across mobility, waste collection, safety and maintenance. This is probably where citizens can most immediately see the value of Urban Tech, because it affects their everyday experiences.
The defining example is Citymapper, founded in London in 2011. Several sources describe it as a London-founded company built around the complexity of urban transport, whose growth was enabled by the availability of mobility data.
London was an ideal environment: it has one of the world’s most complex, multilayered transport networks, alongside one of the most advanced ecosystems for public open data, thanks to Transport for London’s pioneering role. Citymapper was able to build algorithms and services on large-scale, continuous streams of real-world information. In cities where data is closed, a model like this would have found it much harder to develop at the same pace.
The impact of these solutions is tangible. For people, it means simpler urban journeys, better access to integrated transport and time saved. For cities and regions, it means making existing mobility networks work better without immediately expanding physical infrastructure. For the environment, it means encouraging public transport and multimodal travel, reducing reliance on private cars. For the economy, it means reducing some of the costs of congestion and improving urban productivity.
The same principle applies to waste management. Companies such as Bigbelly show how sensors and analytics can reduce collection frequency by more than 80% and greenhouse gas emissions by up to 70%, by improving how intelligently waste is collected rather than changing how much is produced.
Alongside the three main pillars of AI-driven urban management, other trends are emerging that deserve attention.
One is generative AI for planning, which accelerates urban planning, permitting and urban design, with Spacemaker remaining one of the most representative examples. Another is the expansion of Mobility as a Service: the full integration of public and private transport into unified mobility experiences. Citymapper is one of the clearest examples of this trajectory. The global MaaS market continues to grow precisely because it brings data, payments, routing and transport modes together in a single experience.
Then there is urban farming tech, where one of the most interesting examples is Infarm, founded in Berlin in 2013. Several sources identify Berlin as its birthplace and describe its model as a distributed network of urban vertical farms, designed to bring food production closer to where it is consumed.
Here, too, geography is decisive. Berlin provided an ideal environment, combining a strong organic food culture, urban sustainability, industrial spaces suitable for conversion and access to technical talent. The presence of major retailers also enabled Infarm to test its “Farm as a Service” model directly in stores, integrating it into existing logistics.
The value of this approach is clear. For people, it means access to fresher produce grown closer to where it is consumed. For cities and regions, it means bringing productive capacity back into the urban fabric. For the environment, it means reducing transport, packaging and pressure on long supply chains. For the local economy, it means creating new value chains and service models at the intersection of food, retail and technology.
Finally, there is circular water tech, with Source Global as one of its most compelling examples: turning scarcity and environmental pressure into new distributed, resilient and sustainable infrastructure.
The real paradigm shift lies in orchestrating urban infrastructure in real time, beyond simply collecting data.
One common thread runs through all these cases and helps explain how Urban Tech develops: none of these innovations emerges in a vacuum. Every startup is a product of its ecosystem—a combination of local conditions, including regulation, access to capital, public-sector culture and social and environmental pressures, that enables both the idea and, crucially, its adoption.
This is clear in Oslo, where Spacemaker grew in an environment that treats sustainable construction as a structural priority. It is clear in London, where Citymapper benefited from one of the world’s most advanced public open-data policies. And it is clear in Berlin, where Infarm found fertile ground in a city combining sustainability, urban experimentation and available infrastructure. The Arizona example confirms the same principle: urban innovation accelerates where infrastructure needs are real, urgent and tangible.
A closer look therefore reveals that a significant share of the most interesting Urban Tech innovations comes from Europe. That matters.
Europe Is Not Falling Behind: It Innovates Differently
Rather than describing Europe as slow to innovate, it is more accurate to say that it innovates at a different pace and according to a different logic.
In the United States, Urban Tech growth is often driven by less regulated markets, aggressive venture capital investment and rapid adoption. In China, the decisive factor is scale: large cities, strong coordination and the capacity for mass deployment. In Europe, every innovation must meet high standards for safety, privacy, urban design quality and sustainability from the outset. The accompanying document clearly emphasises that compliance, particularly for infrastructure-grade solutions, is an integral part of development rather than an incidental cost.
This can slow progress. At the same time, it often leads to more mature, reliable solutions that are better integrated into the city’s existing fabric.
That is precisely what makes many of today’s European examples so interesting. Spacemaker emerged because of the Nordic region’s stringent regulatory environment: AI becomes valuable by helping users navigate complex construction and environmental requirements. Citymapper’s growth reflects both London’s complexity and the data governance that makes intelligent urban services possible. Infarm’s development rests on more than a strong technological idea: Berlin offers a rare combination of sustainability culture, available infrastructure and industry players willing to experiment.
Europe therefore tends to favour Urban Tech innovations capable of delivering real impact within more regulated, dense and demanding systems.
Comparison with other European ecosystems helps avoid a common mistake: assuming that Italy’s lag stems solely from a lack of technology or talent. The European examples suggest that the bottlenecks often lie elsewhere: continuity in public policy, the ability to treat data as shared infrastructure, the speed at which experiments and pilots translate into adoption, and connections between startups, industry, investors and public authorities.
Yet Italy is not starting from scratch. The accompanying document puts the domestic Urban Tech market at around €14 billion and highlights how many of the most tangible opportunities lie in smart retrofitting: adding sensors, connectivity and AI to existing infrastructure at a far lower cost than full replacement. It also points to Italian market growth in 2024–2025 and the role of the National Recovery and Resilience Plan (PNRR) in opening a historic investment window for infrastructure, mobility and service networks.
This is a decisive point, because it makes Urban Tech particularly well suited to Italy. In a country that cannot realistically rebuild everything from scratch, the key opportunity is to make existing assets smarter: traffic lights, buildings, energy grids, logistics hubs and public infrastructure.
This brings us back to the trends outlined at the start. AI-driven urban management is growing so rapidly precisely because it enables existing infrastructure to become systems capable of predicting, optimising and coordinating. This applies to mobility, energy, water, waste, safety and urban planning.
Italy can play a significant role if it succeeds in doing what the most advanced ecosystems have done: creating the conditions for these innovations to become part of an industrial and regional development strategy.
Artificial intelligence is moving beyond observing the city: it is beginning to predict, simulate and coordinate how it operates.
Urban Tech is compelling because its relevance extends beyond a single vertical. It sits at the intersection of technological innovation, quality of life, sustainability and economic competitiveness.
It improves services. Reduces waste. Makes cities more liveable. Increases network efficiency. Creates new businesses and value chains. Its benefits can be tangible: McKinsey estimates that smart city solutions can improve selected urban quality-of-life indicators by 10% to 30%, with effects ranging from faster journeys to lower emissions and better access to services.
This makes Urban Tech a practical driver of national development, with relevance far beyond a niche sector.
Zest’s Role
In this context, developing ecosystems becomes as important as developing technologies.
Over recent years, Zest has built a substantial track record in this space, investing in solutions that connect sensors with infrastructure through programmes such as Habismart and Magic Spectrum, focused on proptech and connectivity respectively.
Over the past three years, investments through Magic Mind, Zest’s AI-focused programme, have also supported the development of a dataset covering thousands of companies offering AI-enabled solutions for operationally intensive use cases. This accumulated, analysed experience on the ground has led to the launch of UrbanTech.
Sources
Accompanying document: “Urban Tech: quando l’intelligenza incontra l’infrastruttura”.
World Economic Forum, Human-centred physical AI will be key to transforming cities.
Precedence Research, AI in Smart Cities Market.
McKinsey, Smart cities: digital solutions for a more livable future.
Bigbelly, Reducing Waste Collections e Municipal Waste Management Solutions.