The market may be be tightening, but not for Eclipse Ventures, a Palo Alto-based venture firm that just raised $1.2 billion across two new funds. One fund, with $720 million in capital commitments will be invested in early-stage outfits, as well as companies that Eclipse itself incubates. The remaining $510 million will be funneled into growth-stage companies, including outfits that have never before raised outside capital but that also fit into Eclipse’s broader themes. The vehicles bring the firm’s capital under management to $4 billion.
That’s a lot for a venture firm that was founded just eight years ago, but apparently, Eclipse’s pitch — that legacy industries need to modernize how they operate in order stay competitive — is resonating with its investors.
As firm founder Lior Susan explains it, “The thing that I always talk about is automation in general because there is just so much opportunity. So you know, 5% of the world’s GDP, or $45 trillion, is blue-collar wages. But there are not enough truck drivers or warehouse workers or agricultural workers or construction workers in the world, and we’ll see even fewer as more people retire. All will be replaced by automation, and we intend to build a lot of those companies in those markets.”
There are many ways to pull traditional industries into the 21st century, judging by Eclipse’s wide-ranging portfolio. One of its biggest bets, for example, is on Bright Machines, a still-private company that looks to ensure that all the different components in a factory are connected to a central control system that can monitor and manage their operations in real-time. Eclipse also backed Enovix, a company that went public through a special-purpose acquisition company last year and is producing lithium-ion batteries for small devices like smart watches, as well as 3D cell technology and batteries for electric vehicles. Eclipse was also an early investor in Lucira, a company focused on developing and commercializing infectious disease test kits. (It staged a traditional IPO in early 2021 when Covid was still rampant.)
To find out a bit more about how Eclipse is looking at the world right now — and how all that fresh capital might be deployed — we hopped on the phone with this morning with Lior, who spend eight years in the Israel Defense Forces before selling a company he helped his brother build and deciding to launch his own venture firm. Our chat has been edited for length and clarity.
TC: You just announced two funds, one of which is a growth fund. Why not just raise a bigger flagship fund?
LS: We think there is a massive opportunity for Eclipse at the early growth stage, and not just at the early stage. Our first bet from this new fund, for example, is Watchmaker Genomics, a company that will accelerate pharma manufacturing using enzymes and automation. Justin, one of our partners, knew the team for a couple of years; they’d bootstrapped the business to advanced revenue and traction after selling their previous company to Roche for $1.2 billion, and we kind of elbowed our way in because they wanted someone to help them accelerate their manufacturing. We invested alongside Decheng Capital, which is an expert in the world of biotech.
Are you really interested in healthcare or are you more focused on startups that improve back-end processes, no matter the industry or vertical?
We have a whole healthcare infrastructure thesis around investing in picks and shovels on the manufacturing side and in terms of logistics and the supply chain. We have amazing companies, including Rune Labs, Nucleus, and a few others that are building picks and shovels and automation for the worlds of pharma.
Nucleus [RadioPharma] is a company that you co-created with the Mayo Clinic. Eclipse has incubated other companies, too. Is this strategy changing as the market softens and opportunities become available elsewhere?
Not at all. Our model is impacted by the size of the opportunity, and $75 trillion out of the world’s $100 trillion GDP is going to undergo a digital transformation. I’ve been saying that for eight years, and I think everyone now agrees with us — the government, other investors, the public markets. Everyone wants to be Elon Musk. Everyone wants to build cars and rockets and to solve tough problems. So our incubation strategy has been driven by the size of the opportunity more than anything else.
One of the companies you helped to create, Bright Machines, raised some debt funding from Silicon Valley Bank back in November after it decided to scrap plans to go public. How has SVB’s implosion impacted Bright Machines and Eclipse more broadly?
We’d been working closely with Silicon Valley Bank from the firm’s establishment. Naturally, I don’t know enough to comment on how they ran the bank. I will tell you that the people over there were incredible and that the work that they did for the broader ecosystem of startups, not only for Eclipse, was incredible, so on a personal note, I’m sad to see [its demise].
On the business side, I think because it’s going to leave a vacuum in this market, there is a whole suite of new opportunities [that will emerge from this]. I think we will see new entrants in this market. We’re also thinking personally about what we should do, to tell you the truth, because there are extraordinary opportunities to provide not only equity but also non-dilutive capital in this world.
Wait — you’re thinking about providing debt to your own companies?
Not yet, not yet. That’s still above my pay grade. But you know, as an investor and operator, you always need to think about the opportunities currently in front of you.