Eclipse Ventures raises $1.3B fund, backing industrial and physical-world tech as the new frontier

Speaker 1: Up next, we have Lior Susan from Eclipse. He's the founder and CEO. We talking to him about Eclipse's $1,300,000,000 raise as industrial tech shifts from innovation to scale production with companies like Cerebras

Speaker 2: and Bolt's What's going on? Worms. How are doing?

Speaker 1: Doing well. Thanks for having me. Welcome to the show. Please kick us off with an introduction First time. And and some background.

Speaker 3: Yeah. It's great to be here. First of all, I love your show. Yeah. We started the film eleven years ago. We all operators that left their job building companies Yeah. In the physical world to build a film that we can build more than one company at a time. Mhmm. As you can guess, it was fairly controversial eleven years ago to talk about defense manufacturing chips, mining, etcetera. It feels like a little bit less controversial right now. And, yeah, we grow the firm roughly to a $10,000,000,000 AUM, and we just announced our raise of 1,300,000,000.0.

Speaker 1: Let's hit the goal. Congratulations. What was the what was the prehistory of the of the firm? What how did you get into investing? What was the first deal? How big was the first fund? Tell me some background.

Speaker 3: Yeah. First fund, a $125,000,000. Feels like, many moons That's not bad, though. How did you set that up? It feels like a lot of people start at 20 or 50. $1.25 is not bad. Yeah. The ignorance was the power. I never invested a dollar, before a cliff, so it might be that one. I grew up in the military. I went to the special forces. Then I did a company in the networking space. Cisco bought it. I moved to live here. Okay. Spent three years with McNamara while he was the CEO of Flextronics. Fell in love in US manufacturing, and felt all of my friends in Silicon Valley can only spell the world's enterprise software. And I know nothing about enterprise software. I don't like enterprise software, and 85% of the world GDP is physical industries. I felt it's kind of weird that everyone is telling me you need to go after big markets, after big towns, but everyone is following their friends into the enterprise software while those 85% of the world GDP don't have a platform, so I'm left to start that platform. Yeah. Talk to me about the Cerberus investment. How did you meet the founder? I it was one of these companies that I'd heard of,

Speaker 1: and I'd seen a lot of con of of negative takes saying that it was the wrong path, that it wouldn't apply to where the current models are going. And then I tried it and it was really fast and it just felt like magical. And so I was all of a sudden converted to be very excited about the company where before I was sort of uncertain about how it would pencil out. It felt like there was a lot to be done, but you obviously invested early. How did that come together?

Speaker 3: Yeah. We've been around the company for now ten years. Wow. It's been a moment. It's remarkable. Yeah. Exactly. But, you know, like a lot of our companies and I think a lot of those companies in that space Yeah. It started by a fundamental view Sure. That wafer scale integration, basically, short version, you take the the entire wafer and you interconnect between the core. Mhmm. You know, when we have an idea of a chip, it's essentially it's a square, but it don't come from the machine like that. It's actually come as a rounding and then we cut it into Yeah. Squares, into chips. Yeah. The idea here is you take the entire wafer and you connect it to a lot of the chips and you create essentially one very large chip. And naturally, when we made the investments in 2015, we didn't know AI will be exist. What we did know, because we build by ourselves as an operator, those chips and factories and fabs, we knew that Moore's Law is going to hit the limit. From physics point of view, we're going to we're in two nanometers already. You know, let's assume we can do one nanometer. That's about it. That's there is nothing after that. Yeah. And we were looking for a new physics. And a new physics mean, hey, should you can you connect to a lot of those cores in order to create a one big chip? And we decided that we are going to take over companies like NVIDIA and others, and it it was not easy. But I

Speaker 1: think now we are extremely excited about the the company and the growth of the business. Yeah. Yeah. It seems like it's in a fantastic position now. Talk to me about Vulcan Forms. What was the back history there?

Speaker 3: Yeah. It's in some way, same story. Physics start with physics of in the case of Vulcan Forms, are manufacturing high precision metal parts. Sure. And, you know, historically, a lot of those machines been using one, two, three, maybe four lasers. We are using a 160 laser fiber into a single head, and we melt powder really, really fast. Yeah. And the hard part there was, like, how to control something that is so powerful. It's actually we got a call from the US DOW many years ago and asking ourselves basically start to investigate why we are buying all of these lasers because it looks suspicion for them. We're like, no. No. We are just we're just building metal parts. Nothing nothing too sketchy. And, yeah, the company booked multi billions of dollars deals last year and a billion dollar deal the year before. And Kevin Kaskill and the team there is doing a phenomenal job. We are building now four factories in The US, scaling the operation to build high precision metal parts for medical devices, consumer electronics, aerospace and defense, etcetera.

Speaker 1: Yeah, it's a big, I mean, it's a big fund. You're using WE. I imagine you take board seats. You lead rounds. Is that roughly correct? Like, where how many companies do you want in the portfolio? How deeply do you want to be involved? Do you try and pick a single winner in a category? Or do you look at more like secular trends and try and get, you know, a broad exposure to the whole category? What's your thesis?

Speaker 3: Yeah. We so we you know, our LPs put us in the venture bucket and then in the growth bucket when they're thinking about how they are allocating capital, those US endowments and foundation. We call ourselves operators with capital. We are all operators and founders when we build those businesses alongside the management team. So we actually do very few deals every year and we have actually a small amount of position in each fund. And I'll say roughly we incubate one third of the companies and two third who will lead series A, series B, series C, series D, whatever it is. We own the lead. We always take a board seat and and walk very, closely to to the management team. And to tell you the truth, I'm enjoying more building companies than investing in companies. So regardless if I end up investing, and maybe it was not my idea to start the company, I want to feel like I'm part of the management team building those businesses. That's my passion. Jordy? Very cool.

Speaker 2: Where do you think robotics is overhyped and where do you think it's underhyped right now?

Speaker 3: Yeah. Actually, I wrote I wrote something on my LinkedIn maybe last week that say it it feels a little bit twenty twenty one in in Eclipse sectors. We are start seeing some of the bad behavior that maybe was in the enterprise software in 2021 happening now in our sectors. You see those companies raising a billion dollar out of the gate or some some crazy valuations.

Speaker 2: Yeah. Or doing doing I'm assuming there's instances where a company, you guys may have backed a company in a category, you know, eight years ago, and then a new company gets formed in the category, and within, you know, six months, they're valued at at the same price even though there's wildly different from a kind of technical progress standpoint? There

Speaker 3: is some of that. Mainly, it goes back to first principles. As a company, as a person, as an entrepreneur that likes to build companies, I think, you know, there is a way to build companies. There is a for sure a way to build companies in the physical world. You talk about building factories. You talk about supply chain. You talk about CapEx. You cannot all, like, you know, push a full max out of the gate, burn really fast because you believe the contracts will come and you believe that always the markets will be there to fundraise you. So we're just trying to bring some sort of a discipline of how to build those companies. But it goes back to your questions on robotics. We have been doing robotics for eleven years. Now it's out of Eclipse, and we a lot of us did robotics much before in our operating life. And I think, you know, we are now crossing the chasm with robotics, moving from a control based PLC, very accustomed to a much more general purpose, much more using physical AI. And as a result of that, we'll start seeing adoption on the commercial side that is super exciting.

Speaker 1: From your position on boards, I I don't know how much you can talk about this, but I'd love to know your view and expectations for the IPO window we were just talking about with Dan Primak. A lot of a lot of attention paid to the big three SpaceX, OpenAI, Anthropic. But what else are you seeing in terms of how companies are gearing up for the IPO window?

Speaker 3: I mean, I think it's interesting. Right? Of course, SpaceX, I think arguably even OpenAI and Anatropic have a much closer part of the business to what I built to maybe the traditional software that kind of was leading the chart. Yeah. I think real assets are going to have a great moment in the public market. Mhmm. I think people value. You forget it goes back to the 85% of the world GDP. The the reason SpaceX can have that type of an IPO is because they solve something that is really, really hard. Yeah. So it's really, really hard for the second person to solve it as well. I think the the reason you are seeing the correction in the SaaS world is you add a lot of companies. The entry is very easy. Yeah. The TAM is not too big, and as a result, the public market corrects. So I do believe we are going to see quite a lot of companies in the semiconductor world, in the space, in the AI infrastructure, in the data centers worlds going public in the next,

Speaker 1: eighteen months or so. Yeah. What are you tracking in terms of trends in the lunar economy? It does feel like we're at a a turning point moment with SpaceX and and Starship coming online. There's lots of interesting You mean space economy. Right? The lunar economy Yeah. Does Oh, yeah. It's not lunar it's Orbital economy is the buzzword I was thinking. It's the eclipse

Speaker 3: name confusing. Yeah.

Speaker 1: Any any any variation from low Earth orbit to beyond. Some of this stuff when you talk about mass driver on the moon, it starts to seem ten years away, twenty years away, harder to underwrite, harder to think about. But maybe as a venture capitalist, you can start thinking about it. What what are you looking for in in just space broadly?

Speaker 3: Yeah. I mean, I think when you think about Henry Ford, when when when we created cars, there is so much economy that is being developed and so much GDP that is being developed by the ability to move people much faster than you could move before. I think, you know, we are going to see something similar with the increase of our ability to travel to space and lowering the cost significantly. And as a result, we're just going to see a lot of new businesses being built. We are partnering with an amazing company called True Anomaly, they're building space So, defense you know, it's it's not only you're going to travel to space, you're also going to have conflict in space. We are seeing a live one, maybe a ceasefire in with Iran right now. Yeah. But but, yeah, you know, I think since I mentioned his name, I said on an interview yesterday, I used to say that this is the best time to build in this country from Henry Ford and Carnegie or post World War two, and actually change it to this is the best time to build in this country, period, in the companies that I'm passionate about. So we're I'm just extremely excited to have the capital and the relationships to go and build as many companies as we can. Well, congratulations on the fundraise.

Speaker 1: Congratulations on the progress, and thank you so much for taking the time to come chat with us. We'll talk to soon. It. Great to hang. Thanks, folks. Have a good one. Cheers. Take us. Up next, we will be revisiting the Axios NPM package hack that happened, the supply chain attack. NPM, of course Axios NPM was downloaded a 100,000,000 times per week, and it was compromised by North Korean threat actors. We talked about a little bit on the show last week. We're revisiting it with Firas, Abu