SILICON Valley investment firm Eclipse has raised US$1.2 billion for two new funds, both dedicated to backing startups trying to modernize physical industries.
The funds bring the Palo Alto, California-based firm’s total assets under management to US$4 billion, Eclipse announced on Monday (Apr 10). One fund, worth US$720 million and called Eclipse Fund V, will focus on young companies with an emphasis on manufacturing, supply chain, transportation and electrification businesses. The remainder of the money will go to Early Growth Fund II, which will back more mature companies.
“Some of the most amazing founders in the market right now want to be Elon Musk,” Eclipse founding partner Lior Susan said in an interview on Bloomberg Television on Monday. “They want to build cars, they want to build rockets, and they understand that the impact of technology can be much more superior in the physical world than what we’ve been trained in Silicon Valley.”
Eclipse is raising money at a tumultuous time for the venture capital (VC) industry, following both a slowdown in VC activity and a banking crisis. Venture-backed deals dropped in 2022 amid higher interest rates and macroeconomic concerns. Then last month, Silicon Valley Bank, a lender closely tied to VCs and startups, collapsed in the biggest bank failure since the financial crisis. The tech industry as a whole is facing new questions over its long-term growth and the viability of new businesses.
“The next decade in tech will be defined by companies focused on physical industries,” the firm said in a statement, citing “severe cracks in the foundation of our physical world”. Eclipse likened the opportunity to modernize real-world businesses to the boom in software-as-a-service companies in recent decades.
Backing for the new funds came from US-based endowments, foundations, pension funds and non-profits like hospital systems, Lior said. Eclipse was over-subscribed and able to close the funding in a relatively short period of time, he said.
The firm is focused primarily on US-based startups that can impact domestic supply chains and manufacturing. But “that does not mean that there is no opportunities in China”, Lior said.
One of Eclipse’s partners is Charly Mwangi, a former manufacturing executive at electric vehicle startup Rivian Automotive. Mwangi will support the firm’s pursuit of startups starting at their very early stages. BLOOMBERG