The market may be adjusting, but not for eclipse companies, a Palo Alto-based venture firm that just raised $1.2 billion in two new funds. One fund, with $720 million in capital commitments, will be invested in early-stage teams as well as companies that Eclipse incubates. The remaining $510 million will go to growth-stage companies, including companies that have never raised outside capital before but also fit into the broader themes of Eclipse. The vehicles bring the company’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 argument that legacy industries need to modernize the way they operate to remain competitive is resonating with its investors.
As the firm’s founder, Lior Susan, explains, “What I always talk about is automation in general because there are so many opportunities. So, you know, 5% of global GDP, or $45 trillion, is blue collar wages. But there aren’t enough truckers or warehouse workers or farm workers or construction workers in the world, and we’ll see even fewer as more people retire. Everything will be replaced by automation, and we intend to build many of those companies in those markets.”
There are many ways to bring traditional industries into the 21st century, judging by Eclipse’s extensive portfolio. One of its biggest bets, for example, is Bright Machines, a still-private company that seeks to ensure that all the different components of 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 vehicle batteries. electrical. Eclipse was also an early investor in Lucira, a company focused on developing and commercializing infectious disease test kits. (He hosted a traditional IPO in early 2021 when Covid was still rampant.)
To find out a bit more about how Eclipse is viewing the world right now, and how all that fresh capital could be implemented, we caught up on the phone this morning with Lior, who spent eight years in the Israel Defense Forces prior. sell a company he helped his brother build and decide to launch your own venture company. 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 huge opportunity for Eclipse in the early stage of growth, and not just in the early stage. Our first bet of this new fund, for example, is Watchmaker Genomics, a company that will speed up pharmaceutical manufacturing using enzymes and automation. Justin, one of our partners, had known the team for a couple of years; they had started the business to increase revenue and traction after selling their previous company to Roche for $1.2 billion, and we elbowed our way in because they wanted someone to help them speed up their manufacturing. We invest together with Decheng Capital, which is an expert in the world of biotechnology.
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 supply chain. We have amazing companies including Rune Labs, Nucleus and a few others that are building picks and shovels and automation for the pharmaceutical worlds.
Core [RadioPharma] is a company that you co-created with the Mayo Clinic. Eclipse has also incubated other companies. Is this strategy changing as the market weakens and opportunities arise elsewhere?
You are welcome. Our model is affected by the size of the opportunity, and $75 trillion of the $100 trillion global 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 solve difficult problems. So our incubation strategy has been driven by the size of the opportunity more than anything else.
One of the companies he helped create, Bright Machines, raised some debt funds from Silicon Valley Bank in November after it decided to scrap plans to go public. How has the SVB implosion affected Bright Machines and Eclipse more broadly?
We had been working closely with Silicon Valley Bank since the company’s establishment. Naturally I don’t know enough to comment on how they ran the bank. I’ll tell you the people there were amazing and the work they did for the broader ecosystem of startups, not just Eclipse, was amazing, so on a personal note, I’m saddened to see [its demise].
On the trading side, I think because it’s going to leave a hole in this market, there’s a whole set of new opportunities. [that will emerge from this]. I think we will see new entrants in this market. We’re also personally thinking about what we should do, really, because there are extraordinary opportunities to provide not just capital but also non-dilutive capital in this world.
Wait, are you thinking of providing debt to your own companies?
Not yet, not yet. That’s still above my pay grade. But you know, as an investor and trader, you always have to think about the opportunities that are currently coming your way.
