Eclipse Ventures has $500 million more to digitize old-line industries and bring them up to speed – TechCrunch

Two years ago we spoke to Lior Susan, the founder of the now six-year Eclipse Venture in Palo Alto, Ca. At the time, the outfit believed that the next big thing wasn’t another social network, but rather the transformation of old industries through full-tech Stacks – including hardware, software, and data – that could bring them into the 21st century.

Fast forward and nothing has changed, at least not within Eclipse. While the world has changed dramatically due to the coronavirus pandemic – the crumbling U.S. infrastructure has never been so evident to so many – Eclipse supports exactly the same types of businesses it always has and the same size with the fund. After the company closed its second and third $ 500 million funds, it silently closed its fourth vehicle earlier this month with $ 500 million capital commitments from mostly foundations.

This morning we spoke with Susan about how Eclipse is focused on revitalizing old industries largely untouched by technology, and why the pitch from Lior and the rest of the Eclipse team has never been this strong. The following are excerpts from this conversation, which have been slightly edited for the sake of length and clarity.

TC: Because of the focus of Eclipse, you have long been aware of the impending supply chain crises that the pandemic has brought to the fore. Have your priorities as an investor changed at all? Did you have a to-do list for 2020 and has that changed?

LS: Not really. We have said from the start that the infrastructure we live in is all 50 to 60 years old. We’ve been looking at social software and fintech, new ideas and consumer trends all the time. But we don’t live on the internet, we actually live in the physical world. And the physical world isn’t [receiving investment] at all. But much of this innovation can be applied to the world we live in, and we want to bring this $ 65 trillion backstage economy into the digital age.

TC: In this go-go market, not many funds are collecting the same amounts as before. Why did you choose this?

LS: We have a very specific strategy. We only make early stage investments in around 22 companies per fund [want] 20% to 25% on our first review and we double up on companies we think are breaking out and try to do two or three rounds in a row. And we know how to do the spreadsheets, and we know how to make an assumption [about] What is the business value we need to create to achieve alpha returns and [that math leads us to] $ 500 million.

TC: Last time we spoke, Eclipse was also involved in starting and funding a company, Bright Machines, which primarily develops software for robot systems within manufacturing companies. Have you founded other companies in the last few years? I remember you didn’t like the word “incubate”.

LS: We call it venture equity internally, but basically we are very thesis-oriented, so a lot of our investments start with us [circling around] An investment thesis and area that we think will be really interesting. I’m working on a thesis on manufacturing insurance [that will cover] Work skills, facilities, assets. . . It [always] I will start with a one-sided work and talk about it in the company and go hunting. But in many cases we don’t find what we like. Here we say, “Okay, we have an operational background. Why not roll up our sleeves and find out how we can build these companies? ‘

You’re right that we made Bright Machines. We also have Bright Insight (an IoT biopharmaceutical and medical device platform that just raised $ 101 million in Series C funding led by General Catalyst) and Chord (a commerce-as-a-service software conducted for direct-to-consumer brands that do just that) raised $ 18 million in Series A funding) and Metrolink (a new company helping companies design and manage their data flows). We’re done [this model] a [few] Times in which we have not only invested in the company, but are part of the founding team or develop assets. We try to keep it very flexible.

TC: Interesting that you couldn’t find an insurance company focused on the manufacturing industry that you like.

LS: We have many such theses. We see a lot of horizontal business models and technologies that [could work well] in the industries in which we play and which we know need solutions. So, can you take a break to build, or find the right people to build a lemonade to make, or can you find the Shopify for industrial equipment or parts?

TC: What size tests do you write?

LS: I’d say $ 3 to 4 million first checks and up to $ 20 million or $ 25 million in a Series B, but you will find many of our companies that we have been in for more than the life of the company Invested $ 150 million.

TC: Which company attracted Eclipse the most?

LS: I would guess Cerebras [Systems, which reportedly makes the world’s largest computer chip].

TC: What do you think of what we hear from the new administration in the US on infrastructure? Do you think it’s about putting money in the right industries?

LS: I had a call to the Manufacturing Task Force on Monday and I’m going to tell you – without even going into politics because that’s above my pay grade – that if not the current government will pour out hundreds of billions of dollars Trillions of dollars to improve this country’s infrastructure. And there will be semiconductors, batteries, manufacturing, and industrial infrastructure as a whole. . .

[I think last year’s ventilator shortage made clear] that we had lost 100% of the production capacity of this country and the western countries as a whole. And I think everyone understands by now that you are going to see a massive surge in infrastructure investment and the only way to do it is in technology because we actually don’t have a million people here wanting that [work on an assembly line]. We actually need automation lines and software and computer vision and machine learning and everything that Silicon Valley is really good at.

TC: Cerebras and other bets give you an insight into what is happening on the semiconductor front. There is obviously a major chip shortage affecting everyone, including the auto industry. How long does it take for supply to meet demand?

LS: I think we’re going to see some big changes, but it’s going to take many, many, many years. This is not software, we cannot address everything [to speed overnight] how you actually need factories and cleaning rooms and assets. It’s pretty complicated.

It will get worse in the next few quarters. It’s good for some of our companies working on the problem, but overall it’s pretty bad news as an economy.

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