VC Eclipse has set aside $1.3 billion in new funding to back and build ‘physical AI’ startups

A quick look at Eclipse’s recent investments gives you an idea of ​​where the venture’s interests lie and where it’s headed.

The Palo Alto-based VC has seen its median deal size explode over the past few years, funneling more and more money into the “physical world.” The company’s deals include electric boat developer Ark, Buzzy battery recycling and materials company Redwood Materials, self-driving construction vehicle startup Bedrock Robotics, self-driving vehicle technology company Wave, and industrial robotics institute Mind Robotics.

With $1.3 billion in new capital (split between a $591 million early-stage incubation fund and a fund for growth startups), Eclipse is focused on what partner Jiten Behr describes as the next big technology era.

“Over the past 20 years, we have experienced multiple waves of innovation,” Bale said, citing the era of the Internet, mobile cloud, and social media. “This is the first time that things are moving from our screens to the physical world. We’re going to see a higher level of intelligence along with real action in terms of solving real, physical world problems.”

AI and the physical world have collided. The ubiquity of the term “physical AI” is just one signal. Bale said this era is being driven by a convergence of talent, technological advances, demand and policy. And of course capital.

“We have a great war chest to hit the market hard and support companies in the right way throughout their lifecycle,” he said.

Eclipse isn’t breaking new ground by investing in physical AI. After all, this is the next shiny new thing to invest in. It’s interesting to see how Eclipse chooses startups. VCs are looking to invest in all physical sectors, including transportation, energy, infrastructure, computing, and defense. The interesting part, as Bale explained, is the strategy of building a web, or ecosystem, of startups in overlapping fields that are likely to become partners as they scale.

“Scale is very important, and if companies can partner early on to build scale and put it together in a way that builds proof points, then it allows companies to pursue the next set of demands,” Bale said, explaining that portfolio companies will be working directly with each other, but also with each other’s partners if possible.

In some cases, these startups are incubated within the confines of Eclipse. Bale said Eclipse plans to create a company from this new fund. And although he didn’t give too many hints, he admitted that the process has already begun.

“We’re definitely working on some really great ideas,” he said, noting that Eclipse is particularly interested in startups working across the enterprise.

“The next insights are: how do we connect these sectors together, how do we build scale across sectors, how do we use sector-wide data to build an outer moat?” He raised that the addition of data will be used to train smarter AI models that benefit broader groups. “That’s kind of the general theme we’ve been working on.”