VC Eclipse has new $1.3B fund to back – and build – ‘virtual AI’ startups

It takes a little bit of Eclipse’s latest investment to see where the company’s interests lie – and where it’s headed.

The Palo Alto-based VC, which has seen its average deal size explode in the past few years, has poured an increasing amount of money into the “physical world.” Its deals include electric boat developer Arc, buzzy battery recycling and materials firm Redwood Materials, self-driving car startup Bedrock Robotics, autonomous vehicle technology company Wayve, and industrial robotics lab Mind Robotics.

With $1.3 billion in cash — split between a $591 million seed fund and one focused on growth startups — Eclipse is focused on what partner Jiten Behl describes as the next big tech era.

“Over the past two decades, we’ve seen many waves of innovation,” Behl said, citing the Internet, mobile cloud, and telecommunications eras. “This is the first time that things will move from our screens to the virtual world; we will see advanced levels of intelligence, and real actions, in terms of solving problems in the real, virtual world.”

AI and the physical world have collided; the ubiquity of the term “body AI” is just one signal. Behl said this period is driven by a combination of talent, technological advancements, demand, and policy. And of course, money.

“We have a good war chest to go and do a lot of damage in the market and support companies properly throughout the life cycle,” he said.

Eclipse isn’t breaking new ground by investing in virtual AI. After all, it’s the next shiny new thing to invest in. How Eclipse selects startups is important to note. VC is looking to invest in all tangible sectors, including transportation, energy, infrastructure, computing, and defense. The interesting part, as Behl explained, is the strategy of building a web, or ecosystem of startups in overlapping sectors that can be partners as they scale.

“Scale is very important, and if you can put it together in a way where companies collaborate early to build scale, to build proof points, it just makes them able to go after the next set of demand,” Behl said, explaining that the portfolio companies will collaborate with each other, but hopefully also collaborate with each other’s partners.

In some cases, those startups will be installed within Eclipse. Behl said Eclipse plans to build companies in the new fund. And while he wouldn’t give too much advice, he confirmed that the process has already begun.

“We’re definitely working on a few cool ideas,” he said, noting that Eclipse is very interested in startups that work across businesses.

“The next insight is like, how do you connect these sectors? How do you build scale across sectors? And how do you use data across sectors to build that pipeline?” he said, adding the data will be used to train intelligent AI models for the benefit of the wider group. “That’s kind of the general thesis we’ve been working with.”