Beyond Software: How Eclipse Ventures Capitalized on the ‘Physical-World’ Tech Revolution
- Eclipse Ventures secured a $2.5 billion return from the Cerebras Systems IPO, validating their long-held thesis that 'physical-world' technology is more sustainable than pure SaaS.
- Lior Susan emphasizes that as AI commoditizes code, hardware-centric industries (semiconductors, robotics, defense) offer a superior defensive moat that cannot be replicated by software alone.
- A powerful convergence of government policy, capital, and technical talent is creating an ideal environment for deep-tech startups to scale, moving away from traditional software-only venture models.
The Shift Toward Industrial Innovation
For years, Silicon Valley was defined by the relentless pursuit of SaaS (Software as a Service) and pure enterprise software. However, back in 2015, Lior Susan, founder of Eclipse Ventures, began advocating for a different thesis: the digitization of the physical world. While this approach seemed contrarian at the time, it has now become the cornerstone of a massive financial windfall.
The firm’s early $6.5 million Series A investment in Cerebras Systems has culminated in a monumental $2.5 billion return. With a total investment of $147 million over the years, the recent IPO of the semiconductor giant highlights a 17-fold return, signaling a broader market shift away from purely digital solutions toward hardware-integrated systems.
The Erosion of the Software Moat
Lior Susan argues that the traditional “software moat” is rapidly evaporating. With the rise of advanced generative AI models capable of writing complex code, the barrier to entry for software-only startups has plummeted. As Susan puts it, “You can vibe-code pretty much whatever you want.” This sentiment aligns with current public market skepticism regarding pure SaaS, as enterprises increasingly move toward building their own custom software tools using platforms like Anthropic’s Claude or OpenAI.
However, the physical world offers a defensive barrier that code cannot replicate. Manufacturing semiconductors, building robotics, or advancing energy infrastructure requires clean rooms, capital-intensive machinery, and complex supply chains—assets that cannot be mimicked by AI agents.
The Rise of Industrial Capital
Eclipse Ventures is currently seeing unprecedented momentum in its portfolio. Companies focused on robotics, energy, and defense raised nearly $15 billion in 2025, with Q1 2026 alone seeing $4.5 billion in late-stage funding. Notable successes include:
- Wayve: $1.2 billion in funding for autonomous driving.
- True Anomaly: $650 million for space-based defense technologies.
- Bedrock Robotics: $270 million for industrial robotics.
- Oxide Computer: $200 million for innovative enterprise hardware.
A Unique Convergence of Forces
While AI is often cited as the catalyst for this growth, Susan believes the success of “physical-world” tech is driven by a unique alignment of five forces: technology, capital, customer demand, talent, and policy. For the first time, U.S. government subsidies and favorable regulatory frameworks are supporting the resurgence of deep tech. As the venture landscape evolves, Eclipse remains at the forefront, betting that the most lucrative opportunities for the next decade will be found not in the cloud, but in the machines that power the physical economy.
