Eclipse's Lior Susan on $12.5B AUM and the Bet on Physical Industries
Summary
Eclipse’s core bet is that venture’s largest opportunity sits in the physical economy—roughly 85% of global GDP, or $100 trillion. Lior Susan argues that manufacturing, energy, defense, transportation, shipping, mining, and semiconductors were neglected while capital crowded into software. Deglobalization, supply-chain vulnerability, government support, and customer demand now make this “the best time in the history of humanity to build those industries again.”
The firm has scaled to about $12.5 billion in AUM by acting as “operators with capital,” not passive venture investors. Eclipse has roughly 90 portfolio companies and helped build 30 of them, while its latest two-fund raise totaled $1.3 billion. Physical companies need operating help across CapEx, manufacturing, supply chains, policy, subsidies, debt, hiring, and systems engineering because “you cannot fake it till you make it” when poor execution appears directly in yield.
Susan rejects formulaic incubation even though company creation is central to Eclipse’s model. “There’s no process,” he says: some founders bring Eclipse an idea, other companies are recruited around an internally developed thesis, and the Rivian carve-out referred to as Mytra in one transcript passage and Mynd in others followed a third path. Each is “a snowflake,” and repeated attempts to manufacture a scalable creation system have failed.
His valuation framework favors market size, differentiation, team quality, and free cash flow over headline gross margin. Susan says Silicon Valley “bullshitted the world that SaaS and gross margin are the most important metrics,” partly by placing continuing engineering costs in R&D rather than COGS. He contrasts crowded software categories with Tesla’s mid-teens gross margin and Cerebras’s roughly 40–50% margin: both can command strong valuations because they solve difficult problems in enormous markets.
Eclipse deliberately avoids sector-box portfolio construction. “My portfolio construction is not to have a portfolio construction,” Susan says; the firm might back five memory companies rather than force one allocation each to defense, chips, and robotics. Its current concentration spans the semiconductor stack, new energy sources, AI infrastructure “picks and shovels,” and physical AI—not foundation models or LLMs.
Physical companies can compound through second and third acts that expand wallet share within an industry. Susan maps Cerebras from chip to system to data center, Redwood Materials from recycling to large-scale energy storage for data centers, and SpaceX from launch to Starlink. Eclipse tries to link these businesses into an internal economy where one deal dollar can become “four or five dollars” across several portfolio companies.
The hands-on promise extends into operational emergencies and a broader US growth thesis. After a cooling leak turned a portfolio data center into “a pool,” Susan flew to the Midwest and spent 72 hours coordinating repairs, down to drying concrete correctly around electronics. He believes physical investment can drive 5–7% annual US growth through factories, energy, construction, housing, and services: “We better not screw up that moment.”
Deep dive
1. Eclipse was built as an operating platform with investment capital
Susan founded Eclipse in 2015 after leaving Flex, then met Pierre while considering a vehicle for building physical-industry companies. Susan was 31, Pierre 85; ten minutes into their first meeting, Pierre declared, “Young man, we’re going to start a firm together.” Susan protested that he had not finished high school and had never invested a dollar. Four months later, Eclipse was born.
Pierre brought experience stretching from Fairchild and National Semiconductor to 35 years at Sequoia. His stories described an earlier venture culture of operators doing few deals, including Sequoia and Kleiner helping save each other’s companies—far removed from today’s calls advertising portfolios that are “up to the right.”
The value Pierre installed was “discipline, discipline, discipline.” Susan connected that directly to manufacturing: “You cannot fake it till you make it” because bad discipline produces bad yield. Pierre also institutionalized board management and quarterly reporting early enough that first-year Eclipse operated more like a ten-year-old firm.
That foundation now supports roughly $12.5 billion in AUM and a recent $1.3 billion split across two funds. Yet Susan still resists the conventional label: Eclipse is “operators with capital,” staffed by people who left industry specifically to build companies in physical sectors.
2. Building 30 companies keeps Eclipse operationally current
Passive capital is insufficient for businesses combining hardware, software, manufacturing, and regulation, Susan argues. Founders may need help with CapEx, supply chains, government, subsidies, debt versus equity, the right engineering team, and the orchestration of a complete system—not merely enough money to build an app.
Eclipse has about 90 companies, roughly 30 of which it helped create, including Bright Machines, Bedrock, Mitra Chem, the Rivian carve-out referred to as Mytra in one passage and Mynd in others, and Peak Energy. Incubation began partly because Susan’s “hands started shaking” to build again; Pierre initially shut the door and lectured him for an hour about discipline before agreeing investors could also create companies.
Susan’s honest answer on methodology is, “There’s no process.” A founder might approach Eclipse with a new HBM-memory concept; Eclipse might identify an opportunity in heterogeneous AI and recruit a team; or it might carve technology out of an incumbent. “Every time I try to build a system around it, I fail.”
Building is also how the investors keep their operating knowledge fresh. Susan believes a former operator becomes stale after ten years away from execution—losing touch with technology, talent, customers, and networks—unless the firm remains directly involved in creating companies.
3. The Rivian carve-out shows how company creation can unlock talent, capital, and neutrality
The company emerged after roughly three years of discussions with RJ about general-purpose manufacturing robotics. Their design thesis was specific: the robot should be mobile and highly dexterous, need not resemble a human, and would require substantial data to train its model.
When Susan learned Rivian already had a small internal team, he proposed a spinout over wine at a robotics dinner. Independence could attract talent unwilling to work on the problem inside Rivian, bring in external capital rather than burden Rivian’s balance sheet, and create a “Switzerland” able to serve every manufacturer.
Eclipse, Rivian, and RJ subsequently carved out the company together. Susan said it was “flying” and planned to show its first product that year—the result of a relationship-driven creation path that would be difficult to reduce to an incubation template.
4. The physical-economy thesis came from China—and arrived later than expected
A year in China convinced Susan that its roughly $20 trillion economy had been built by aligning five forces: talent, policy, capital, technology, and customer demand. A standalone Western company struggles against that coordinated flywheel; Eclipse was his attempt to reproduce some of that alignment at firm level.
Susan expected deglobalization to force countries to rebuild domestic energy, manufacturing, and defense capacity, but conceded that he was wrong about the timing. The shift took longer than expected; COVID first exposed the vulnerability clearly enough for onshoring to accelerate.
His market-size argument is blunt: the physical world represents about 85% of global GDP, roughly $100 trillion. Metal manufacturing alone is a $3 trillion industry, yet when Eclipse started, Susan guessed that quite a lot of capital was flowing into enterprise software and probably zero into metal manufacturing.
Molly O’Shea’s challenge was that newly enthusiastic “tourist VCs” now claim these sectors. Susan’s answer emphasized the difficulty of the work: building a physical company resembles “500 planes that all need to land perfectly,” from wafers and cold plates through PCBAs, full systems, kernel software, customers, and production yield.
5. Free cash flow matters more than the software gross-margin story
Responding to O’Shea’s concern that physical businesses cannot earn SaaS multiples, Susan argued they might do better. “We kind of bullshitted the world that SaaS and gross margin are the most important metrics,” he said; a real public company ultimately trades on free cash flow and EPS, while gross margin is only an indicator.
His criticism is partly accounting-driven: many SaaS businesses sustain growth by continually hiring engineers, but that spending appears in R&D rather than COGS. A business may therefore report an 85% gross margin even when growth remains tightly correlated with cash burn.
Susan instead asks three questions: How large is the market? How differentiated is the product? Does the team have the ability to solve the difficult problem? He said $20 billion is not large enough, guessed a new CRM market at $30 billion, and noted that roughly 1,000 companies compete in CRM.
Tesla, with mid-teens gross margin, can trade like a leading software company; Cerebras, which Susan placed around 40–50%, can trade better than many SaaS businesses. His explanation is not margin purity but “a really tough problem in a gigantic market” for which customers will pay.
6. Eclipse backs clusters, not a predetermined sector checklist
When institutional LPs ask about portfolio construction, Susan gives the same answer: “My portfolio construction is not to have a portfolio construction.” Eclipse could fund five memory companies if conviction warrants it; Susan rejects acquiring one defense, chip, or robotics company merely so the portfolio can claim exposure.
Semiconductors illustrate the cluster approach. Beyond chips sit capital equipment, testing, lithography, packaging, supply chains, and subcomponents. The fact that HBM memory is concentrated among Micron, SK Hynix, and Samsung—while software supports thousands of competitors—signals both the barriers and the opportunity Eclipse believes its operating expertise can address.
Energy is another cluster: The Nuclear Company, Peak Energy’s sodium-ion work, Redwood Materials across LFP and recycling, and an unannounced modern gas-turbine company intended to compete with incumbents. Eclipse also approaches AI from both ends—its infrastructure “picks and shovels” and physical-AI applications—while avoiding foundation models and LLMs.
Susan offered no macro-timing claim: “I know nothing about bubbles and valuation and things like that. I only know how to build companies.” His conviction is narrower but categorical—viewed from the work of company formation, there remains “so much to build.”
7. Second acts and an internal economy can multiply physical platforms
Eclipse initially questioned whether Redwood Materials’ recycling market could become large enough. The next act changed the thesis: rebuild recycled batteries into large-scale energy-storage systems for data centers as CATL and other Chinese suppliers began being blocked from selling storage into “our grid.” Eclipse then led a large financing, while Deepak, a former Tesla CFO, joined Redwood—“the band is back together a little bit.”
Susan sees this expansion pattern repeatedly: Cerebras moved from chip to system to data center; Redwood from recycling to storage; SpaceX from launch to Starlink; and True Anomaly from space defense awareness toward Golden Dome and more vertically integrated programs. Successful physical platforms can introduce multiple businesses and capture more wallet share.
Across the portfolio, Susan said companies signed roughly $40–50 billion of commercial agreements in the prior year, including some double-digit-billion deals. That scale makes customer selection consequential: “You’re married to a very large whale partner,” even as companies have multiple customers in addition to their largest accounts.
The “Eclipse economy” links chips, automated server manufacturing, Oxide’s CPU-based on-prem racks, data centers, nuclear, sodium-ion, lithium-ion, gas turbines, and physical AI. Selling one large deal through three or four companies can turn “a $1” into “four or five dollars”; seeing five-year gas-turbine lead times also directly prompted Eclipse to create a new supplier.
8. Field execution and nationwide growth complete the thesis
Oxide began from the view that security, latency, and cost would keep some computing on-premises while giving customers cloud-like tooling. Eclipse did not foresee AI becoming a catalyst—“Getting lucky is important in this business”—but Susan said Oxide now has multiple customers doing double-digit millions.
The operating promise becomes literal during failure. When cooling leakage left a portfolio data center looking like “a pool,” Susan flew to the Midwest for 72 hours, mobilized service providers, arranged new installations and HVAC systems, and learned how concrete moisture can damage electronics. “I don’t need medals,” he tells grateful founders. “You just must be there with them in the field.”
Susan traces that instinct to leaving high school and working summers on an Israeli banana farm at 16. The workers handled a couple hundred roughly 60-pound bunches a day, and he learned welding to repair the metal cranes used in packaging. Despite the heat, it produced the realization: “I need to build a physical thing. This is my thing.”
His closing macro claim is that a Nebraska data center creates thousands of jobs, then pulls through energy, construction, materials, housing, restaurants, and services. With capital, talent, policy support, demand, and technology aligning, Susan believes the US could grow 5–7% annually—and changed his earlier Henry Ford and Carnegie comparison to call this “the best time in the history of this country to build companies.”