Forging the New Economy: Eclipse Fund V and Early Growth Fund II
Apr 10, 2023|
Today, we announce $1.23 billion in new funds — comprising $720 million for Eclipse Fund V and $510 million for Eclipse Early Growth Fund II — to continue partnering with founders tackling the world’s most pressing challenges.
The world’s most transformative technology companies were founded at inflection points: Google at the time of internet proliferation. Intel when semiconductors were emerging as the catalyst to the electronic revolution. We’re at another inflection point: physical industries urgently need modernization. For the past two decades, digital transformation was everywhere except where we needed it most: supply chain, manufacturing, logistics, energy, healthcare, defense, transportation, construction, agriculture, industrial, mining, and others. This decade’s generational companies will be the ones that redefine and reshape our physical world.
However, even with tailwinds, building generational companies is difficult. There are thousands of factors involved in successful company creation, but the most important factor by far is the right people. You need founders who are passionate, talented, and dedicated — and they in turn need partners who have deep conviction combined with the relevant experience to help founders deliver on their vision. As a team of former operators, this is how Eclipse has approached investing since our inception in 2015, with high-conviction and high-involvement.
To that end, today we announce $1.23 billion in new funds — comprising $720 million for Eclipse Fund V and $510 million for Eclipse Early Growth Fund II — bringing our total assets under management to ~$4 billion. With this capital, we will continue to partner with founders building ambitious companies tackling the world’s most pressing challenges.
Forging the New Economy: There’s Never Been a Better Time to Rebuild Our Physical Industries. The powerful combination of people, technology, capital, and the government’s commitment will fuel the Industrial Evolution.
- We must modernize our physical world: We need to transform physical industries by enabling greater efficiency, scalability, resiliency, and profitability across critical infrastructure. Our essential industries have outgrown the foundation upon which they were built. These sectors are prioritizing digital transformation in response to the massive disruptions inflicted over the last few years. Covid and the subsequent parade of challenges — from trade wars, geopolitical issues and deglobalization, to labor shortages, and ongoing climate change – have all necessitated change. In short, physical industries will not survive in an analog state.
- Partners must be true partners: Today’s Early-Stage founders focused on physical industries are knocking on the door of a massive opportunity, the same way internet founders were in the early 2000’s and semiconductor companies were in the 70’s and 80’s. Eclipse Partners are well-versed in building complex companies for physical industries. Our team helped scale companies, such as Tesla, Rivian, Samsara, Apple, and more. We make few investments per year and work closely with portfolio companies to ensure they benefit from our knowledge and proficiency in relevant industries. Ultimately, our goal is to help founders accelerate the true value of their businesses.
- The technological tipping point: Addressing the vulnerabilities in our critical industries is only possible with technology. Digitization, driven by advances in cloud computing, computer vision, artificial intelligence, automation, and more, has created a robust technical stack that can now be leveraged across all physical industries. The maturity of this technical stack has vastly lowered the cost of starting a company in this space; therefore, Early-Stage capital intensity is no longer an issue for founders looking to build products in the physical world.
- Revisiting the “Myth of Margin”: The SaaS model has dominated Silicon Valley for over a decade, creating the perception that physical industry businesses are undesirable. That thinking ignores the fact that while physical industry businesses might not have the highest gross margins, the successful ones have incredibly high profit margins. Building large, successful companies requires substantial markets, business defensibility, long-term profit margins, and durability. The public markets recognize and reward these types of businesses.
- Re-Industrialization is a strategic national priority: The current Administration has signaled its commitment to revitalize America’s industrial base through unprecedented legislation, including, for example, the CHIPS and Science Act, the Inflation Reduction Act, and the Executive Order on Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy.
About the funds:
- Fund V – $720 million – Eclipse’s Early-Stage Fund will continue to invest in the industries that make up 75% of the world’s $100T GDP, like manufacturing, supply chain, transportation, healthcare infrastructure, semiconductor, energy, etc. Partner Charly Mwangi joined the team late last year, adding even more depth to Eclipse’s bench of operators who continue to build and invest in pre-seed, seed, and Early-Stage companies.
- Early Growth Fund II – $510 million – Continuing the same industry focus, Eclipse’s Early Growth Fund compounds capital into our breakout portfolio companies and seeks new opportunities at Series B and C. With the recent addition of Partner Marc Stoll, our partnership helps Eclipse companies transition from Early-Stage startups to high-performance, generational businesses.
We founded Eclipse to power the Industrial Evolution, to unlock the solutions needed to build the New Economy, and to provide the operational expertise and support that founders innovating in these industries need. By working toward a clear vision and demonstrating enduring, joint resolve to achieve at every step, together founders and Eclipse can deliver on the promise of technology to solve the hard problems we are facing as a global society.
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