Lior Susan, Eclipse — Redefining Physical Industries and Powering the Ongoing Industrial Evolution



Jan 18, 2023



Eclipse Founding Partner Lior Susan sat down with Ty Findley, host of Heavy Hitters: The Digital Industrial Podcast, to discuss the opportunities and challenges that lie ahead for digital industrial innovation.

Editor’s note: Portions of the conversation were edited for brevity.

When Lior Susan founded Eclipse in 2015, physical industries were an afterthought — or not even a thought — to the VC community. Physical industries were deemed “too hard” or “too complicated” and were passed up in favor of focusing on more familiar venture-backed industries like SaaS, FinTech, and more. Fast-forward seven years later, it is no longer an option to ignore the critical industries that power our everyday lives. Over the past two years especially, Eclipse’s thesis and the need to digitally transform the world’s physical industries came into sharper focus as we navigated the many challenges we faced as a global community. Historically high inflation, unprecedented supply chain interruptions, geopolitical conflicts, and climate-related disasters thrust physical industries and the critical need for transformation into the spotlight like never before. Susan sat down with Ty Findley, host of Heavy Hitters: The Digital Industrial Podcast — the podcast where heavy industrial industries meet the venture capital ecosystem — to discuss the opportunities and challenges that lie ahead for digital industrial innovation.

Below are a few highlights from their conversation.

Ty Findley (HH): Lior, this an extra special podcast for me, as Eclipse truly is one of the very first movers to invest behind this thesis of digital industrial and has similar parallels in my opinion to what Forerunner did bringing Consumer Tech into the spotlight or Fifth Wall did with PropTech. I think the Industrial Tech community owes you a hat tip with Eclipse for building up the ecosystem early on. So, really excited to have you and welcome to Heavy Hitters. To start, can you give listeners more color commentary on what’s been a pretty incredible journey on your path to Silicon Valley and founding Eclipse?

Lior: I did not have a conventional Silicon Valley background like going to Stanford Business School, nor did I ever have a stint working at Facebook. I grew up in a kibbutz community in the old part of Israel, worked on a banana farm throughout my childhood, and joined the military for many years in the Special Forces. Afterwards, I joined my younger brother as he was building the company Intucell, helped sell the company to Cisco, and moved to the Bay Area where I met Mike McNamara — the CEO of Flextronics at the time — and helped him build the company’s digital transformation team. Three and a half years after leaving Flextronics, I started Eclipse to tackle what I believe is the greatest opportunity of our lifetime to digitize physical industries. I did not plan the path I’ve ended up on, but when I think about it, starting my career in agriculture, going into defense, then manufacturing, maybe it was meant to be for me from the start after all.

Ty Findley (HH): It’s certainly a perfect alignment! Let’s set the stage for our discussion with listeners who maybe aren’t as familiar with Eclipse. Tell us a little more about Eclipse generally. I also saw this year marks seven years since starting the firm, so any quick reflections would be appreciated as well.

Lior: I started the firm in April 2015 and seven years later, we're managing about $3 billion. There are 26 full-time people at the firm and we have partnered with about 90 companies. At the beginning, it was a lonely space to be in — other investors were focused on FinTech, SaaS, and crypto. But the industries that are the most important are the essential physical industries that influence the way that our kids live, the way we move products, the way that we are using healthcare and security, etc. Yet, these industries did not have the same tech transformation at the hands of the internet, mobile, cloud, etc., that other industries went through. This sounds more obvious today than it was in 2015. 

Ty Findley (HH): I know you have multiple funds and focus areas — I believe there’s an Early-Stage, Early Growth, and Venture Equity. I just want to make sure and scope in our listeners who may be approaching you for different stages, sectors, and tech size. Do you mind confirming and elaborating?

Lior: We are currently investing out of our $500M Fund IV in Early-Stage companies, primarily seed, Series A, and from time to time, Series B as well. Through this fund, we also build companies out of our program called Venture Equity. Through Venture Equity, we have at any given time four to five Venture Founders — top-tier operators who want to build companies that will transform the industrial sector. We help them build their companies internally at Eclipse and proceed by leading their seed rounds. Along with our Fund IV, we have another $500M Early Growth Fund that enables us to lead rounds in Series B, C, and D not only in our existing portfolio, but also for companies that we find that we unfortunately did not meet at the Early-Stage. All in, we’re currently deploying a billion dollars of fresh capital to build the New Economy.

Ty Findley (HH): All humility appreciated, Lior, but you guys really were one of the first movers in this category, at least from the venture perspective. Let's unpack that genesis of how you and Eclipse saw and had that conviction early to attack this white space innovating in these physical industries like agriculture, industrial, manufacturing, supply chain, transportation, and energy. What was it that convinced you to be contrarian as one of the first movers to invest thematically behind what you're calling a new era in essential industries? Second, how has it evolved over the last few years? We've had COVID supply chain issues, reshoring has a hotter momentum than ever before, and globalization expedited by war, all those things. What has changed? And what does that evolution mean for VC investing behind this going forward?

Lior: I had two “aha” moments while I was at Flex. Flextronics operates in about 10 industries that fit the bill of what you’d classify as physical industries like aerospace and defense, aviation, automotive, industrial, consumer electronics, infrastructure and communication, energy, etc. I spent a lot of time with Flex customers and I consistently heard how these giant industries were being transformed by technology. Customers’ main message for us at Flex was, "Hey, it's cool that you're doing our manufacturing, but we need more help with technology. Technology's going to change our industries." I was fascinated by the notion that Johnson and Johnson on the medical device side and Schlumberger on the energy side were talking about identically the same trend. Although, naturally healthcare and oil and gas are extremely different industries.

My second “aha” moment happened when I took this insight and tried to share this information with friends. At the time, I was an entrepreneur and I was an executive at a Fortune 500, so I got to know most of the VCs and growth investors in the Bay Area. I said, "Hey, a lot of the things that you guys are familiar with around cloud infrastructures, SaaS, and open source software are now going to migrate into those giant industries and it's a pure greenfield. You don't have 10 companies in that space. You have none, you have only incumbents." So, basically I tried to convince them why it makes sense to focus on investing in physical industries and the response was, "Man, that's too hard. We like recurrent business models." I just scratched my head like, "Out of the $85 trillion world GDP, about 70 plus are in those sectors. And if tech penetration is a single digit, most of the growth of tech will happen in those sectors." That essentially was the catalyst for me to leave Flex and start Eclipse.

We are seeing a perfect storm that I personally and the team at Eclipse believes will finally digitize physical industries.

Lior Susan, Founding Partner, Eclipse

Ty Findley (HH): So all of that building even circa before 2015 and then kicking off 2015 with a fund — fast forward to today. What’s changed and what does that mean for the VC investment class behind these evolving industries?

Lior: It’s remarkable how quickly changes are occurring now. For someone who has been doing this for seven years, I'm more bullish than ever that the strategy is going to come to  fruition. When we first started, we did not take into account the world shutting down all physical operations when COVID hit and the resulting vulnerability. And as a result, all of these industries are now trying to move to digital. We also did not count on an energy crisis in Europe due to the situation with Russia and the impact on long duration energy storage, renewable energy, and the ability to use batteries. We did not count on the electrification that we are seeing in automotive. We did not count on a war in Ukraine and the understanding that defense needs to implement much more technology than ever before. We did not count on a trillion dollar Infrastructure Law. We did not even count that the richest person on earth would be a guy building cars and rockets. Now he also owns a social media platform, so he's killing my pitch. But you get the point — I think we are seeing a perfect storm that I personally and the team at Eclipse believes will finally digitize physical industries. As a result, we are going to see a lot of Tesla and SpaceX-esque companies being built in these categories and we want to back them.

Ty Findley (HH): With all that momentum, one would think we’d see more capital flooding in faster than ever into VC and legacy industrial innovation. Why aren't there more VCs focused on physical industries given these opportunities and all the record dry powder we talk about in the venture asset class?

Lior: I think it's changing — we are seeing much more competition coming from what I think of as general investors that yesterday were all about crypto, and maybe the day before were all about SaaS, and now they're all about these industrial sectors. These investors can no longer ignore these industries because this is the largest opportunity for technology and they are following where the largest opportunities exist.

Second, all of the investors at Eclipse come from an operating background in these sectors. Greg (Reichow) came from Tesla, Charly from Rivian and Tesla, Seth came from GE, and Aidan from Apple and Samsara. So, for us, it was obvious that the largest companies in the world are being built right now in these sectors and we were less terrified than maybe other general investors about the perceived complexities. One of the things I constantly hear from other investors and LPs is, "Hey, this is a capital intensive business." And I will respond, "Yes, at this scale, but any SaaS company or consumer company will raise a lot of money at scale as well."

What changed dramatically is the average check that we are writing out of Eclipse, which is $8 million. So, today with an $8 million check, you can actually get a working prototype, an early version of product-market fit in the industrial sector. Ten years ago, you needed to add another zero because we did not have open source software, cloud infrastructure, sensors that are easy to use, a computer that's easy to use, manufacturing that is willing to work with startups, and so on. The cost of building these companies in the Early-Stage normalized to any other SaaS and FinTech company. My belief is that in the long term we're going to see a lot of investors operating in these sectors. Most of the world GDP is in these sectors and as a result, most of the investors in the world will focus on those areas.

Ty Findley (HH): We talked about this a little earlier, but I want to come back to how you build a business model to scale the right way in these industries. Eclipse knows this so well and the go-to-market motion required, and now have formalized it into the branding of Eclipse Venture Equity building new businesses from scratch. Can you give us a little more color on why you added this capability alongside the Early-Stage and Early Growth Funds and how you see that progressing ahead amongst the portfolio within Eclipse?

Lior: It started without strategy, if I'm being transparent. We are operators and I actually like to operate. I know I'm also an investor today, but I'm an operator at heart and I like to build companies. Now, the question is, how are you operating at scale? I like to think I’m a general contractor that's helping 10 teams build 10 companies, rather than me building one house. We had a strong thesis in 2017 that the world would move from offshoring to near-shoring and then onshoring, because people would want to manufacture much closer to the demand. We couldn't find the right company, so I went to the team and said, "I actually built that team originally inside Flex. It used to be called the Advanced Engineering Group, AEG. I will go talk with Mike and see if he wants to give that team back." 12 months later, we carved 200 people out of Flex into a company that we created, Bright Machines. I became the CEO of that company and we financed the business and we thought, "How can we do this at scale?” That essentially was the foundation of the Venture Equity program and Aidan joined us about two years ago and took it from bare bones to a very reputable structure, building four to five companies a year.

For the full episode, listen here.

Follow Eclipse on LinkedIn and Twitter for the latest on the Industrial Evolution.


  • Digital Transformation
  • Industrial
  • Infrastructure
  • Manufacturing
  • Physical Industries
  • Reshoring
  • Supply Chain
  • Transportation

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