When Lior Susan started Eclipse Ventures in 2015, the firm’s thesis of digitizing the physical world wasn’t particularly popular in Silicon Valley.
“It was the era of enterprise software and SaaS, and it felt fairly lonely the first couple of years,” Susan said on stage at a recent StrictlyVC event in San Francisco.
More than a decade later, Eclipse finds itself at the center of the tech world’s action. The firm’s $6.5 million Series A investment in Cerebras Systems in 2016 paved the way for a total return of $2.5 billion when the semiconductor company went public this week. The firm invested a total of $147 million in Cerebras over time, a bet that generated a 17-fold return at the IPO price of $185 per share, according to Eclipse.
For Susan, the windfall from Cerebras is only the beginning of reaping big rewards from a longstanding belief that because 85% of global GDP is tied to the physical world, investing in companies beyond pure software could be immensely lucrative.
Public markets and startup founders seem to be recognizing the value of physical-world tech now, too. Susan noted that shares of TSMC and Micron recently hit all-time highs, while a growing cohort of elite founders are eager to build startups at the intersection of hardware and software.
“I think people understand that the real moat in software is gone. You can vibe code pretty much whatever you want,” he said.
Susan echoed public market sentiment that earlier this year sent many SaaS stocks tumbling on the belief that enterprises may use Anthropic’s Claude Code or OpenAI’s latest models to create their own bespoke software tools instead.
“What you cannot do with ‘vibe code’ is manufacture wafers, because you need machines and silicon, and they need clean rooms, and a bunch of other things,” Susan said.
When it comes to the tech that touches the physical world, it’s not just semiconductors that are suddenly catching the attention of investors and founders.
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