BREAKING: Eclipse’s Quiet… | Sourcery Newsletter Summary

1. Key Themes

The Physical World Is a $100T Opportunity SaaS Investors Ignored

Eclipse spent eight years building a contrarian portfolio in manufacturing, semiconductors, energy, defense, and space while most of Silicon Valley chased software.

"85% of the world GDP, roughly 100 trillion, is in the physical world." This is reinforced by his framing of metal manufacturing as "a $3T industry" that received close to zero venture capital compared to enterprise software.

"Operators With Capital" — Not Traditional VC

Eclipse rejects the standard venture identity in favor of a hands-on operating model.

"We never thought ourselves as venture capital. We call it operators with capital because we are operators with capital." This shows up literally in practice — Susan describes personally flying to fix a flooded data center: "I don't need medals. I do it because that's what I'm passionate about... you just must be there with them in the field."

Gross Margin Is Vanity; Free Cash Flow Is Reality

Susan directly challenges the SaaS-era obsession with gross margin as an investing heuristic.

"We kind of bullshit the world that SaaS and gross margin is the most important metrics... what matter is free cash flow. It's actually not gross margin. Gross margin is an indicator to potentially what your free cash flow going to be." He substantiates this with comparables: Tesla's mid-teens margins and Cerebras' 40-50% margins both trade above many SaaS peers.

The "Eclipse Economy" — Portfolio Synergy as a Moat

Eclipse actively cross-sells and integrates its portfolio companies into large bundled commercial deals.

"We do one very large deals, and we sell the deals with three, four portfolio. So essentially you have a $1 that became four or five dollars." This generated "roughly 40B to 50B in commercial deals across the portfolio last year."

Building Companies From Scratch as an Information Edge

Rather than only writing checks, Eclipse incubates ("Venture Equity") a third of its own portfolio to stay operationally current.

"You need to know manufacturing and supply chain. You need to know how to deal with CapEx... You need to know how to leveraging debt versus equity."

2. Contrarian Perspectives

De-risking through de-globalization was a good bet, just early. Susan bet on countries onshoring energy, manufacturing, and defense years before COVID validated the thesis — a rare example of a macro call being directionally right but badly mistimed.

"Susan's view when he raised the first fund was that countries would stop relying on other countries for energy, manufacturing and defense. He says the timing was wrong and took longer than expected, with COVID as the first event that exposed the vulnerability."

Portfolio construction is itself a mistake. Rather than diversifying for "category coverage," Eclipse deliberately concentrates.

"My portfolio construction is not to have a portfolio construction." He says Eclipse might do 5 memory companies in a single period, and declines inbound requests from firms looking to add a physical AI name for category coverage.

On-prem infrastructure isn't dead — cloud dogma was wrong. Eclipse bet on Oxide when "everything is moving to the cloud" was consensus.

"Our view starting the company was: not everything is going to move to the cloud." Susan argues security, latency, and cost keep entire industries on-premise permanently.

3. Companies Identified

Eclipse — Palo Alto venture firm investing across physical industries (manufacturing, semiconductors, energy, defense, robotics, space). Mentioned as the subject of the profile and case study in "operator-led" investing.

"Eclipse manages approximately $12.5B and closed $1.3B in April 2026 across Eclipse Fund VI and Early Growth III, its largest raise to date."

Cerebras — AI chipmaker (wafer-scale computing). Eclipse's marquee return, proving early conviction in unfashionable hardware bets.

"In 2016, AI hardware was not cool. @EclipseVentures was among the first to believe in us... Despite the fact that many told us that wafer-scale computing couldn't be done." (Andrew Feldman)

Mind Robotics — Full-stack industrial robotics/foundation model platform carved out of Rivian. Case study in Eclipse's incubation model and founder-relationship-driven deal sourcing.

"We can attract better talent that will not necessarily go work today for that problem inside Rivian... it's like Switzerland. You can work with everyone."

Redwood Materials — Battery recycling company (Tesla-founder-linked) expanding into energy storage. Cited as an example of the "second act" compounding thesis.

"Redwood went recycling, then energy storage for data centers built from recycled batteries, with former Tesla CFO Deepak Ahuja joining as CFO."

Oxide — On-prem server/rack computing company. Cited as validation of the anti-cloud-consensus bet.

"There's a lot of industries [that] never stopped needing it for security, latency & cost, & AI is making their bet on @oxidecomputer look even better."

True Anomaly — Space domain awareness company expanding into defense programs. Another "second act" example.

"True Anomaly went space domain awareness, then Golden Dome and vertically integrated programs."

Noetive — AI company that emerged from stealth with a $41M seed led by Eclipse, founded by Eclipse's first Chief AI Officer.

"In September 2026, Eclipse incubation Noetive came out of stealth with a $41M seed led by the firm."

SpaceX — Referenced as the archetype of physical-world compounding (launch → Starlink), not a disclosed Eclipse holding but used as a strategic parallel.

4. People Identified

Lior Susan — Founder & CEO of Eclipse, former Flex executive, 2026 Forbes Midas List honoree. Central figure of the piece; articulates the physical-world investment thesis.

"Okay, young man, we're going to start a firm together." (Lamond's recollection of recruiting Susan)

Pierre Lamond — Eclipse co-founder, age 96, Partner Emeritus. Legendary operator (Fairchild Semiconductor under Gordon Moore, National Semiconductor co-founder, 27-year Sequoia GP). Mentioned as the source of Eclipse's institutional rigor from day one.

"He brought a lot of institutional knowledge of investing and managing a board and how you write your quarterly reports... we already operate in a way that maybe a firm that is 10 years around."

RJ Scaringe — Rivian CEO; co-originator of the Mind Robotics carve-out. Mentioned for enabling Eclipse's incubation strategy via a personal, multi-year relationship.

Andrew Feldman — Cerebras co-founder/CEO. Cited via tweet validating Eclipse's early conviction in an unproven hardware category.

Amir Frenkel — Eclipse's first Chief AI Officer (joined April), co-founder of Noetive. Mentioned as an example of internal talent spinning out incubated companies.

Deepak Ahuja — Former Tesla CFO, now CFO of Redwood Materials. Mentioned as a talent signal for the "second act" thesis.

5. Operating Insights

Discipline transfers across sectors, but consequences differ by domain. In manufacturing, weak process shows up immediately and physically, unlike in software where it can be hidden.

"You cannot fake it till you make it when you're manufacturing something because the yield will just be very bad."

Incubation cannot be systematized or templated — it requires founder-level presence. Susan explicitly states repeated attempts to scale the "Venture Equity" model through process failed.

"Every time I'm trying to build a system around that, I failed."

Use a simple 3-question filter for physical-world deals: market size (with a stated $20B floor), differentiation, and team quality.

"How big is the market? 20 billion is not big enough. How differentiated is what you do in that market, and do you have the right team..."

6. Overlooked Insights

Eclipse is quietly shaping U.S. industrial policy, not just investing behind it — a detail with major long-term implications for regulatory tailwinds in its sectors.

"We actually helped write a little bit of the AI Action Plan & collaborated with the administration on that. We call it the Eclipse economy."

The firm is entering the gas turbine market to directly compete with GE Vernova, driven by proprietary backlog data across its own portfolio — a rare instance of portfolio-level data generating a net-new company thesis.

"Susan says the gas turbine thesis came out of deployment data across the portfolio showing a 5 year lead time with all suppliers fully backlogged."