17 May Physical-World Tech’s Impact on Venture Capital
The Rise of Physical-World Tech: A New Dawn for Venture Capital
In the ever-evolving landscape of technology investment, a significant shift is underway. Eclipse Ventures, a firm that bet early on the intersection of hardware and software, is reaping substantial rewards and reshaping investor perceptions about the potential of physical-world tech. This trend marks a notable departure from the software-centric focus that has dominated Silicon Valley for years.
The Physical-World Thesis
Founded by Lior Susan in 2015, Eclipse Ventures embarked on a journey to digitize the physical world—a thesis that was initially met with skepticism. At a time when enterprise software and SaaS were the darlings of investors, Susan’s vision seemed out of step. However, the recent $2.5 billion return from their investment in semiconductor company Cerebras Systems has validated this long-term bet, demonstrating the lucrative potential of ventures that bridge the gap between tangible and digital realms.
According to Eclipse, their investment in Cerebras, which began with a $6.5 million Series A round, represents just the beginning of their success. This approach is increasingly resonating with public markets and startup founders, with shares of companies like TSMC and Micron reaching all-time highs. The demand for technology that integrates with the physical world is fueled by the realization that software alone cannot address all challenges—especially those requiring complex manufacturing capabilities.
Investor Enthusiasm and Market Shifts
The recent surge of interest in physical-world tech has been marked by a series of high-value funding rounds for Eclipse’s portfolio companies. In the first quarter of 2026 alone, these companies attracted $4.5 billion in late-stage investments. Notable deals include $1.2 billion for autonomous vehicle company Wayve, $650 million for space tech startup True Anomaly, $270 million for Bedrock Robotics, and $200 million for Oxide Computer.
This wave of investment is not solely driven by AI, though artificial intelligence plays a pivotal role. AI serves as both an infrastructure input, through chips and data centers, and as a catalyst making robotics increasingly viable. However, the allure of physical-world tech extends beyond AI, capturing investor attention due to its foundational role in global GDP.
Implications for the Future
The growing interest in physical-world tech underscores a broader recognition of the limitations of software-centric models. As enterprises explore the creation of bespoke software tools using AI technologies like Anthropic’s Claude Code or OpenAI’s models, the unique value of physical-world tech becomes ever clearer. Unlike software, the production of semiconductors, robotics, and other hardware requires specialized infrastructure that cannot be easily replicated.
Eclipse Ventures’ success story is emblematic of a larger trend. As the tech industry continues to evolve, the fusion of hardware and software promises to unlock new opportunities and reshape industries. Investors, founders, and markets are beginning to align with this vision, suggesting that the future may well belong to those who can adeptly navigate the intersection of the digital and physical worlds.
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