VC Eclipse has secured $1.3 billion in new funding to support and build ‘physical AI’ startups.

One need only glance at Eclipse’s recent investments to see where the venture’s interests lie and where it is headed.

Palo Alto-based VCs have been pouring more and more money into the ‘physical world’ as average deal sizes have exploded over the past few years. The deals include electric boat developer Arc, verge battery recycling and materials company Redwood Materials, self-driving construction vehicle startup Bedrock Robotics, autonomous vehicle technology company Wayve and industrial robotics lab Mind Robotics.

With $1.3 billion in new capital (split between $591 million in early-stage incubation funds and funds aimed at growth startups), Eclipse is focusing on what partner Jiten Behl describes as the next era of technology.

“We’ve seen several waves of innovation over the past 20 years,” Behl said, listing the Internet, mobile cloud and social media era. “This is the first time things are moving from the screen into the physical world. We’re going to see advanced levels of intelligence coupled with real action in terms of solving problems in the real physical world.”

AI and the physical world have collided. The ubiquity of the term “physical AI” is just one signal. Behl said this era is being driven by a convergence of talent, technological advancements, demand and policy. And of course capital.

“We have good funding to seriously impact the market and support the company in the right way throughout its life cycle,” he said.

Eclipse isn’t breaking new ground by investing in physical AI. After all, this is the next shiny new thing you should invest in. It’s worth noting how Eclipse selects startups. VCs are looking to invest in all physical sectors, including transportation, energy, infrastructure, computing, and defense. The interesting part, as Behl explains, is the strategy for building an ecosystem, or web, of startups in overlapping fields that have the potential to become partners as they scale.

“Scale is very important, and if companies can put that together in a way that works together to build scale early on and build a proof point, then they can meet the next demand,” Behl said, explaining that the portfolio companies will work directly with each other, but hopefully also with each other’s partners.

In some cases, these startups may be incubated within the scope of Eclipse. Behl said Eclipse plans to build a company with this new fund. And although he didn’t give many hints, he did confirm that the process has already begun.

“We’re working on some really cool ideas,” he said, noting that Eclipse is particularly interested in startups that work across the enterprise.

“The next insight is: How do you connect these sectors? How do you build scale across sectors? And how do you use data across sectors to build a moat?” He argued that adding data would be used to train smarter AI models to benefit a broader group. “This is the kind of general paper we’ve been working on.”