VC Eclipse has a new $1.3 billion fund to back — and build — startups in “physical AI.”

It only takes a quick look at Eclipse’s recent investments to see where this venture firm’s interests lie — and where it’s headed.

The Palo Alto-based venture capital, which has seen its average deal size explode over the past several years, has been pouring an increasing amount of money into the “physical world.” Its deals include electric boat developer Arc, battery and materials recycling company Redwood Materials, self-driving construction vehicle startup Bedrock Robotics, self-driving vehicle technology company Wayve, and industrial robotics lab Mind Robotics.

With $1.3 billion in new capital — split between a $591 million early-stage incubation fund and another fund geared toward growing startups — Eclipse is focused on what partner Jiten Behl describes as the next big tech era.

“Over the past two decades, we have seen multiple waves of innovation,” Biehl said, listing the age of the Internet, the mobile cloud and social media. “This is the first time that things will move from our screens into the physical world; we will see advanced levels of intelligence, coupled with actual actions, 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 sign. This era is driven by the convergence of talent, technological advancement, demand and politics, Biehl said. And of course capital.

“We have a good war chest to make a serious impact in the market and support companies in the right way throughout the life cycle,” he said.

Eclipse doesn’t break new ground by investing in physical AI. It is, after all, the next shiny new thing to invest in. It is noteworthy how Eclipse selects startups. Venture capital looks to invest in all physical sectors, including transportation, energy, infrastructure, computing, and defense. The interesting part, as Biehl described it, is a strategy to build a web or ecosystem of startups in overlapping fields that are likely to become partners as they scale.

“Scale is very important, and if you can put it together in a way that companies partner early on to build scale, build proof points, then they can just go after the next set of demand,” Biehl said, explaining that the portfolio companies will collaborate with each other directly, but hopefully also work with each other’s partners.

In some cases, those startups will be incubated within the confines of Eclipse. Eclipse plans to build companies from this new fund, Biehl said. Although he did not give many hints, he confirmed that the process has already begun.

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

“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 that moat?” He put forward that adding data will be used to train smarter AI models to benefit a broader group. “That’s kind of the general thesis we’ve been working on.”