Key facts
- Ethereal Machines, a precision manufacturing startup, raised $28.5 million.
- The funding round was led by Avataar Ventures, with participation from Peak XV Partners.
- The capital will fund a new 300,000 sq ft mega-factory near Bengaluru.
- The company is developing India's first domestic multi-axis CNC controller.
- Ethereal Machines aims to expand its AI-driven factory software platform, Vesper.
- The company plans to establish new teams in the US and Europe.
Precision manufacturing startup Ethereal Machines has secured $28.5 million in a funding round led by Avataar Ventures, with participation from Peak XV Partners and others. The Bengaluru-based company, founded in 2014 by Kaushik Mudda and Navin Jain, designs and builds proprietary multi-axis CNC machines and operates a Machining-as-a-Service (MaaS) business.
Ethereal's flagship CNC machines, Aura and Nimbus, offer sub-10-micron accuracy and operate at a fraction of the cost of global competitors, attributed to the company's intellectual property. The newly raised capital will be allocated to constructing a 300,000 square feet mega-factory on the outskirts of Bengaluru, developing India's first indigenous CNC controller, and expanding its AI-driven factory software platform, Vesper. The company also intends to establish new teams in the United States and Europe.
In June 2024, Ethereal Machines raised $13 million in a Series A round. Since then, the company has experienced significant growth, tripling its MaaS revenue year-over-year and increasing its production capacity tenfold at its automated smart factory in Bengaluru's Peenya industrial area. Mudda noted that existing clients have increased their engagement and wallet share, moving from medium to very high precision work.
Certifications obtained from these projects have enabled Ethereal to secure larger clients in new geographies, with approximately 70% of its current revenue originating from exports to the US, UK, Europe, and emerging markets in Southeast Asia and Japan. The development of Ethereal's proprietary CNC controller has been ongoing for nearly five years, a complex undertaking as few companies globally have successfully developed both multi-axis CNC machines and their controllers.
Regarding the mega-factory, Mudda stated that the land has been acquired, and construction is slated to commence by the end of the year. The facility, located adjacent to Foxconn in Bengaluru's industrial belt, will be developed in three phases, with a long-term goal of expanding the machine fleet to 250-300 units within the next 18-24 months.
Ethereal Machines aims to bolster India's manufacturing sector, which currently contributes about 17% to the nation's GDP but relies heavily on imported precision machine tools from Germany and Japan. India annually consumes approximately $2.2 billion worth of CNC machines, with about $1.2 billion being imported, primarily sophisticated four-axis and five-axis machines, while domestic manufacturers have largely focused on two and three-axis models. The global push for supply chain diversification, such as the China+1 strategy, presents an opportunity for India to capture a share of the $220 billion global precision manufacturing market, projected to reach $400 billion by 2030.