Ethereal Machines Raises $28.5 Million Series B to Build India’s Largest Precision Manufacturing Facility
Bengaluru-based deeptech startup Ethereal Machines has raised $28.5 million (approximately ₹272 crore)** in a Series B funding round led by **Avataar Ventures**, with participation from existing investor **Peak XV Partners** and others . The round brings Ethereal’s total funding to nearly **$50 million, having previously raised $13 million in Series A and $7.3 million in seed funding from Peak XV’s Surge programme .
The Numbers at a Glance
| Metric | Details |
|---|---|
| Amount Raised | $28.5 million (~₹272 crore) |
| Lead Investor | Avataar Ventures |
| Other Participants | Peak XV Partners, others |
| Round Type | Series B |
| Total Funding to Date | ~$50 million |
| Founded | 2014 |
| Founders | Kaushik Mudda & Navin Jain |
| Current Facility | 55,000 sq ft in Peenya, Bengaluru |
| Team Size | 300+ employees |
| Export Revenue Share | ~70% |
| Key Clients | Collins Aerospace, HAL, BEL |
| Target Machine Count | 250-300 units (next 18-24 months) |
What Ethereal Machines Builds
Founded in 2014 by Kaushik Mudda and Navin Jain, Ethereal Machines designs, builds, and operates proprietary multi-axis CNC (Computer Numerical Control) machines and runs a Machining-as-a-Service (MaaS) business supplying high-precision components .
The company’s flagship five-axis CNC machine, Nimbus, delivers sub-10-micron accuracy at production scale—approximately one-tenth the width of a human hair—and matches the precision of elite Japanese and German competitors . The company claims to operate at one-sixth the cost of global peers, a cost advantage Mudda attributes to Ethereal’s proprietary intellectual property .
Key Technical Capabilities:
- 5-axis simultaneous machining: Enables complex geometries without repositioning, reducing errors and lead times
- On-axis feedback: Linear scales on X, Y, Z and dedicated rotary encoders on B and C axes ensure accuracy specifications match real-world QC reports
- Material range: Aluminium, steel, titanium, Inconel, copper EV rotors, nickel-based superalloys
*”India consumes roughly $2.2 billion worth of CNC machines annually, of which about $1.2 billion is imported, predominantly the higher-end four-axis and five-axis machines. Domestic manufacturers have largely stuck to two and three-axis machines, ceding the more sophisticated end of the market to foreign suppliers.”*
— Kaushik Mudda, Co-founder & CEO, Ethereal Machines
The Pivot: Why No One Was Buying Their Machines
Ethereal’s path to success was anything but linear. After five years of development, they had a sophisticated five-axis machine ready, matching precision of elite German and Japanese competitors at half the price. But when they tried to sell it, they hit an unexpected barrier: a lack of faith in Indian manufacturing prowess .
“People said it’s impossible that an Indian company had built a multi-axis CNC machine. They’d see the machine working perfectly and still say, ‘I don’t know, it wouldn’t work.’ “
— Kaushik Mudda
This skepticism forced a radical pivot in mid-2022: instead of selling machines, Ethereal would use their machines to manufacture parts for customers. The “Machining-as-a-Service” (MaaS) model proved transformative. Clients could start with smaller orders ($10,000–$20,000) to test quality and delivery, avoiding hefty upfront investments .
“It’s an objective process. They’ll give you a drawing and instead of claiming your machine can make it, just make the component and give it to them.”
— Kaushik Mudda
The skepticism extended to venture capital as well. After Blume Ventures’ first check in 2019, Ethereal didn’t land any other institutional funding until 2023 .
How the Fresh Capital Will Be Deployed
The $28.5 million Series B will be deployed across five strategic priorities :
| Priority | Details |
|---|---|
| Mega-Factory | 300,000 sq ft facility near Bengaluru (six times larger than current plant); construction to begin by end of 2026; land already procured near Foxconn’s facility |
| Indigenous CNC Controller | India’s first proprietary multi-axis CNC controller; under development for 5+ years; cutting trials underway with two machines already running on it |
| AI Factory Software | Expand Vesper, its AI-driven factory operating platform |
| Semiconductor Manufacturing | Strengthen presence in India’s emerging semiconductor ecosystem with high-precision components |
| Global Expansion | Establish dedicated teams in the US and Europe |
The proposed facility at Doddaballapur, on the outskirts of Bengaluru, will be built in three phases. The longer-term target is to scale its machine fleet to 250-300 units over the next 18-24 months .
*”The facility is next to Foxconn in Bengaluru’s emerging industrial belt. The longer-term target is to scale its machine fleet to 250-300 units over the next 18-24 months.”*
— Kaushik Mudda
Rapid Growth: 3X Revenue, 10X Production Capacity
Since its Series A round in 2024, Ethereal has demonstrated explosive growth :
- MaaS revenue tripled year over year
- Production capacity increased tenfold
- Team expanded to 300+ people
- Exports now account for ~70% of revenue (up from 10% when the company started), with clients across the US, UK, Europe, Japan, and early inroads into Southeast Asia
The company currently operates a fully automated smart manufacturing facility in Peenya, Bengaluru, running round-the-clock across three shifts .
Notable clients include:
- Collins Aerospace
- Hindustan Aeronautics Limited (HAL)
- Bharat Electronics Limited (BEL)
- Global semiconductor and electronics firms (emerging growth segment)
Expanding Markets: Semiconductor, Consumer Electronics, and Energy
While aerospace and healthcare were initially its primary markets, semiconductor manufacturing, consumer electronics, and energy infrastructure have emerged as major growth areas for Ethereal .
*”The China+1 supply chain push by global companies, such as Apple, has created an opportunity for India, and Ethereal wants to pitch itself as the platform to help the country capture a share of the $220 billion global precision manufacturing market, which is projected to reach $400 billion by 2030.”*
— Kaushik Mudda
The company is already executing orders for global semiconductor and electronics firms and expects these segments to account for a larger share of revenue over the next year. Demand from power-generation equipment manufacturers, driven by the expansion of AI infrastructure and data centres, has also increased in recent months .
Why This Matters for India’s Deeptech Ecosystem
Ethereal Machines’ Series B carries several important signals for India’s deeptech and advanced manufacturing landscape:
1. India Can Build World-Class Precision Manufacturing
Ethereal has proven that Indian engineering can match—and in some cases exceed—the precision of German and Japanese competitors. Their Nimbus machine achieves sub-10-micron accuracy at one-sixth the cost of global peers—a direct challenge to the assumption that precision manufacturing requires Western or East Asian suppliers .
2. The “China+1” Opportunity Is Real
Global companies are actively diversifying supply chains away from China, and Ethereal is positioned to capture a share of the $220 billion global precision manufacturing market .
3. Sovereign Technology Matters
Ethereal’s indigenous CNC controller—under development for over five years—represents a critical sovereign technology capability. The controller is the “brain and nervous system” of a CNC machine, and very few companies globally have cracked multi-axis control .
4. Deep-Tech Requires Patient Capital
Ethereal’s journey—from bootstrapping to Blume’s first check in 2019, no institutional funding until 2023, and now nearly $50 million total raised—demonstrates that deep-tech ventures take time. As Mudda himself noted, “extraordinary technical barriers protect this value proposition” .
5. Domestic Supply Chains Are Strengthening
Ethereal’s success is not just about one company; it’s about building capabilities that serve the entire Indian manufacturing ecosystem. By providing high-precision components to aerospace, defence, healthcare, and semiconductor companies, Ethereal is reducing India’s dependence on imported precision components .
The Road Ahead
With $28.5 million in fresh capital, Ethereal Machines is well-positioned to become a cornerstone of India’s advanced manufacturing ecosystem.
Key milestones to watch:
- Mega-factory construction beginning by end of 2026 (300,000 sq ft facility)
- Indigenous CNC controller completion (cutting trials already underway)
- Expansion to 250-300 machines over 18-24 months (from 60 currently)
- US and Europe teams establishment
- Semiconductor and electronics segments scaling
“Ethereal Machines is building that foundation—from precision CNC systems to intelligent factory software and large-scale automated manufacturing. This capital allows us to accelerate that journey and position India as a trusted global hub for high-precision manufacturing.”
— Kaushik Mudda, Co-founder & CEO
For more updates on India’s deeptech ecosystem, startup funding, and advanced manufacturing innovation, keep it locked on StartupPoint.in.
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