Bengaluru-based deeptech manufacturing startup Ethereal Machines officially raised $28.5 million (approximately ₹264.5 crore) in its Series B funding round on Saturday, April 25, 2026.
The investment was led by Avataar Venture Partners, with the valuation reportedly jumping to $158 million (₹1,470 crore)—a nearly 4x (3.8x) increase from its previous valuation of ₹383 crore in 2024.
1. Deal Breakdown & Investors
The round is a mix of fresh capital and increased commitments from existing marquee backers.
- Lead Investor: Avataar Venture Partners (invested ₹199.55 crore for a 13.69% stake).
- Key Participants: Peak XV Partners (investing ₹30.7 crore, increasing stake to 16.36%) and Novellus Systems (investing ₹27.9 crore).
- Other Investors: Sustained Innovations LLP, Eventures India Pvt Ltd, Shailesh Lakhani, and Indigo Circle Advisors.
- Founder Stake: Following this round, co-founders Kaushik Mudda and Navin Jain collectively retain a 24.17% stake in the company.
2. Business Model: Machining-as-a-Service (MaaS)
Ethereal Machines has successfully pivoted from being a machine seller to a specialized manufacturing-as-a-service provider.
- Proprietary Tech: The company develops its own 5-axis CNC (Computer Numerical Control) machines. Unlike traditional 3-axis machines, these can move in five different directions, allowing for the production of highly complex, high-precision components.
- Target Industries: The firm caters to mission-critical sectors including aerospace, defense, healthcare, and automotive.
- Efficiency: Ethereal’s proprietary technology reportedly reduces manufacturing costs for clients by 30% and cuts production lead times by 40%.
3. Financial Growth & Capacity
The funding follows a period of rapid physical and financial expansion for the decade-old startup.
- Revenue Growth: Operating revenue for FY25 stood at ₹11.45 crore, though the firm posted a loss of ₹27.27 crore during the same period as it scaled infrastructure.
- Facility Expansion: The company currently operates a 55,000-square-foot facility in Bengaluru with over 60 machines running 24/7.
- The “Mega-Factory”: A portion of the new capital is earmarked for a new 7-acre mega-factory in Bengaluru to meet the surging global demand for precision components under the “Make in India” initiative.
4. Strategic Importance
Ethereal Machines is viewed as a critical player in India’s push for manufacturing self-reliance.
- Import Substitution: India currently imports billions of dollars worth of machine tools; Ethereal is one of the few domestic firms competing with German and Japanese giants in the high-end 5-axis space.
- Global Market: With the Series B capital, the company intends to aggressively expand its presence in the U.S. and European markets, positioning itself as a cost-effective alternative for precision engineering.