Deeptech startup Ethereal Machines raises $28.5M led by Avataar Ventures

Ethereal Machines, the Bengaluru-headquartered deeptech startup operating in the precision manufacturing space, has raised $28.5 million in a Series B funding round led by Avataar Ventures, with participation from Peak XV Partners and other investors.

The company plans to use the fresh capital to expand its manufacturing facility, strengthen its software stack, advance technology development, build capabilities for the semiconductor sector, and support global expansion.

Founded in 2014 by Kaushik Mudda and Navin Jain, Ethereal Machines designs, builds, and operates proprietary multi-axis CNC machines. Through its Machining-as-a-Service (MaaS) model, Ethereal serves global clients across the aerospace, defence, healthcare, semiconductor, and consumer electronics sectors from its smart factory in Peenya, Bengaluru.

“The world is actively looking for resilient alternatives in global manufacturing, and India has a once-in-a-generation opportunity to emerge as a serious deep-tech manufacturing powerhouse. Ethereal Machines is building that foundation from precision CNC systems to intelligent factory software and large-scale automated manufacturing,” said Kaushik Mudda, Co-founder & CEO, Ethereal Machines.

Ethereal Machines raised $13 million in its Series A funding round in June 2024. The startup said its Machining-as-a-Service (MaaS) revenue grew 3X year-on-year, while its production capacity expanded 10X across its smart factory operations.

The company operates a manufacturing facility spanning three lakh square feet and employs over 2,000 people. It has also developed a proprietary factory operating software stack, Vesper, which uses AI to predict manufacturing lead times, monitor factory uptime and output in real time, and optimise production workflows.

Ethereal Machines also plans to develop a proprietary multi-axis CNC controller: the command centre that governs every axis of machine movement and delivers the micron-level precision.

"Their (Ethereal Machines) full-stack approach of building their own CNC machines and pairing them with intelligent factory software, lets them operate at 1/6th the cost of global peers. The roster of top-tier global clients they have already won is validation of that technological edge,” said Anirudh Singh of Avataar Ventures Partners.

According to Ethereal Machines, given India's heavy reliance on imported precision machine tools, the company believes its proprietary machines, MaaS model, and global customer base position it to help establish India as a leader in precision engineering.