Mach Industries just spent $50M to solve a major defense tech problem

Three-year-old Mach Industries has acquired solid rocket motor startup Exquadrum in a $50 million cash-and-equity deal, the Huntington Beach-based defense startup tells TechCrunch. Exquadrum — now rebranded as Mach Energetics — has been fully folded into Mach’s operations, giving it direct control over one of the most important, and constrained, components in modern unmanned systems.

The deal itself started with a lucky break. The two companies first connected last September when an Exquadrum customer at an MIT recruiting event happened to overhear a Mach recruiter mention that the company was in the market for a solid rocket motor supplier. Introductions were made, Mach came in as a customer, and now, roughly five months later, it has acquired the company outright, beating out upward of eight other potential buyers in the process, it says.

“The Exquadrum acquisition marks an important next stage in Mach’s growth,” said founder and CEO Ethan Thornton, who dropped out of MIT at 19 to start the company. “As we deliver vehicles to the warfighter, we’ll continue to vertically integrate our supply chain across solid rocket motors, engines, radar, and avionics to ensure we deliver the best possible product at the lowest cost. In many areas of the defense industrial base, these components are not only too expensive or lacking performance, they’re simply unavailable, with lead times stretching years. In short, vertical integration is non-optional.”

That supply problem is real and getting more acute. Decades of consolidation have left the domestic solid rocket motor market effectively controlled by two large primes — Aerojet Rocketdyne and Northrop Grumman — with little independent capacity to absorb the growing demand that modern drone warfare has created.

Indeed, in February, the Pentagon awarded the defense tech outfit Anduril $43.7 million specifically to expand domestic SRM production (its second such investment in the company in just over a year), explicitly calling SRMs a critical bottleneck in the munitions supply chain.

Mach is now explicitly positioning itself as part of the solution, and not just for its own programs but for the broader ecosystem. Mach Energetics plans to sell components, testing services, and subsystems to other defense firms, a maneuver that suggests Mach sees itself as potential infrastructure for the defense tech industry and not just a systems builder.

According to Mach, all 85 Exquadrum employees are coming over as part of the deal, along with the company’s IP, business lines, and its 70,000-square-foot facility in Victorville, California, which is anchored by a nearby energetics and rocket propulsion test site. The combined company now has roughly 350 employees. Exquadrum co-founders Kevin Mahaffy and Eric Schmidt (no relation to the former Google CEO) are both taking on leadership roles within Mach Energetics and the broader organization.

The acquisition also mirrors moves by other ambitious defense tech startups that are focused on owning the stack and using cost and speed as competitive weapons. Mach has five vehicle programs in various stages of development — Viper, a jet-powered VTOL; Glide, a high-altitude strike glider; Stratos, an airborne surveillance platform; Dart, its low-cost counter-drone interceptor; and Pike, a long-range strike munition built for large-scale deployment — with plans to enter production on at least three this year. The company says the acquisition meaningfully improves unit economics across all of them at exactly the moment it is starting to scale.

Mach has raised nearly $200 million in total — most recently a $100 million Series B last June led by Bedrock Capital, Khosla Ventures, and Sequoia Capital — at a valuation of $470 million. It’s a multiple that right now looks modest for a company with this trajectory and will definitely be worth watching as the rubber starts to meet the road this year.