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Bengaluru-based precision manufacturing startup Ethereal Machines has raised $28.5 million in a Series B funding round led by Avataar Ventures. The deeptech firm, founded in 2014, will deploy the fresh capital to expand manufacturing capacity, build India’s first indigenous multi-axis CNC controller, and accelerate its expansion across the US and Europe.
Avataar Ventures Leads the Round With Backing From Peak XV Partners
The Series B funding round was led by Avataar Ventures, with participation from existing investor Peak XV Partners, Novellus Systems, and other backers including Sustained Innovations, Eventures India, and Indigo Circle Advisors.
The round, worth approximately Rs 264.5 crore, values Ethereal Machines at roughly Rs 1,470 crore (about $158 million). That marks a 3.8X jump from the Rs 383 crore valuation it held during its $13 million Series A round in June 2024.
According to regulatory filings, the company issued Series B preference shares at Rs 90,536 apiece. Avataar invested around Rs 199.55 crore, Peak XV Partners put in Rs 30.7 crore, and Novellus Systems contributed Rs 27.9 crore. Avataar will hold close to a 13.69 percent stake after the round.
The startup also counts Blume Ventures and Intel CEO Lip-Bu Tan among its earlier backers. The deal was first reported in April, when the company was said to be raising the round at a 4X valuation premium.
How Ethereal Machines Will Deploy the Series B Funding
Ethereal Machines plans to spend the new capital across five priorities. The largest is a 300,000-square-foot manufacturing facility in Doddaballapur, on the outskirts of Bengaluru.
The proposed plant will be roughly six times the size of the company’s current facility and will be built in phases starting later this year. Ethereal expects it to create more than 2,000 jobs and become one of the largest automated advanced manufacturing facilities outside China.
The remaining funds will support semiconductor manufacturing initiatives, strengthen the company’s software stack, and fund dedicated go-to-market teams in the US and Europe.
Indigenous CNC Controller and Vesper Software Take Center Stage
A core focus of the round is the development of India’s first proprietary multi-axis CNC controller, a project that has been in the works for more than four years.
Co-founder and CEO Kaushik Mudda described the controller as the “brain and nervous system” of a CNC machine, positioning it as a sovereign technology capability for India. The company also plans to invest further in Vesper, its AI-powered factory operating software that predicts lead times, monitors factory performance in real time, and optimises production workflows.
Inside the Deeptech Precision Manufacturing Startup
Founded in 2014 by Kaushik Mudda and Navin Jain, Ethereal Machines designs and manufactures proprietary multi-axis CNC machines and runs a Machining-as-a-Service (MaaS) platform that supplies high-precision components on demand.
The company serves clients across aerospace, defence, healthcare, semiconductors, consumer electronics, and energy infrastructure. Its proprietary CNC platforms, Aura and Nimbus, deliver sub-10-micron accuracy at what it claims are significantly lower costs than global competitors.
Since its Series A round, the startup says its MaaS revenue has tripled year-on-year while production capacity has expanded tenfold. It currently runs a fully automated smart facility in Peenya, Bengaluru, operating 24×7 across three shifts, and aims to scale from more than 60 machines today to over 1,000 units.
On the financial front, Ethereal Machines reported operating revenue of Rs 11.45 crore in FY25, alongside a loss of Rs 27.27 crore as it continued to invest in manufacturing capacity and technology development.
What the Funding Means for India’s Precision Manufacturing Sector
The round arrives as global supply chains increasingly diversify beyond China, opening fresh opportunities for Indian deeptech manufacturing firms. Around 70 percent of Ethereal Machines’ revenue currently comes from exports to the US, Europe, the UK, and Japan, though the company expects domestic demand to rise as local manufacturing activity accelerates.
Mudda noted that India consumes roughly $2.2 billion worth of CNC machines each year, of which about $1.2 billion is imported. The controller segment remains concentrated among global suppliers such as Fanuc, Siemens, and Heidenhain, underscoring the strategic value of a homegrown alternative.
While aerospace and healthcare were initially Ethereal’s primary markets, semiconductor manufacturing, consumer electronics, and energy infrastructure have emerged as major growth areas. Demand from power-generation equipment makers, driven by the expansion of AI infrastructure and data centres, has also picked up in recent months.
The funding signals growing investor confidence in India’s ability to manufacture complex, high-precision components locally, with execution of the Doddaballapur facility now a key milestone to watch.
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