Mach Industries just spent $50M to solve a major security technology problem

Three-year-old Mach Industries has acquired Exquadrum solid rocket motor for $50 million, the Huntington Beach-based defense startup tells TechCrunch. Exquadrum – now renamed Mach Energetics – is fully folded into the Mach process, giving it direct control over one of the most important, and burdensome, aspects of today’s unmanned systems.

The deal started with a break. The two companies first connected last September when an Exquadrum client at a recruiting event at MIT overheard a Mach recruiter say the company was in the market for solid-state rockets. The introduction was made, Mach came as a customer, and now, five months later, he found the company, beating more than eight potential buyers, it says.

“The acquisition of Exquadrum marks an important step in Mach’s growth,” said founder and CEO Ethan Thornton, who dropped out of MIT at age 19 to start the company. “As we deliver vehicles to the warfighter, we will continue to integrate our procurement strategies into solid rocket systems, engines, radars, and avionics to ensure that we are delivering the best products at the lowest possible cost. In many areas of the defense industry, these equipment are not just too expensive or lack functionality, they are not available, and in the short term, the mix is ​​unstable.”

That availability problem is real and growing. Years of consolidation have left the domestic rocket market dominated by two major primes – Aerojet Rocketdyne and Northrop Grumman – without the independent power to handle the ever-increasing volume of modern drone warfare.

Indeed, in February, the Pentagon gave Anduril a defense technology outfit of $ 43.7 million specifically to increase the production of SRM in-house (its second such investment in the company in less than a year), calling SRMs the most difficult part of the arms sales.

Mach is now positioning itself as part of the solution, not just for its own software but for the universe as a whole. Mach Energetics plans to sell equipment, test services, and subsystems to other defense companies, a move that shows Mach sees itself as a base for defense technology and not just a machine builder.

According to Mach, all 85 employees of Exquadrum are coming as part of the agreement, along with the company’s IP, business lines, and its 70,000-square-foot facility in Victorville, California, which will be equipped with a test center for energy and rocket propulsion. The combined company now has about 350 employees. Exquadrum co-founders Kevin Mahaffy and Eric Schmidt (no relation to the former Google CEO) are both taking positions in Mach Energetics and the executive board.

The acquisition also reflects a move by other defense firms to focus on having a stack and using cost and speed as competitive tools. Mach has five vehicle programs in various stages of development – ​​the Viper, a jet-powered VTOL; Glide, a high-end burner; Stratos, an air traffic control platform; Dart, its low-cost anti-drone interceptor; and the Pike, long-range missiles built for mass deployment – with plans to enter production of at least three this year. The company says the acquisition will improve the company’s overall financial position at a time of rapid growth.

Mach has raised nearly $200 million in total – recently a $100 million Series B last June led by Bedrock Capital, Khosla Ventures, and Sequoia Capital – at a cost of $470 million which currently seems modest for a company with this strategy, and will be worth watching when the rubber starts to meet the road this year.