Mach Industries just spent $50 million to solve a major problem in defense technology

Three-year-old Mach Industries has acquired solid rocket motor startup Exquadrum in a deal worth $50 million in cash and stock, the Huntington Beach-based defense startup told TechCrunch. Exquadrum – now renamed Mach Energetics – is fully integrated into Mach operations, giving it direct control over one of the most critical and constrained components of modern unmanned systems.

The deal itself started with a lucky break. The two companies first connected last September when an Exquadrum client at an MIT recruiting event overheard a Mach recruiter mention that the company was in the market for a solid rocket motor supplier. Introductions were made, Mach came on board as a client, and now, about five months later, it has acquired the company outright, beating out more than eight other potential buyers in the process, she says.

“The acquisition of Exquadrum represents an important next phase in Mach’s growth,” said founder and CEO Ethan Thornton, who left MIT at 19 to start the company. “As we deliver vehicles to warfighters, we will 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 expensive or lacking in performance, they are simply not available, with lead times extending for years. In short, vertical integration is not optional.”

This supply problem is real and getting more severe. Decades of consolidation have left the domestic solid rocket motor market dominated by two large, mainstream companies — Aerojet Rocketdyne and Northrop Grumman — with little independent capacity to absorb the growing demand created by modern drone warfare.

In fact, in February, the Pentagon gave defense technology company Anduril $43.7 million specifically to expand domestic production of weapons of mass destruction (the second such investment in the company in just over a year), explicitly describing weapons of mass destruction as a critical bottleneck in the munitions supply chain.

Now Mach is clearly positioning itself as part of the solution, not only for its own software but also for the broader ecosystem. Mach Energetics plans to sell components, testing services and subsystems to other defense companies, a move that suggests Mach sees itself as potential infrastructure for the defense technology industry and not just a systems builder.

According to Mach, all of Exquadrum’s 85 employees will come as part of the deal, along with the company’s intellectual property, business lines and its 70,000-square-foot facility in Victorville, California, which is anchored by a nearby energy and rocket propulsion testing site. The combined company now has approximately 350 employees. Exquadrum’s founders, Kevin Mahaffey and Eric Schmidt (no relation to the former Google CEO), both hold leadership roles within Mach Energetics and the broader organization.

The acquisition also mirrors moves by other ambitious defense technology startups 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; Gliding, high-altitude glider; Stratos, an airborne observation platform; Dart, a low-cost counter-drone interceptor; and Pike, a long-range assault munition designed for widespread deployment – ​​with plans to enter production on at least three of them this year. The company says the acquisition significantly improves unit economics worldwide the moment it begins expansion.

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. They are multiples that now look modest for a company of this track and will certainly be worth watching as the rubber begins to take on the road this year.