Startup Deep Dive : Ethereal Machines — valued at $158 million on Rs 11.45 crore of revenue

In April 2026, investors priced a Bengaluru manufacturer of five-axis CNC machines at Rs 1,470 crore (~$158 million) — a nearly fourfold jump from its 2024 valuation. The same company’s audited revenue for the year ended March 2025 was Rs 11.45 crore, against a net loss of Rs 27.27 crore, as per its regulatory filing reported by Entrackr.

That gap between a nine-figure-dollar valuation and single-digit-crore revenue is the story of Ethereal Machines: a company two engineering students started in a dorm room in 2010, that took four and a half years to build a machine every expert told them only Germany and Japan could build, and that now bets its future on renting out that machine’s time rather than selling the machine itself.

Quick facts

What they do

Ethereal Machines designs and builds its own multi-axis CNC (computer numerical control) machines, then uses those machines itself to manufacture precision-engineered metal components for other companies, a model it calls machining-as-a-service, or MaaS. Its clients sit in aerospace, defence, healthcare and semiconductor supply chains — sectors where a part’s tolerance is measured in microns and a machining error can ground an aircraft or void a medical device. The company’s own about page lists Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Collins Aerospace among the customers it has supplied critical components to, according to Blume Ventures’ account of the business. Instead of selling a half-million-dollar machine to a factory and walking away, Ethereal keeps the machine, runs it around the clock at its own Bengaluru facility, and sells the finished part. Its flagship platform, marketed as Nimbus, is pitched as capable of “sub-10-micron accuracy at production scale,” per Avataar Venture Partners’ portfolio page.

The origin

The idea did not start as a business plan. Around 2010, Kaushik Mudda and Navin Jain, two electronics and communication students at RV College of Engineering in Bengaluru, were trying to get a robotic arm to hit a precise angle. The arm kept failing, and the two traced the failure back to the components: making a part precise enough required a CNC machine, and CNC machines of the kind they needed cost upward of half a million dollars, according to Blume Ventures’ retelling of the founders’ account. Two college students with no capital could not buy one. So they decided to build one instead.

With roughly Rs 1.75 lakh ($2,100) won from debate competitions and robotics prizes, they built a basic CNC machine in a friend’s apartment in early 2015. To test whether anyone would actually pay for machined parts, they posted ads on OLX and Quikr — India’s classifieds sites — and the response told them there was a real, if unglamorous, market: marble engravers, wood etchers, small EV-chassis makers and microscope-part manufacturers who could not afford imported machines. A senior from college lent them a garage rent-free for three months to get started. That is where the actual company was born, years before it looked like one.

The founders’ next bet came from watching where global manufacturing was headed. By 2018, products everywhere were getting thinner, lighter and more complex — flatter televisions, smaller engines, more intricate consumer electronics — and building them needed five-axis machines that could cut a part from every angle without being repositioned by hand. That market was owned by companies with 50-year histories: Japan’s DMG Mori and Switzerland’s Willemin-Macodel, among others, with no serious new entrant since the 1980s and machines that cost over half a million dollars with eight-to-ten-month waiting lists, per Blume Ventures. India, meanwhile, was estimated to produce only about $1 billion worth of three-axis machine tools a year while importing roughly double that amount, a gap Blume cites as the strategic opening Ethereal was chasing. Mudda has described the decision to attempt a five-axis machine in blunter terms: “It comes from a place of hubris — how hard can it be?”

The struggle years

It was very hard. What the founders expected to take about a year to build stretched to four and a half years, from 2018 to mid-2022, according to Blume Ventures. A five-axis machine is not one hard problem but four running at once — hardware, software, electronics and the mathematics that ties them together — and getting three of the four right was worthless if the fourth failed. No talent pool for this kind of work existed in India at the time. Blume partner Arpit Agarwal has summarised the hiring problem bluntly: engineers who understood mechanical design did not understand computer control, and engineers who understood control could not solve the underlying equations.

The company survived on extremes of frugality. Mudda has said that even when a Rs 5,000 part would have solved a problem, the team often could not afford it and would spend hours writing workaround code instead of buying the thousand-rupee fix. Failed prototypes were stripped for reusable screws and bolts; scrap metal was sold for cash. Mudda has described working out of basements for years, saying he “did not see breeze and sunlight for ten years.”

Funding matched the technical strain. Blume Ventures put in seed money in 2019, but no other institutional investor backed the company for four years after that — a funding drought that ran to 2023, as Blume itself has recounted. Investors it approached had no comparable Indian precedent to benchmark the business against, and Mudda’s response — “there is no precedent, nobody’s done this” — was not always a winning pitch.

• Technical near-death: a one-year engineering plan for the five-axis machine stretched to four and a half years (2018–2022), per Blume Ventures.
• Funding near-death: a four-year gap with no new institutional investor between Blume Ventures’ 2019 seed and the next round in 2023, per Blume Ventures.
• Commercial near-death: even after the machine worked, Indian buyers told the founders “only Germans and Japanese can do this,” and some prospects demanded payment terms of up to 12 months after delivery — untenable for a company with no cash cushion, per Blume Ventures.

The turning point

By mid-2022 the machine finally worked, matching the precision of Japanese and German rivals at what the founders believed was close to half the price. It did not matter. Customers who watched the five-axis machine perform flawlessly still balked at buying one, telling the founders, in effect, that Indian-built precision equipment could not be trusted, according to Blume Ventures’ account. During one such demonstration, a large prospect loved what the machine could do but could not get internal approval for the capital expenditure to buy it outright.

Rather than lose the account, Mudda proposed an alternative on the spot: Ethereal would keep the machine and simply manufacture the parts the customer needed, charging for the output instead of the equipment. It was an improvised concession, not a strategy memo. “Since then, we have not looked back,” Mudda has said. The shift turned a single stalled sale into the company’s entire business model — machining-as-a-service — and the before-and-after is visible in the numbers that follow: from a company that had struggled for four years to sell hardware to one whose MaaS revenue, on its own account, grew roughly 4x in the twelve months around its Series A and roughly 3x year-on-year again around its Series B. One concrete example the company has cited: cutting a customer’s production time on a component from 30 hours to seven — a change that compounds when multiplied across an order of 2,000 pieces, per Forbes India and Inc42’s reporting on the business.

The money behind it

Ethereal’s capital came in slowly at first, then fast. Total funding raised stood at nearly $50 million as of its Series B close in April 2026, per Inc42’s reporting.

• Blume Ventures — seed backer since 2019; the only institutional investor in the company through its four-year funding drought, before other investors came in from 2023 onward (Blume Ventures; Forbes India).
• Peak XV Partners (via its Surge programme) — invested $7.3 million alongside Blume Ventures in July 2023, then co-led the $13 million Series A in June 2024 with Steadview Capital, and returned as a participant in the Series B (Entrackr, June 2024 and April 2026).
• Steadview Capital — co-led the $13 million Series A in June 2024 alongside Peak XV Partners, the round that ended the funding drought (Entrackr, June 2024).
• Avataar Venture Partners — led the Series B, contributing Rs 199.55 crore (~$21.5 million) of the Rs 264.5 crore (~$28.5 million) round in April 2026, at a post-money valuation of Rs 1,470 crore — a 3.8x jump from the company’s prior valuation of Rs 383 crore at Series A (Entrackr).
• Novellus Systems — a semiconductor-equipment maker, joined the Series B as a strategic investor, putting Rs 27.9 crore into the round and signalling Ethereal’s push into semiconductor-adjacent manufacturing (Entrackr; Inc42).

Before the round closed, YourStory reported in December 2025 that Ethereal was in early talks to raise around $30 million at a valuation near $150 million; the round that eventually closed was $28.5 million at roughly $158 million, per Entrackr — close enough to confirm the shape of the deal, with the final print landing slightly above the reported talks.

How it makes money

Ethereal does not primarily sell machines any more; it sells the output of machines it owns and operates itself. That distinction is the part outsiders most often get wrong, treating it as a machine-tool company when its revenue model looks closer to a manufacturing utility.

• Money in: customers pay per component or per order under the MaaS model, starting with small trial orders in the $10,000–$20,000 range that do not require the customer to approve a capital purchase, per Forbes India.
• Compounding accounts: the company says it now has five to six accounts worth more than $1 million each, all of which started as small trial orders, per Forbes India.
• Costs out: once a machine is installed, the marginal cost of running it is largely electricity and maintenance; Ethereal runs its machines 24/7 across three shifts to maximise utilisation and gross margin, per Forbes India and Blume Ventures.
• Where the margin sits: in utilisation. A machine sitting idle earns nothing; a machine cutting parts around the clock spreads its fixed cost over far more billable hours, which is why the company has expanded from roughly 21 machines to more than 60 between 2024 and 2025–26, per Forbes India and Blume Ventures.
• The vertical-integration wrinkle: each five-axis machine has around 3,200 parts, and some of them are precise enough that India’s existing supply chain cannot make them — Ethereal has to manufacture those parts on its own machines, deepening its cost base but also its moat, per Blume Ventures.
• Customer-stated savings: the company says its service cuts customer production costs by roughly 30% and lead times by roughly 40%, a company claim reported by Inc42 and Entrackr rather than an independently audited figure.

The numbers

Ethereal’s revenue has grown off a very small base, and losses have grown faster in absolute terms as it scales up machines and headcount. Figures below are from the company’s regulatory filings as reported by Entrackr; a standalone FY24 (year ended March 2025 minus one) figure was not independently locatable at the time of writing and has been left out rather than estimated.

• FY23 revenue of Rs 2.30 crore was up roughly 3.8x on FY22’s Rs 0.60 crore, per Entrackr’s June 2024 reporting.
• By FY25, revenue reached Rs 11.45 crore while the net loss widened to Rs 27.27 crore, per Entrackr’s April 2026 reporting — losses have grown faster than revenue, consistent with a company still building out machines and facilities ahead of demand.
• Corporate-records aggregator Tofler independently shows total revenue growth of 164.64% year-on-year as of the March 2025 filing, directionally consistent with Entrackr’s absolute figures.
• Company executives have separately described MaaS revenue growing roughly 3–5x year-on-year in the twelve months around the Series A and Series B raises — a company-stated growth rate that does not map neatly onto the audited crore figures above and should be read as a directional claim, per Forbes India and Inc42.

Where the money comes from

Ethereal does not publish an audited revenue split by segment or geography, so what follows is company-stated and reported by business media rather than filed disclosure.

• Sectors served: aerospace, defence, healthcare and semiconductors are the core verticals, with early forays into consumer electronics, per Avataar Venture Partners and Inc42.
• Named clients: Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL) and Collins Aerospace are cited as customers for critical aerospace and defence components, per Blume Ventures.
• Geography: the client base spans the United States, Israel, Germany and India, per Forbes India’s 2024 reporting — meaning a meaningful share of demand is already export-oriented despite the company manufacturing entirely out of a single Bengaluru facility.
• The surprise: a company that markets itself around a hardware breakthrough — its own CNC machine — earns money almost entirely as a services business, billing for finished components rather than equipment; only a small, declining share of revenue comes from machines sold outright, per Forbes India and Blume Ventures.

The risks

• Widening losses against a small revenue base: FY25 net loss of Rs 27.27 crore was more than double FY25 revenue of Rs 11.45 crore, per Entrackr — the company remains dependent on further equity funding to reach breakeven, and any slowdown in venture capital for Indian deep-tech would directly threaten its capacity expansion plans.
• Customer concentration in a handful of accounts: the company itself says it has only five to six accounts worth more than $1 million each, per Forbes India; with named clients including government-linked HAL and BEL, procurement-cycle delays or budget shifts at a small number of large customers could disproportionately hit revenue.
• Execution risk on scaling headcount and skills: the founders’ own account of the 2018–2022 struggle centres on India’s shortage of engineers who can work across mechanical design, computer control and the underlying mathematics simultaneously, per Blume Ventures; the company’s plan to grow from roughly 60 machines to a mega-factory of up to 1,000 machines will need that scarce talent at a much larger scale, with headcount at 277 people as of its own current about page.

The takeaway

The lesson in Ethereal Machines is not that persistence pays off, which is too easy a reading of a company that spent four and a half years failing to sell the very machine it eventually built. The sharper lesson is that the business model change came out of a customer’s constraint, not a strategy offsite. Ethereal did not choose machining-as-a-service because it looked good on a slide; it improvised the offer to avoid losing one deal, because a prospect could not get capital-expenditure approval but could get an invoice approved. The product the founders spent eight years perfecting turned out to be less valuable to the market than the service wrapped around it. Founders convinced that their hardware is the moat are often standing next to a simpler question: what would the customer buy today, with the budget they already have, rather than the one they wish they had.

Frequently asked questions

What does Ethereal Machines actually sell?

It primarily sells precision-machined metal components made on its own proprietary five-axis and three-axis CNC machines, under a machining-as-a-service model, rather than selling the machines themselves, per Forbes India and the company’s own about page.

Who founded Ethereal Machines and when?

Kaushik Mudda and Navin Jain, then engineering students at RV College of Engineering in Bengaluru, began the work that led to the company around 2010; Ethereal Machines Private Limited was incorporated in November 2016, per Tofler’s corporate records and Blume Ventures’ account of the founders’ history.

How much funding has Ethereal Machines raised, and at what valuation?

The company had raised nearly $50 million in total as of its Series B close in April 2026, when Avataar Venture Partners led a $28.5 million (Rs 264.5 crore) round at a valuation of Rs 1,470 crore (~$158 million), up from Rs 383 crore at its 2024 Series A, per Entrackr and Inc42.

Is Ethereal Machines profitable?

No. It reported a net loss of Rs 27.27 crore on revenue of Rs 11.45 crore for the year ended March 2025, per Entrackr’s reporting of its regulatory filing.

What is machining-as-a-service (MaaS), the model Ethereal Machines runs on?

Instead of selling its CNC machines to manufacturers, Ethereal keeps the machines at its own Bengaluru facility, runs them continuously, and charges customers for finished, precision-machined parts — letting customers avoid the capital expenditure of buying million-dollar equipment outright, per Forbes India’s reporting on the pivot.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Entrackr, “Exclusive: Ethereal Machines raising $28.5 Mn at 4X valuation premium,” April 2026
• Entrackr, “Ethereal Machines raises $13 Mn led by Peak XV and Steadview,” June 2024
• Inc42, “Ethereal Machines Raises $28.5 Mn To Expand Precision Manufacturing Capacity,” April 2026
• Blume Ventures, “The impossible machine: how two Indian engineers built a manufacturing juggernaut against all odds,” 2026
• Forbes India, “Ethereal Machines: Creating machining-as-a-service for the world,” 2024
• Avataar Venture Partners, portfolio page for Ethereal Machines, accessed September 2026
• Ethereal Machines, company website “About” page, accessed September 2026
• The News Minute, “Bengaluru startup Ethereal Machines bags innovation prize at CES 2018,” January 2018
• Tofler, corporate financial profile for Ethereal Machines Private Limited, accessed September 2026
• YourStory, “Ethereal Machines in early talks to raise $30M from Avataar, Glade Brook at $150M valuation,” December 2025 (search-indexed summary; original article not independently fetchable at time of writing)

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