Most people haven't heard of Ethereal Machines. That changes now. The Bengaluru-based deeptech startup just closed a $28.5 million Series B round led by Avataar Ventures, with Peak XV Partners and Novellus Systems also participating. The valuation jumped to $158 million — a nearly 4x premium from its Series A just two years ago. But the money is only part of the story. What Ethereal is building — India's first indigenous multi-axis CNC controller — could fundamentally shift where advanced manufacturing gets done in the next decade.
What Ethereal Machines Actually Does (And Why It's Harder Than It Sounds)
CNC (Computer Numerical Control) machines are the backbone of precision manufacturing — what makes aerospace components, semiconductor wafers, and medical devices to tolerances of microns. The global CNC machine market is valued at over $100 billion, and until now, the high-end controllers — the "brain" of these machines — have been built almost entirely by German, Japanese, and American companies like Fanuc and Siemens.
Ethereal Machines designs, builds, and operates proprietary multi-axis CNC machines. Through its Machining-as-a-Service (MaaS) model, it serves global clients in aerospace, defence, healthcare, semiconductors, and consumer electronics from its smart factory in Peenya, Bengaluru. Since its $13 million Series A in June 2024, Ethereal has grown MaaS revenue threefold year-on-year and scaled production capacity tenfold — a remarkable execution record according to YourStory.
Why Building the Controller Changes Everything
There's a meaningful difference between running CNC machines and building the intelligence inside them. Countries that control the controller technology control the roadmap, the pricing, and the data from every machine it powers. Before Ethereal: India imported all high-end CNC controllers from Japan, Germany, and the US — paying a significant premium while losing control over firmware and data. After Ethereal: Indian manufacturers would own the full technology stack completely.
Kaushik Mudda, co-founder of Ethereal Machines, said: "This round enables us to build India's first indigenous CNC controller and expand our semiconductor manufacturing capabilities." The comparison to India's software services journey in the 1990s is apt — deeptech could be India's next export category, and precision manufacturing is a critical on-ramp.
The Semiconductor and Defence Connection
Ethereal's timing is deliberate. India's semiconductor ambitions — the India Semiconductor Mission has approved over $10 billion in fab incentives — require precision manufacturing at scales India has never attempted. TSMC-quality chip fabrication demands tolerances measured in nanometres. Ethereal's existing client base in aerospace and defence also positions it directly in India's growing domestic procurement stream under DRDO and PLI schemes.
As we covered in our piece on India's AI and deeptech startup funding in 2026, precision manufacturing startups have been underfunded relative to SaaS and consumer tech — but that gap is closing fast as investors recognize the scale of the defence and semiconductor opportunity.
International Expansion and What Comes Next
The Series B funds also go toward US and European expansion. Ethereal already serves global aerospace and consumer electronics clients from Bengaluru. The international push targets distribution partnerships and potentially co-location manufacturing in North America — where supply chain reshoring has created massive demand for precision contract manufacturers outside China. At a 4x valuation jump, Avataar Ventures clearly sees Ethereal as a global precision tech company built in India.
What This Means for You
For Indian engineers and manufacturers: Ethereal's MaaS model means access to world-class precision manufacturing without owning capital equipment. For startups building hardware, drones, or medical devices in India, this is worth evaluating today. For investors: manufacturing-as-a-service plays with genuine IP (not just outsourced labor) are the next Indian unicorn category. For students in mechanical and aerospace engineering: deeptech is where serious capital is flowing — ₹272 crore to one company in one round is a career signal.
Frequently Asked Questions (FAQs)
Q: What does Ethereal Machines make?
A: Ethereal Machines designs and builds proprietary multi-axis CNC machines and operates them through a Machining-as-a-Service (MaaS) model, serving aerospace, defence, healthcare, semiconductors, and consumer electronics clients globally from Bengaluru.
Q: What is India's first indigenous CNC controller and why does it matter?
A: A CNC controller is the software-hardware brain of a precision manufacturing machine. India currently imports all high-end CNC controllers from Japan, Germany, and the US. Ethereal's indigenous controller means Indian manufacturers will own the full technology stack — a first in India's manufacturing history.
Q: How much has Ethereal Machines raised in total?
A: Approximately $41.5 million total — a $13 million Series A in June 2024 and a $28.5 million Series B in June 2026, the latter led by Avataar Ventures with Peak XV Partners and Novellus Systems participating.
Q: Is Ethereal Machines available for Indian hardware startups to use?
A: Yes. Ethereal's Machining-as-a-Service (MaaS) model allows access to precision manufacturing capacity in Bengaluru without buying CNC machines — significantly lowering the barrier for hardware startups, drone companies, and medical device manufacturers in India.
Q: How does Ethereal's funding affect India's semiconductor manufacturing ambitions?
A: Semiconductor fabrication requires extreme precision manufacturing. Ethereal's indigenous CNC controllers could supply the precision manufacturing backbone for India's chip fabrication aspirations under the India Semiconductor Mission, reducing dependence on foreign equipment vendors like Fanuc and Siemens.
Ethereal Machines is exactly the kind of company India's deeptech narrative needs: unglamorous, technically rigorous, and building IP that the world will eventually depend on. Watch this space.
