The aerospace and defense industry in the U.S. has spread far and wide owing to the growth of leading companies like SpaceX, Blue Origin, and The Boeing Company. Investors around the world are looking for an opportunity to become involved with space tech and next-generation innovation through various space engineering and manufacturing startups.
Although people’s views on space innovation and aerospace engineering have transformed drastically there remains one unchanged facet. The cost of space exploration and tech is still high and the industry is deeply affected by a slow and inefficient supply chain.
To make essential aerospace and defense parts faster and cheaper, Hadrian, an automation startup based in Los Angeles is working to simplify complex engineering for the aerospace and machinery manufacturing industry. Hadrian was founded by Chris Power in a bid to build software powered factories to serve the space and defense industries efficiently by manufacturing essential parts for rocket ships.
“We view our job as to provide the world’s most efficient space and defense component factory,” said Hadrian founder, Chris Power.
Hadrian’s main goal here is to manufacture precision parts to be used within rocket ships and satellites by letting professionals use automation-powered machines. The company recently wrapped its series A funding round which was led by Andreessen Horowitz and Lux Capital.
Let’s dive into the company’s past and present to deduce where it could be in the future.
Power was a tech entrepreneur right from the start. Before Chris Power founded Hadrian, he had his sights set on creating an entirely new model for advanced manufacturing which would help energy tech companies to build their products at a lower cost and a faster rate. Power who was a student of commerce at Australia’s largest institution called Monash University did not graduate despite being top of his class in marketing & business law.
The sole reason for choosing to drop out from Monash University back in 2013 was to prioritize business pursuits more conveniently. After just two years, Power’s journey entrepreneurial journey began in an adviser role at Everproof. The company was an Australia-based EdTech startup that went on to close its seed financing round. As an adviser, Power was in charge of the data systems, tech, and even B2B outreach and strategy.
But it didn’t take him long to shift gears and join Ento, a company that offered workforce management software in 2015 as CRO/Head of Growth. At Ento, Power worked alongside the co-founders to build revenue, extend partnerships, increase valuation and also the team size. It was at this moment when Power faced the challenges of an aging workforce and the need for upgrading all manufacturers’ tech stacks.
“I realized that the right way to bring technology to the industrial space is not to sell software to these companies, it’s to build an industrial business from scratch with software.”
Leaving Ento was a close call for Power but he made it anyway and spent 6 months in a transition period. Power is still involved with Ento as an informal advisor. In 2018, Power’s interest in the booming sector of aerospace and defense supply chain landed him an advisor role at the Open Lunar Foundation which is based in San Francisco Bay Area. Power noticed that contract manufacturing obstacles are not relevant only to space but dozens of industries where D2C is the norm.
“Let me tell you how bad the situation is at the moment and what’s going to happen over the next 20 years. Right now everyone in space and defense, [including] SpaceX and Lockheed Martin, outsources their parts and manufacturing to small factories across the country. They’re super expensive, they’re unreliable and they’re completely invisible to the customers,” said Power.
Within the U.S., the space and defense advanced manufacturing include things like semiconductors, EVs, etc, anything related to contacts is difficult due to the segmented nature of the market. Power believes that companies like SpaceX and relativity are moving way too fast which is breaking the supply chain. Because the needs of the customers have changed, it gives way to further fragmentation and poor service.
“The problems with space and defense manufacturers in the design phase occur because the lead time is so long and the iteration time is super long. Imagine running software and being able to iterate on your product once every 20 days? If you can imagine a Gantt chart of how to build a rocket, about 60% of that is buffer time. A lot of the delays in launches and stuff happen because parts got delivered three months ago. It’d be like running a Mcdonald’s and realizing that your fries and burger providers could not tell you when the food would arrive” said Power.
Power saw it as the perfect time to introduce a new supply chain in contract manufacturing and therefore looked for inspiration, help, and backers in the form of early investors. Initially, he tried to raise some funds and put them to use in a way that could work efficiently with the existing mom-and-pop shops for machine parts used in aerospace and space projects. But Power later realized that establishing Hadrian could solve the issues that have plagued the space industry so he returned the funds received to establish Hadrian.
Hadrian is a software-enabled factory where the goal is to increase efficiency. Customers also get complete visibility into their parts which are moved through the machining supply chain. Everything is taken care of all at once because otherwise, it would delay the process. The company has two missions as per General Partner at Andreessen Horowitz. The first is to scale up the American supply chain for the aerospace and defense industry. The second mission is to ensure that the young generation with basic technical skills gets to learn machining to support the country-wide workforce in factories.
“By enabling all US advanced manufacturers in Space, Defense, Semiconductor, Energy and Medical Devices to make their products 10x faster and 50% cheaper, Hadrian will empower US aligned actors to win Space Race II, and maintain peace through strength on Earth, in Orbit and cislunar space.” Hadrian CEO.
Hadrian’s team consists of remarkable talents who hail from aerospace giants like SpaceX and Lockheed Martin. Even the head of quality at Hadrian, Matthew Mueller is ex SpaceX who held senior manufacturing roles for over 3 years. This year in June, Power’s startup hired Simon Hallam in the role of engineering head. Hallam was formerly head of mechatronics at Oculus. The goal is to actively hire new people and expand Hadrian's capabilities further.
Hadrian’s main goal is to avoid mom and pop shops altogether and create factories across the country where essential parts used in spacecraft, satellites, and drones are manufactured using automated precision tools at an unsurpassed speed. Human intervention will be limited in all Hadrian factories. The startup established its first automated factory in Hawthorne where space and defense parts are made 10x quickly and proficiently. Even though Hadrian has an operating facility in Hawthorne, the startup is registered in San Francisco.
As of now, Hadrian is serving 3 aerospace customers who specialize in building rockets and satellites. Hadrian is handling the manufacture of aluminum-based components for these 3 undisclosed companies. At its Hawthorne facility, Hadrian is building tools and equipment to serve a multitude of industries like climate, semiconductor, aviation, and even med device.
“We’re not setting up factories that are like manufacturing lines – we’re building an abstract factory that you can drop any part into and it comes out the other side … as long as it fits within a certain size or certain material that we support, we can make anything within that,” CEO Chris Power said.
Hadrian automated factories will be:
Hadrian’s capabilities also includes:
According to ResearchMarket’s report, the global space equipment market was estimated at $369 billion back in 2020 when the COVID-19 crisis took the world by storm. Over the period of 2027, it is projected to touch north of $496 billion, recording a CAGR of 4.3%. As for the U.S. market, the total estimate was close to $108.7 billion in 2020. For more than one reason, China is still among the fastest-growing individual in this group as evident from its 4% consistently growing CAGR.
The strategic importance of the parts suppliers to aerospace, defense, and advanced machining operations cannot be emphasized enough. It holds the key to re-establish the U.S. as a leader holding geopolitical influence on the global industry where manufacturing excellence is prioritized. Some of the most innovative companies within the country such as SpaceX are struggling to get machine parts quickly. But there is only a handful of companies left that expertly manufacture essential parts and tools used in space-worthy projects.
“America made massive strategic mistakes in the early 90s which have left our national manufacturing ecosystem completely dilapidated,” said Founders Fund principal Delian Asparouhov. “The only way to get out of this disaster is to re-invent the most basic input into our aerospace and defense supply chains, machining metal parts quickly and with high tolerance. Right now, America’s most innovative company, SpaceX, relies on a network of near-retired machinists to produce space-worthy metal parts, and no one in technology is focused on solving this.”
Chris Power of Hadrian estimated that there are a total of 3,000 small-scale machine shops that are capable of producing specialized and high-precision components. Companies that own these shops generate yearly revenue of about $40 billion. To transform the current situation within the aerospace industry, Hadrian is looking to centralize a complete supply chain to remove all fragmented suppliers spread across the country. This way, the current supply chain would not need to depend on several mom-and-pop machine shops.
According to a study shared by Deloitte and The Manufacturing Institute, around 2.1 million manufacturing jobs will be unfulfilled by the year 2030 if circumstances remain unchanged. There is also a matter of the average of machinists rising at an alarming rate that would soon cause a labor shortage in the future. For this reason, Hadrian’s working model can be seen as a way to revive American manufacturing jobs. Power aims to solve the component manufacturing problem with automated factories and highly engineered that can produce and ship components faster.
Let us now take a look at its direct competitors and understand where Hadrian Automation stands:
PMD (Progressive Machine and Design) Automation headquartered in Victor, New York is an automation machinery manufacturing company. The company is known for its innovative solutions for manufacturing companies around the globe in a cost-effective factory using test systems. Their professional team employs cutting edge technologies to bring high-precision components.
NuTec specializes in designing as well as building robotic automation solutions for OEM and industrial manufacturers. NuTec headquarters is located in Meadville, Pennsylvania. The company is currently led by Torben Harring who became the CEO in 2019. NuTec was established in 1993 and now has around 15 licensed engineers and architects, NUTEC.
Based in Kitchener, Ontario, Brock Solutions starts by designing and then building before finally implementing automation engineering solutions for the manufacturing, logistics, and transportation industries. The total annual revenue generated by the company is close to $1 million. The company has Jason Smith and John Southcott as its co-CEOs.
Functionally, the CEO of Hadrian is trying to build an ultra-reliable factory supply chain. With full-fledged Hadrian handling the order, aerospace engineers do not bother to look at the delivery status page after placing an order for any component. Similar to Amazon, the team of Hadrian is working on building a trustworthy supply chain through this method. As of now, this early-stage venture has been funded thrice and the total amount raised comes close to $99.5 million.
Hadrian’s past financing rounds were supported by 14 renowned investors. Out of the 14 investors, Katherine Boyle (Andreessen Horowitz) and Brandon Reeves (Lux Capital) have joined Hadrian’s board as a member. Just a year ago, Power’s startup had almost 6 employees including space engineers but now their team size has grown to 40 people. The startup has begun hiring new talents from around the world to establish its second automated factory in Torrance by August 2022.
After completing its most recent finance round of Series A, Hadrian has increased its valuation by hundreds of millions. Though the CEO has not yet shared the total valuation of his machine-parts startup its estimated worth could be up to $450 million (after series A). According to Oddup’s data, Hadrian’s Post Money Valuation after Series A is about $540 million. Keeping these figures in mind, Oddup’s research team has given it an Oddup score of 52.92.
The Oddup Score for any company is obtained after spending several hours on detailed research that reveals our expert’s projection as to how profitably that particular company would fare in the future.
Hadrian announced its pre-seed funding round last year in February when the global pandemic situation allowed U.S-based industries to regain momentum. This funding round was participated by the likes of Village Global, Rob Meyerson, Jackson Moses, Harry Hurst, and Countdown Capital. The pre-seed round was led by Countdown Capital which is renowned for investing in Hard Tech startups that focus on rebuilding the American industrial base. As a result, Countdown Capital’s Jai Malik joined Hadrian in the role of the advisor of the board.
After two months of a successful pre-seed round, Hadrian called for its seed round in April 2021. This time, 2 out of the 5 investors led the seed round. Lux Capital and Founders Fund’s participation makes the most sense as both of these investment firms are known to support companies building next-gen technologies or early-stage tech ventures. Other investors who joined the seed funding round were JAM Fund, Floodgate, and Construct Capital. Hadrian also got 4 investor partners out of this round.
Lux Capital co-founder Josh Wolfe said “Companies like SpaceX and Blue Origin are using mom and pop machine shops. Those shops are horribly inefficient, inconsistent, and unreliable. Between the software automation, and the hardware, you can cut down on inefficiency at every step of the process. I like to think of value creation as waste reduction so mundane things like quoting, scheduling, bidding, and planning all the way to the programming of the manufacturing every one of those things takes hours to tens of hours to days and weeks, so if you can do that in minutes, it’s just a no-brainer.”
The series A round was Hadrian’s most successful one to date as the total amount raised went over $90 million. It was announced this year at the end of March. The two lead investors who joined this round were Lux Capital, who is an existing investor in Lux Capital and the other leading investor is a16z. 5 more investing firms were noted in Hadrian’s series A such as Lachy Groom, 137 Ventures, Caffeinated Capital, Construct Capital, and Founders Fund.
Andreessen Horowitz partner Katherine Boyle sees Hadrian’s ability to scale its approach as a key reason behind Andreessen Horowitz’s investment. “The pace at which they’ve been able to build factories has just been extraordinary,” Boyle told CNBC.
The industry involving automated aerospace manufacturing has been on a constant rise and giants like Relativity Space and Rocket Lab have brought investors’ attention to the Long Beach-based companies. Hadrian has a fair chance to redirect some of the new players and a lot of experienced VCs toward its robot-staffed efficient factories.
“We’re getting to a point where they’re making spaceflight hardware within 30 days of joining Hadrian,” Power said. “We’ve launched Factory #1 and proven that we can produce space and defense parts 10 times faster and more efficient than anybody else,” Hadrian founder and CEO Chris Power told CNBC.
Hadrian also planned to build their automated factory in Los Angeles after establishing their first automated factory at Hawthorne which is approximately 100,000 sqft. For this reason, Power’s company is actively recruiting in Los Angeles and San Francisco. By the end of 2022, Hadrian expects to grow its team size from 40 to 120 people. But according to experts, success is still far from Hadrian’s reach.