Hadrian founder and CEO Chris Power got tired of turning startups away.
Since 2020, Power has raised $220 million for Hadrian, a largely autonomous factory that mass produces parts for space and defense companies.
While Hadrian has produced parts for major defense companies, it had to turn away some defense tech startups because startups have to rapidly iterate on product designs, meaning they need one hyper-specific part today and another design tomorrow. Hadrian, which was last publicly valued at $275 million, would have to constantly set up entirely new production lines, ruining the point of using its hyper-efficient automated factory.
But on Wednesday Hadrian announced they bought Datum Source, a software company founded by SpaceX alums that uses AI to help hardware companies find manufacturing partners. Terms of the deal were not disclosed, but Datum Source has raised $5.6 million at a valuation of $30 million, according to Pitchbook. With Datum Source, Hadrian can help match a startup with specific manufacturers any time it needs a new part, instead of the founders otherwise searching through hundreds of potential suppliers, Power said.
This lets Hadrian partner with the early stage defense tech startups it’s been missing out on — and hopefully ensures that, as these companies grow, Hadrian is top of mind. Or, as Power put it, when a startup does win a big DoD contract and is ready to scale up production, he can promise that “we’re going to make all this stuff in an autonomous factory for you.”
As a bonus, the acquisition brought Hadrian about thirty of Datum’s existing customers, with the bulk being early stage startups. The company will also bring on Datum Source’s 14-person team to help guide early stage companies through the procurement process.
The acquisition is both a savvy move on Power’s part and a harbinger of things to come. Venture capital has poured $129.3 billion into defense tech startups since 2021, according to PitchBook, and, in a category where there can be very, very few winners, a rush of acquisitions will have to occur.
It looks like the time of consolidation is upon us. Anduril has bought at least five companies since 2021, and, three months ago, Shield AI bought AI company Sentient Vision Systems.
Power also said that Datum Source will be the “first of many” acquisitions for Hadrian. In the future, he added, Hadrian might acquire startups that also offer automated manufacturing processes or, perhaps, even buy some that use legacy manufacturing systems.
Acquisitions are in defense tech’s DNA. To be a “defense prime” — basically, to compete with behemoths like Lockheed Martin, Boeing, etc — a company has to be able to compete for contract after contract, each of which will require a different skillset or engineering capacity or design speciality.
So, for any defense tech startup to grow that big, they must continuously add to their offerings and must make them better than some of the best-capitalized companies on the planet.
Most defense tech startups will likely never be able to produce one thing well enough to win a contract, much less multiple areas that win multiple contracts. So for those that have one or two great products, the best hope for an exit will probably be an acquisition by a bigger defense startup, which will scoop them up to compete for a specific contract or purpose.
“I think you’re going to see a lot more acquisitions from the platform companies like Hadrian and Anduril in the next couple of years,” he laughed. “Something is indeed happening.”