Hermeus raises $350M to build unmanned hypersonic aircraft

On Tuesday, defense startup Hermeus announced a $350 million funding round that pushes the company’s valuation to $1 billion. The transaction is structured to provide both capital and ownership protection for the founders and existing shareholders.

The funding consists of:

• $200 million in equity financing, led by Khosla Ventures.
• $150 million in debt.

Other participants in the equity portion include existing investors Canaan Partners, Founders Fund, In-Q-Tel, and RTX Ventures, which is the venture arm of defense contractor RTX Corporation. New investors Cox Enterprises and Destiny Tech100 also joined the round.

The startup is using debt to finance its growth non-dilutively—meaning it is securing financing that does not reduce the ownership percentage of existing shareholders. This approach allows Hermeus to expand its manufacturing capabilities while maintaining control of its cap table, the document that tracks company equity ownership. “We build a lot of hardware, we’re expanding our manufacturing capabilities, and if we can finance a large portion of our spend non-dilutively, it’s absolutely the way to do it,” said AJ Piplica, Hermeus co-founder and CEO.

Piplica attributes at least some of the fundraising success to a technical pivot the company made a few years ago. Instead of continuing to build its own engine, the company partnered with Pratt & Whitney, a subsidiary of RTX Corporation, to modify an F100 engine to power its hypersonic aircraft—vehicles designed to travel at speeds exceeding Mach 5. According to Hermeus president Zach Shore, this decision accelerates the company to Mach 5, reinforces its business economics, and satisfies near-term demand from the Department of Defense. Last month, the company flew a demonstrator version of its technology.

The investment comes as venture capital funding in the defense technology sector continues to grow. Globally, venture capital investment in defense technology crossed $9 billion across 265 rounds last year, according to PitchBook. Corporate investors also contributed $2 billion across 28 rounds. Hermeus, which is currently approaching 300 employees, is using a rapid prototyping model inspired by SpaceX to build and test its aircraft. Piplica noted that the main challenge is choosing which risks to take on and how to apply capital over time. He expects that we could crash an airplane at some point in the development program, though the company is set up to do so safely.

Why it matters

The funding round pushes Hermeus’ valuation to $1 billion and provides capital to expand manufacturing capabilities for its unmanned hypersonic aircraft, while leveraging non-dilutive debt to maintain control.