Defense tech acquisition spree has begun: Autonomous factory startup Hadrian acquires Datum Source | TechCrunch

Hadrian founder and CEO Chris Power is tired of turning down startups.

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 has had to turn away some defense technology startups because they have to quickly iterate on product designs, meaning they need one hyper-specific part today and another design tomorrow. Hadrian, whose last public valuation was $275 million, would have to constantly set up entirely new production lines, which would defeat the point of using its hyper-efficient automated factory.

But on Wednesday, Hadrian announced that it has purchased Datum Source, a software company founded by SpaceX alumni that uses artificial intelligence to help hardware companies find manufacturing partners. Terms of the deal were not disclosed, but Datum Source has raised $5.6 million at a $30 million valuation, according to Pitchbook. With Datum Source, Hadrian can help a startup connect with specific manufacturers every time it needs a new part, rather than founders having to search through hundreds of potential suppliers, Power said.

This allows Hadrian to partner with early-stage defense technology startups it has been missing out on, and hopefully ensures that as these companies grow, Hadrian is the first choice. Or, as Power said, when a startup wins a big Defense Department contract and is ready to ramp up production, it can promise that “we’re going to make all of this in an autonomous factory for you.”

As an added benefit, the acquisition gave Hadrian access to around thirty current Datum customers, most of which are early-stage startups. The company will also bring on Datum Source’s 14-person team to help guide early-stage companies through the acquisition process.

The acquisition is both a smart move by Power and a harbinger of things to come. Venture capital has poured $129.3 billion into defense technology startups since 2021, according to PitchBook, and, in a category where there can be very, very few winners, there will have to be a flood of acquisitions.

It seems the time for consolidation has come. Anduril has bought at least five companies since 2021, and three months ago, Shield AI bought artificial intelligence 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 could acquire startups that also offer automated manufacturing processes, or perhaps even buy some that use traditional manufacturing systems.

Procurement is part of the DNA of defense technology. To be a “first-tier defense company” (basically, to compete with giants like Lockheed Martin, Boeing, etc.), a company has to be able to compete for contract after contract, each of which will require a different skill set or engineering capability or design specialty.

So for any defense technology startup to grow this big, it must continually scale up its offerings and make them better than some of the best-capitalized companies on the planet.

Most defense technology startups will probably never be able to produce one product well enough to win a contract, let alone multiple areas that win multiple contracts. So for those that have one or two excellent products, the best hope of exit will likely be an acquisition by a larger defense startup, which will absorb them to compete for a specific contract or purpose.

“I think we will see a lot more acquisitions of platform companies like Hadrian and Anduril in the coming years,” he laughs. “Something is happening.”