For all of the antiquated critiques that defense tech isn’t an investable sector, a whole lot of investors would beg to differ.
On Monday, aviation autonomy hotshot Merlin announced over $75M in new private investment in public equity (PIPE) financing, increasing the total capital raised from $125M to more than $200M ahead of their expected IPO early next year.
Did everyone win the Powerball or something?
Merlin the magician: Merlin, for the uninitiated, has climbed higher and higher since their founding in 2018. The Boston-based company makes takeoff-to-touchdown AI-powered flight autonomy software paired with onboard hardware. Their flagship Merlin Pilot product serves as the primary pilot with human supervision, running aviation, navigation, and communication duties on fixed-wing aircraft.
In the busy aviation autonomy space, Merlin has notched some major wins, including:
- Winning a $105M contract with USSOCOM to put Pilot on the C-130J Super Hercules cargo aircraft last summer.
- Partnering with Honeywell to bring autonomy to a wider range of aircraft last October and with GE Aerospace this September to develop an “autonomy core” to build into GE’s avionics system.
- Securing airworthiness approval from the Air Force for Pilot’s use on the KC-135 Stratotanker before winning a contract to make them autonomous last December.
- Being selected as one of six startups in Northrop Grumman’s Beacon autonomy testbed ecosystem in August.
Money moves: All those wins have clearly caught the eye of some big-dollar investors. In August, they announced plans to go public via SPAC after raising $125M in committed PIPE capital, led by Inflection Point Asset Management (of USA Rare Earth and Intuitive Machines fame), at an $800M pre-money valuation.
Doubling down: Now, Inflection Point—along with “new institutional investors,” according to George—is doubling down on Merlin with an extra $75M in PIPE capital, but $100M of the total capital they’ve raised is coming from Inflection Point.
“The upsized PIPE further de-risks the balance sheet at close, lets us run more programs in parallel (including expanding our U.S. defense programs and aircraft integrations), creates real M&A and partnership optionality, and expands hiring capacity,” George told Tectonic via email. “The original PIPE funded the plan. The incremental capital gives us more resilience and more offense.”
A chunk of that incremental capital is going to go into new acquisitions, which George says “offer a path to full ownership of technology and access to talent, providing deeper integration, faster time-to-market, and proprietary control over a core capability.”
Big plans: On the expanded defense program front, Merlin is aiming to scale their autonomy software to more and more military aircraft, along with commercial “transport, tanker, and turboprop platforms.”
In particular, they’re eying Air Force transport platforms (starting with the C-130), the entire tanker fleet (starting with the KC-135), and “virtually any military platform,” George said. “This also includes future uncrewed aircraft (UAS) and collaborative air platforms like Collaborative Combat Aircraft (CCA) or Collaborative Logistics Aircraft (CLA).”
Needless to say, George is feeling pretty good about things ahead of going public in early 2026.
“Merlin has a proven track record with awarded contracts from military customers and an estimated $3 billion identified pipeline,” George said. “This combination of secured revenue, a massive pipeline, and a clear path to market-leading certification suggests significant near-term and long-term financial upside.”
With some major cash on its balance sheet, Merlin is in a good position to make some magic happen.