Another day, another IPO. Defense tech is entering the big leagues, baby.
Yesterday, flight autonomy hotshot Merlin officially started trading on the Nasdaq as $MRLN after merging with a SPAC called Inflection Point Acquisition Corp. IV and raising about $200M in proceeds. The deal valued Merlin at $800M pre-money.
In normal people speak? Merlin just went public via a SPAC (plans it announced last year) and raised $200M in the process. $MRLN closed up about 26% yesterday.
“It’s an important moment for defense tech,” Merlin CEO Matt George told Tectonic. “I think we’ve had a lot of companies that have gone out there and raised a bunch of money on the private side, but in order to actually build a new enduring, true American industrial base, people need to bite the bullet and go public.”
Defense tech really is so hot right now.
No hands: We’ve covered Merlin before—most recently when they announced over $75M in private investment in public equity (PIPE) financing ahead of this here IPO.
The Boston-based company (can’t call it a startup no more, can we) has basically built an autonomous pilot—takeoff-to-touchdown AI-powered flight autonomy software paired with onboard hardware. Basically, the autonomy stack (called Merlin Pilot) serves as the primary onboard pilot with a human overseeing it.
And to say the tech has been popular with users and companies alike would be an understatement.
- The company scored a $105M contract with USSOCOM to put Pilot on the C-130J Super Hercules cargo aircraft last summer.
- Merlin has also partnered with Honeywell to bring autonomy to a wider range of aircraft, and with GE Aerospace to develop an “autonomy core” to build into GE’s avionics system.
- They’ve also scored a contract with the Air Force to make the KC-135 Stratotanker—the aircraft that crashed over Iraq last week, killing six crew members—autonomous.
- Merlin was also selected as one of six startups in Northrop Grumman’s Beacon autonomy testbed ecosystem last summer.
George said that the KC-135 crash highlights exactly why his company builds what they do.
“We owe our American service members who are flying those airplanes…the best technology to keep them safe, to go execute their mission,” he said. “Anything we can do—anything the US Air Force can do—to give them the tools that they need to reduce accidents, to reduce collisions, to reduce errors while they are on these 40-plus-hour missions, we will do.”
Roll up: Per George, this IPO—and the funding raised as part of it—will enable the company to scale up, deploy on more aircraft, and potentially roll up a company or two.
“We think that there are interesting opportunities to go take different types of aircraft, different types of folks working on interesting airframes or interesting technologies, and roll that up underneath the Merlin brain and give those more traditional things a little bit more intelligence,” he said. The company is still “picking its head up” after the IPO, he added, so they haven’t picked what they want to snap up quite yet.
Play the long game: We asked Merlin why they decided to go public rather than, say, raise more VC money. Besides the cash money (everyone loves cash money), George basically said it’s the clearest path to longevity.
“There’s been no sector of venture capital that’s ever been hot forever,” George said. “Defense tech is very, very hot right now. And I think we as a country have a real danger of not seeing those companies mature…and sort of withering on the vine.”
The world is changing,” he added. “We need to, collectively as an industry, figure out how to make sure that we’re sustaining ourselves. So, we’re happy to be the canary in the coal mine.”