Castelion raises $350M Series B to scale hypersonic missile business

Startup Castelion, focused on hypersonic weapons, is set to raise $350 million in a Series B funding round, spearheaded by Lightspeed Venture Partners and Altimeter Capital. Sources and documents reviewed by TechCrunch reveal that this funding round, which values the company in the billions, is expected to finalize within weeks, with a term sheet already signed. This new funding follows a successful $100 million Series A round completed in January, comprising approximately $70 million in equity and $30 million in debt, also led by Lightspeed. Since emerging from stealth mode in late 2023, Castelion has made significant headway in the challenging government defense sector, a space traditionally difficult for non-traditional players to penetrate. Founded by former SpaceX executives, the company aims to revolutionize the production of hypersonic missile systems, a crucial area for national security. Military officials have expressed concerns regarding China's rapid advancements in hypersonic technology, where weapons travel at speeds exceeding Mach 5, potentially outstripping U.S. capabilities. Castelion proposes an innovative approach akin to SpaceX's model—rapid development, frequent testing, and vertical integration to reduce costs. The company has already garnered grants and recognition from various Department of Defense offices, including the Air Force Research Laboratory and the Naval Air System Command. In March, Castelion conducted its first hypersonic vehicle test in the Mojave Desert, aiming to demonstrate its capacity to produce affordable hypersonic missiles at scale. The U.S. Army's fiscal year 2026 budget request, published in June, included Castelion, which is seeking $25 million under the Project HX3 initiative to aid in developing the Blackbeard Ground Launch (GL) hypersonic weapon. The document indicates that Blackbeard GL will retain roughly 80% of the capabilities of a long-range variant being developed by established aerospace manufacturers, reflecting the Army's willingness to compromise slightly on speed and range for a more cost-effective solution. Once President Trump signs the budget into law, the contract will move forward in two phases: the first phase will involve Castelion delivering a proof-of-concept prototype by early 2026, followed by the second phase, which will require the delivery of ten prototype missiles in 2027 for further testing with the High Mobility Artillery Rocket System. The Blackbeard system is also being designed to be compatible with a new autonomous launcher. While Castelion's previous endeavors with the DoD may seem small in comparison, the potential of the hypersonic weapons market could lead to larger contracts, enabling the company to deliver Blackbeard missiles as early as 2028. Established industry giants like Lockheed Martin, Raytheon, and Northrop Grumman may need to keep a close watch on Castelion's progress.