In late 2022, a Navy officer called SpaceX government sales director Bryon Hargis with a desperate plea: He needed a new manufacturer that could reliably supply hypersonic missiles, which travel five times faster than the speed of sound. Hargis had heard his fair share of complaints during his two decades working in Pentagon sales—at the time, selling SpaceX satellites to the U.S. military—but this particular ask struck a chord. “He was begging for a new entrant in the missile market because of how bad the situation in his office was,” Hargis said.
Despite efforts since the early 2000s to develop hypersonic missiles, the U.S. still does not have a fully deployable system, unlike adversaries like China and Russia that revealed their operational systems in recent years. Due to their speed and ability to maneuver, these missiles can effectively evade air defense systems, as seen in Ukraine, said Greg Scofield, director of hypersonics at Purdue Applied Research Institute. “When it comes to targeting high-value assets, hypersonics are a priority for many nations across the world,” he said. Yet the slow pace of development and high costs have left the U.S. in the dust.
Hargis knew SpaceX had the ability to manufacture at the speed and scale that the Navy officer asked for, but hypersonics weren’t part of SpaceX’s immediate scope of business. So, he began discussing with his colleagues commercial sales director Sean Pitt and finance manager Andrew Kreitz, both of whom agreed that no company was moving fast enough to address the issue. After spending nights and weekends working on the idea, the trio left SpaceX in November 2022 and founded Castelion to build the hypersonic missiles themselves.
It wasn’t easy going. The founders didn’t have enough cash and got rejected by more than 50 investors and banks within their first five months. Some prospective investors categorized the company as a vice, along with alcohol and guns. Others saw a fool’s errand in building such sophisticated hardware from scratch with only the government as a customer. Instead of pivoting, the team began building test vehicle components in their friends’ warehouses and whatever machine shops in the area that would let them use the space. “Whether or not they had the money, they were going to find a way to do this,” Lavrock Ventures partner Alex Poulin recalls.
Seeing the trio’s persistence in real time eventually convinced Poulin to become Castelion’s first investor, backing the company with $2 million in April 2023. It was a bold bet: A majority of the U.S. government spending on missiles went to legacy defense contractors like Lockheed Martin and Raytheon. But it immediately paid off. A month after Poulin wrote that first check, Castelion won a $5 million contract for low-cost strike weapon development from the government on its very first attempt.
In less than three years, Castelion has secured more than $100 million in contracts with the U.S. military and raised $450 million from investors to date. A $350 million funding round led by Lightspeed Venture Partners and Altimeter announced Friday now values the company at $2.8 billion. “Hypersonic weapons used to be only something the legacy contractors could touch,” said Katherine Boyle, founder of Andreessen Horowitz’s American Dynamism fund and an early investor in the company. “But Castelion has done it faster than, candidly, anyone I’ve ever seen or had ever expected.”
The trio understood they needed to fix the cost, quantity and production time of hypersonic missiles, so they borrowed from the SpaceX playbook. Unlike legacy contractors that buy the different parts of the missile separately, they opted to design and manufacture as much of the weapon in house. Outsourcing can be cheaper, but Pitt said the company has found ways to bring down costs by going to nontraditional suppliers, such as in the automotive industry, to purchase materials like metal cases or rubber attachments, which are typically pricier when purchased from traditional defense manufacturing suppliers.
That’s helped them move much faster. In the time that legacy missile manufacturers wait for their orders of different parts to arrive—which can take months—Castelion’s founders said they can create, test and improve their missiles multiple times over. The startup tested versions of its missiles more than 20 times this year, unlike legacy contractors that test only a couple times per year. “Though it’s more expensive, vertically integrated companies will be rewarded with being quick to market, and lessons you learn from being first to market are more valuable,” Scofield said.
To test so frequently, the company has had to turn to non-traditional testing locations. Every two weeks, a team of a dozen or so engineers who call themselves “desert rats” don hoodies and shirts embellished with a black cartoon rat and drive out to remote locations. One such testing location is the Black Rock Desert in Nevada, best known as the venue for the annual Burning Man Festival. “You see a bunch of aerospace engineers go out into the desert. A week later, it’s a bunch of burners, and then the next week it’s people launching missiles again,” Pitt said, laughing as he recalls engineers stumbling across obscure remains of the weeklong art and music festival.
Castelion’s approach means its missiles can be ten times cheaper than existing weapons of similar range or capability—taking down costs from millions of dollars per missile to hundreds of thousands, its founders claim. So far, the company has been able to produce more than 50 missiles this year, and its first weapon called Blackbeard won a contract in October to test its capabilities while integrated in the U.S. Army and Navy weapons systems. The company said Blackbeard has been in development for the last year and a half and hopes it will be fully deployable by 2027.
Still, the government is Castelion’s only customer, and legacy contractors that have been around for decades aren’t going away anytime soon. But Connor Love, partner at Lightspeed Venture Partners, said there’s real opportunity in the next few years for Castelion to capture multiple billions of dollars of the U.S. government’s budget for hypersonic missile development, which is estimated to be around $10 billion for next year. “The primes are in a really tough position to be able to deliver thousands of these things in anything less than five to 10 years,” he said.
The company still has a long way to go. Government contracts typically come in the order of planning contracts, demonstration contracts and production contracts, and Hargis said the company is currently in the second phase. It has yet to win an actual production contract, let alone produce thousands of missiles. The funding round announced today will go to Blackbeard testing and toward a new manufacturing facility in New Mexico that Hargis said will be completed late next year to be able to produce more than 1,000 missiles per year. He also hopes that Castelion’s cheaper missiles will ultimately provide better outcomes per taxpayer dollars spent.
But for Hargis, the mission runs far deeper than numbers: “I have two young kids—I don’t want them to have to experience a war in their lifetime,” he said. “This is how I’m giving back to them.”
