Castelion Raises $350M Series B for Hypersonic Missile Development

Castelion Secures $350 Million Series B Funding

Castelion, a startup focused on hypersonic weapons technology, is poised to receive $350 million in Series B funding. This investment is being led by Lightspeed Venture Partners and Altimeter Capital, as indicated by reviewed sources and documentation.

The funding round, which establishes the company's valuation in the billions, is expected to finalize within weeks. A term sheet confirming the investment has already been signed.

This new capital infusion follows a $100 million Series A round completed in January. That previous round consisted of approximately $70 million in equity and $30 million in debt financing, also spearheaded by Lightspeed.

Castelion has not issued a public statement regarding this funding.

Breaking into the Defense Market

Entering the government defense sector presents significant challenges for companies outside of established industry players. However, Castelion has demonstrated substantial progress since its emergence from stealth mode in late 2023.

Founded by former executives from SpaceX, the company aims to revolutionize the manufacturing process for hypersonic missile systems, a technology of critical importance to national security.

The Hypersonic Arms Race

Despite the substantial budget allocated to the U.S. Department of Defense, military officials are expressing concerns about China’s rapid advancements in hypersonic weapon development and deployment.

These weapons systems are capable of traveling at speeds exceeding Mach 5, and China’s capabilities are beginning to surpass those of the United States.

Castelion’s Approach

Castelion proposes a novel solution inspired by the operational model of SpaceX. This involves rapid prototyping, frequent testing, and vertical integration to minimize production costs.

The company has already secured grants and awards from various branches of the DoD, including the Air Force Research Laboratory and the Naval Air Systems Command.

In March, Castelion successfully conducted its inaugural hypersonic vehicle test in the Mojave Desert, aiming to demonstrate its ability to deliver low-cost hypersonic missiles at scale to the government.

Project HX3 and Blackbeard GL

Castelion was featured in the U.S. Army’s fiscal year 2026 budget request, released in June.

The budget includes a $25 million allocation for an initiative known as Project HX3. This project is designed to support the development and testing of an “affordable, mass-produced hypersonic weapon” designated Blackbeard Ground Launch (GL).

According to the budget documentation, Blackbeard GL will offer approximately 80% of the capabilities of existing long-range hypersonic weapon variants currently under development by major aerospace contractors.

The Army is indicating a willingness to accept a slight reduction in speed and range in exchange for a more cost-effective product.

Contract Phases and Deliverables

The anticipated contract, considered virtually assured pending President Trump’s approval of the budget, is structured in two phases.

Phase one will involve Castelion delivering a “prototype proof-of-concept” for demonstration in early 2026.

Successful completion of phase one will lead to phase two, which includes the delivery of 10 prototype missiles in 2027 for further testing utilizing the High Mobility Artillery Rocket System, a standard launcher platform.

Blackbeard is also being engineered for compatibility with a forthcoming launcher system featuring autonomous functionalities.

Future Prospects and Market Impact

Castelion’s prior successes with the DoD represent a small fraction of the potential within the lucrative hypersonic weapons market.

Positive results from Army field testing could pave the way for a larger contract and the commencement of Blackbeard missile deliveries as early as 2028.

Established defense contractors such as Lockheed Martin, Raytheon, and Northrop Grumman should closely monitor Castelion’s progress.