A San Marcos-based manufacturer of rare Earth magnets is set to expand after attracting some fresh capital.

Noveon Magnetics Inc. on May 16 announced it has closed a $75 million series B funding round led by NGP Energy Capital Management LLC and Aventurine Partners.

The funding will support expanded manufacturing for Noveon, which supplies magnets "to businesses that span the automotive, defense, energy, production, medical and consumer goods sectors," according to the announcement.

It has been an eventful year for Noveon, which in February hosted Texas Gov. Greg Abbott for his annual State of the State address. The company was lauded by Gov. Abbott for its role in bringing rare Earth magnet production stateside; as it stands, China controls the vast majority of that sector.

The $75 million raise offers a bright spot in the Austin-area startup scene, which has seen funding wane from the peaks of 2022. Austin startups closed 63 startups deals in the first quarter of 2023, down from 102 deals in the fourth quarter of 2022 and the lowest deal count since 2016, according to the latest Venture Monitor report put together by PitchBook and the National Venture Capital Association.

Noveon's series B round is larger than all but three funding deals announced in the first quarter: the $150 million raised by Colossal Laboratories & Biosciences; $85 million by Coherent Logix and $75 million from Alleviant Medical.

Noveon CFO Viji Subramanyam described the $75 million raise as a "validation of the technology" underpinning the business, especially considering the broader economic headwinds. She added that the company went into the market wanting to raise a certain amount, "and this was close to where we wanted."

Noveon is putting the money to good use. The company is ramping up production at its 145,000-square-foot manufacturing facility in San Marcos, where it expects to make roughly 2,000 tons of magnets annually by 2024, according to the announcement.

“Our team is working hard every day to produce the rare Earth magnets needed to power a low-carbon future while strengthening our domestic supply chain in accordance with our national security priorities,” said Noveon CEO Scott Dunn in a statement. “This funding will allow our company to continue ramping up production to help fulfill our robust sales pipeline and meet the skyrocketing global demand for critical rare earth magnets.”

Subramanyam said Noveon eventually wants to ramp up production enough to make 10,000 tons of of magnets annually.

"We have the space," Subramanyam said. "The idea is, once this is built up completely, the intention is to build up to 10,000 tons capacity.”

Noveon is still pre-revenue, Subramanyam said, but the company expects to make between $8 million and $10 million in revenue by the end of the year.

In a December interview, Dunn said that many of the company's customers come from the defense sector; The company had also raised more than $35 million from the U.S. Department of Defense as of May 2022.

Dunn said at the time that Noveon was planning to grow from 60 employees to more than 100 over the next two years. Subramanyam said the company already has 70 employees now and indicated Noveon might even reach 100 employees by the end of the year.

“Over the next couple of months, we will start to have multiple shifts to run the operation," Subramanyam said.

Those new hires will include operators to run the facility, along with new hires in sourcing and procurement.

“Noveon Magnetics has a proven capability of sustainably manufacturing superior rare Earth magnets, which are an essential component in a wide variety of industries — especially those focused on the beneficial usage and generation of electricity,” said James Wallis, Partner at NGP, who is joining Noveon's board of directors. “We’re proud to partner with Noveon to help them scale their operations and provide their customers a reliable, high-quality supply alternative.”

Subramanyam praised San Marcos leaders for providing the incentives and welcoming environment to help Noveon grow.

"We can source from local universities here. The San Marcos chamber has been really, really helpful to us," she said. "A lot of good things are happening, and we want to be the big company out here in San Marcos.”

Noveon, founded as Urban Mining Company in 2014 before rebranding in May 2022, isn't the only magnet supplier to plant roots locally. Amazing Magnets — which designs, develops and distributes magnetic products to businesses in sectors such as automotive, clean energy, entertainment and military industries — recently relocated its headquarters from California to Round Rock.