New Italian unicorn Exein rides the physical AI wave

In a notable development for cybersecurity, Italian startup Exein has secured a substantial $270 million funding round at a valuation of $1.7 billion, led by Headline. This comes as the company expands its focus to provide a cybersecurity layer for physical AI, building on its initial work in IoT. CEO Gianni Cuozzo highlighted the company's mission to enable devices to defend themselves, regardless of their connectivity status.

Exein's latest product, Photon, is a runtime security solution targeting kernel-level attacks. The Rome-based firm has been collaborating closely with manufacturers and silicon vendors since its founding in 2018, driven by the increasing prevalence of connected devices. These devices span sectors such as aerospace, industrial automation, automotive manufacturing, energy, healthcare, and semiconductors, where cyberattacks could have severe consequences.

Exein expects growth to continue as physical AI becomes more prevalent, encompassing AI-powered robots, drones, self-driving cars, sensors, and smart appliances. The company's valuation has surged thirtyfold since its Series B and more than doubled since its Series C, underscoring investor confidence. This growth is partly fueled by the rise in "machine-speed attacks" enabled by open-source AI models, which can be deployed without guardrails, making attacks easier and cheaper.

Exein is developing a foundational model for physical AI security, training it on machine data and telemetrics, with deployment planned for the first quarter of 2027. The company plans to use the new funding for acquisitions and staff expansion in the U.S. and Asia Pacific, regions that currently account for half of its revenue.

Exein's expansion is challenging due to its global presence across three continents. However, the company's growth, which has seen a 400% increase year on year, is bolstered by the impending European Union's Cyber Resilience Act, set to fully implement in December 2027. This legislation will mandate manufacturers to ensure digital products are safe from cyber threats, potentially providing Exein with additional business opportunities.