Cyber winds ༄༄

Cybersecurity and infrastructure software trends, supported by 33N ventures

Fig 1. Exein’s Series B announcement.

At 33N, we’re always on the lookout for transformative technologies that can reshape the cybersecurity and infrastructure software markets and create new paradigms. Our latest investment in Exein is a testament to this vision.

Believe it or not, our first interaction with Exein started more than 3 years ago. Since then, the opportunity of investing in the company has always excited us given its addressable market, product, leadership, and investor support. Well, in 2023 everything came full circle with an extraordinary market validation and sales execution. On the back of this long relationship with Gianni (Founder & CEO), coupled with our common vision on the most unexplored and promising segments within the IoT/OT security market, 33N was fortunate to lead their financing round, joined by Partech, and continued supported from United Ventures, eCapital, and Future Industry Ventures.

The Growing Threat Landscape

The Internet of Things (IoT) and Operational Technology (OT) sectors present a growing threat to enterprises as industrial devices integrate with IT networks, the volume of software embedded on devices increases, as well as the transfer of data from previously isolated appliances. In 2022, IoT-target cyber attacks surged by 116% YoY, with Europe bearing the brunt. In the first two months of 2023, these attacks were already 41% higher compared to 2022, reflecting an obvious acceleration of the problem (source). Pushed by these forces, the IoT/OT security space developed into a standalone market within infosec estimated at $6.8bn in 2023 and expecting a 21% CAGR for the next 3 years (as per Pitchbook) . The security segment is estimated conservatively at <1% of the total market opportunity for IoT startups that reached $645bn in 2022, excluding services startups (according to Pitchbook).

Distinctive Technology Proposition

Exein stands out with its comprehensive, software-focused approach to embedded security. Unlike traditional methods that rely heavily on hardware-based appliances, costly specialized consultancy, network-centric solutions or vulnerability assessments, Exein offers a scalable and flexible platform that provides real-time threat detection and response capabilities at the device level. This approach is crucial for environments with connectivity constraints, enabling effective security without the need for constant network access.

Fig 2. Competitive landscape.

Key features:

●      Runtime Security: Exein’s agent monitors device security in real time, providing immediate threat detection and mitigation.

●      Analyzer Platform: Automates cybersecurity assessments, identifying vulnerabilities in firmware without requiring source code access.

●      Edge AI: Utilizes machine learning for anomaly detection, ensuring each process on a device is secure.

Fig 3. Architecture.

Global Partnerships & European Leadership

Exein adopted a strategy to provide linear integration in CNCF open-source Linux embedded systems such as Yocto and Buildroot. The company is the only startup and European entity as a Platinum Member of the Yocto Project, the standard de facto of Linux embedded systems running on 1.4bn devices per year, a significant portion of the embedded IoT market.

Fig 4. Yocto project Platinum members.

The long-term commercial agreements with relevant GTM partners, OEMs, and chipset manufacturers globally built by Exein throughout the last years is remarkable and a relevant barrier for new market entrants.

Pressing Regulatory Environment

IoT security adoption is benefiting from regulatory tailwinds and is now a legislative priority. Few years ago, the US Government passed the IoT Cybersecurity Improvement Act, which created security standards for connected devices procured by the federal government. Further, recent US Executive Orders, the Cyber Trust Mark (CTM), or in the EU, the Cyber Resilience Act (CRA) and the NIS2 Directive, bolstered measures to ensure more secure hardware and software products to be implemented until 2025-26. Considering general device production life cycles of 1-2 years, organizations need to start complying with the latest regulations right now. Each of these directives should play a crucial influence on broader IoT security adoption, and Exein can play a pivotal role in helping manufacturers act in accordance with the upcoming regulatory framework. The latter comes reinforced if we consider the EU's dominance on the global production of industrial devices and its position at the forefront of the work done to regulate this space.

In case you’re interested to know more, please check https://www.exein.io/. Stay tuned for more updates very soon! Let the winds keep blowing.