AI is moving out of the cloud and into the physical world all around us. Drones delivering packages. Robots working in warehouses. Self-driving cars on public roads. Factory machines that make decisions without human oversight. And someone needs to keep all of that safe from hackers who want to cause real physical harm.
That someone is Exein. The Rome-based startup just raised $270 million, hitting a $1.7 billion valuation. That’s a 30-fold increase in just two years. And they’re building cybersecurity specifically designed for what they call “physical AI” — artificial intelligence systems that control things in the real world rather than just processing data in servers somewhere.
Why Physical AI Security Is an Urgent Problem
Think about this for a moment. When AI lives purely in the cloud, a successful hack means stolen data. That’s bad, obviously. Companies lose money, customers get upset, regulators get involved. But nobody physically gets hurt. When AI controls a delivery drone, a robotic arm in an automotive factory, or a self-driving vehicle carrying passengers on a highway? A successful hack can mean actual physical harm to real people. That changes the entire calculus of cybersecurity.
That’s the critical problem Exein is solving. Their CEO Gianni Cuozzo put it perfectly when he said “AI is moving out of the cloud and into the physical world, and this is the transition Exein was built for from day one.” The attacks on these systems are already happening at machine speed — far too fast for traditional human analysts to detect, analyze, and respond to in time.
Traditional cybersecurity that relies on human analysts reviewing alerts and making judgment calls simply cannot keep up with threats that execute in milliseconds. You need security systems that operate at the same speed as the attacks themselves. That requires a fundamentally different approach to how we think about protecting connected systems.
The Investment Numbers Are Staggering
VC funding for AI cybersecurity hit 2.4 billion euros this year alone. Exein’s round is the largest so far in 2026, beating the previous record held by Israeli startup Dream at $260 million. Other notable deals include $140 million investments for two different Israeli startups working on AI model protection and agentic AI security.
And the demand is only going to grow exponentially as more AI systems move into physical environments. As AI powers more drones, robots, autonomous vehicles, smart building systems, and industrial equipment, the attack surface gets dramatically bigger with every new deployment. Every connected device becomes a potential entry point for sophisticated attackers.
AI leadership, and cybersecurity for physical AI systems represents one of the fastest-growing segments of that entire market.
What This Means for Your Business Right Now
You might be thinking “this doesn’t affect me — I don’t have drones or autonomous robots in my warehouse.” But here’s the thing that most business owners overlook. If your business uses any connected devices at all, you’re part of this ecosystem whether you realize it or not. Point-of-sale systems. Security cameras. Smart building controls. IoT sensors monitoring equipment. Connected vehicles in your fleet. All of these are potential targets for attackers.
Exein’s approach is particularly interesting because they embed security directly into devices at the chip level, not on the network perimeter like traditional security tools do. That’s a fundamentally different and much more robust way of thinking about protection. And as more business devices gain AI capabilities over the next few years, that embedded approach becomes absolutely essential rather than just nice to have.
The $1.7 billion valuation isn’t just about Exein as a single company. It’s about the entire security infrastructure that urgently needs to be built to protect the AI-powered world we’re all creating together. And that represents a market opportunity measured in hundreds of billions of dollars over the coming decade.
