Giuseppe Lacerenza has experience in the world of innovation, start-ups, worked at McKinsey, is a business angel, has, for example, invested in Sibill, Qomodo and JetHR, and is now working on a new fund dedicated to defence-tech.
Lacerenza is based in Amsterdam and is a partner in the investment vehicle Keen Venture Partners, which has its main offices in the Dutch capital but aims to become the largest European fund dedicated to the defence innovation sector. Keen already has two operatives: one that is almost at the end of its cycle and a second that still has one year left in its investment period and has invested in Italian companies such as Fiscozen and the aforementioned Sibill.
“I joined the Keen team about six months ago to lead as a partner the fund dedicated to defence and security, we started the fundraising last November, so we have not yet done the first closing, but we are aiming for a €125 million fundraising with a €200 million hard cap,” Lacerenza tells Startupbusiness. The goal is to build one of the first and largest investment funds dedicated to the defence and security sector in Europe, and this is based on a number of considerations: Europe has so far clearly underestimated defence-tech innovation with too much dependence on other countries, with the US in the forefront, and has therefore not developed this industry, which no longer requires complex low-volume systems as it once did, but the experience of the Ukrainian conflict teaches us that it is a sector that needs systems very close to the commercial world almost off the shelf adapted for the military context. The war in Ukraine proved to be a laboratory for innovation and what we have learnt now needs to have an effect across Europe, to create domestic capabilities and drive defence-tech innovation, innovation that is often software driven, smart objects. So there is now a great opportunity for start-ups to design the new phase of the defence industry and we believe that VC is the driver that also promotes this innovation in an effective way because it comes out of the logic of state institutions that have always dealt with the subject but in a very inefficient and very slow way, while private capital looks at efficiency and can bring the product mindset of start-ups that evolves much faster than the pace of the traditional defence world.
Technology, also in the defence-tech sector, is evolving rapidly with innovation cycles much closer to the approach of start-ups, with a plus the pushes coming from the geopolitical scenario and with the challenges in social terms in relation to the social perception regarding defence that is rapidly changing. “This is a process that is already underway and appears to be more advanced in those countries that are closer to the front, therefore closer to Russia, such as Estonia, Poland, Finland, but it is spreading throughout Europe, here in the Netherlands there is an awareness of financial institutions towards the need to get closer to the defence world, defence is less and less seen as a negative industry such as pornography, gambling or tobacco as it may have been in the past, and this is changing the scenario also technologically. There is a move towards autonomous guidance systems, drones of all types: airborne, marine, land-based, radio spectrum management, asset jamming such as the ability to disable drones, then there are decision support systems that provide the ability to process complex unstructured data quickly to support real time decisions and the ability to make decisions quickly is a source of superiority when it comes to defence. Then we need to develop scalable technologies, scalable and modular production, we don’t need to fill warehouses with stuff that becomes obsolete but we need processes and technologies that in a modular way can scale quickly in production, and then there are the highly innovative materials, such as those that absorb electromagnetic waves that absorb radar signals, and finally space, which is considered, when it comes to defence, the domain of the air force, an extension of the sky, but has become critical infrastructure, satellites are vital, space situational awareness contributes to the ability to react, systems to move and defend satellites’.
Even before the new fund has started Keen Venture has already taken action: ‘We have already invested in two defence-tech start-ups, one, the Dutch Avalor AI, integrates in a single software the ability to govern any type of marine, land, and air drone from any manufacturer, to plan and manage missions in an integrated manner, and then always Dutch Persive AI, which has developed a software capable of making radar performance comparable to that of a camera by making it capable of classifying objectswhich originated in the automotive sector as an inexpensive alternative to lidar for autonomous driving, is now also being applied in the defence world.
“For me this role in the fund is very important, also because I am Italian, because Italy has so much to give to the defence world, it has the industrial chain with giants such as Leonardo, Alenia, Avio, and it must be able to grow at a European level, so my task is also to make the ecosystem aware of this new theme. I am looking for both investors and investments in Italy, the country has historically had an economic and industrial tradition in defence, in space it is excellence in Europe, I hope and count on finding Italian realities where I can invest, and I also hope that the defence institutions can play a leading role, for example by supporting and acquiring start-ups in which we invest (even NATO’s start-up programme has already started its operations in Italy, further demonstrating the country’s potential). I believe that the concept of Europe is very important at all levels, and without Europe it will not be possible to create a sufficiently scalable and effective system, and we cannot do it with the mechanisms of a state machine, we must be more efficient, specialised, and we must make the integration between the different forces available more efficient by applying economies of scale from a European perspective’.
There is no doubt that the evolving geopolitical scenario poses new challenges to Europe, but it is equally true that a united Europe was born as a strong and decisive response to conflicts, as an instrument of peace and, union indeed, therefore It is also crucial to find the right balance when it comes to investing in defence technologies, and according to Lacerenza, this balance is summed up by the concept of dual-use. ‘Dual-use means developing technologies that can also be used for applications other than defence, for example civil protection which with the consequences of climate change will always have new challenges to face, or logistics, communications, cybersecurity, we will never invest in single-use solutions designed exclusively for defence, the approach is to accelerate innovation by leveraging the defence pretext to then make innovation in other areas as well. War is to be avoided, always, but deterrence is also needed, we need to show our muscles and we need to do it within the framework of democracies, but we need to be prepared. It is not the first time that this has happened, the internet that we use every day was born as a military project, the GPS that helps us navigate the roads and seas of the world was born as a military application, and today we could no longer do without either for everyday activities that are far removed from those of defence, and the challenges are many, think of the role of freedom of information and the fight against fake news that becomes a potential weapon in the event of conflict, and the security of energy infrastructures’.
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