David Kelnar

Managing Director, Private Capital, at Houlihan Lokey. 2x CEO/CFO. Scale-ups, tech, trends. Blog:

[David Kelnar @davidkelnar]

Drones are re-shaping conflict and geopolitics globally. Ahead of us announcing our latest defence technology capital raise: eight thoughts on drones following the Tectonic defence tech conference in Austin:

1. Doctrine: Conflicts in Ukraine and the Middle East highlight the biggest change in military doctrine since World War II and the development of armour. High volume, low cost, increasingly autonomous drone platforms - in the air, on land, at sea, and sub-sea - are reshaping the battlefield and attracting significant spend alongside traditional ‘exquisite’ (extreme performance, high cost, low volume) systems. Conflicts are underpinned by economics and, as often cited, destroying stocks of $30,000 drones with a stock of $4m missiles isn’t sustainable.

2. Components: the West has become dependent on inexpensive, high volume Chinese batteries, motors, radios and other key components. Developing capability, capacity and low cost in critical components is now an urgent challenge for the West and requires both government and private capital. A growing number of companies are seeking to vertically integrate select components, to guarantee supply and create performance and price advantages.

3. Electronic warfare (EW): in response to jamming and an intense EW environment: tactics, techniques and procedures are evolving. Software-defined radios, fibre optic cables and edge-based autonomy are playing key roles in varying missions.

4. Swarming: drone swarms are the next battlefield. Swarming requires new competencies - in connectivity, communication, production, autonomy, decision-making and more - and is a focus for many.

5. Production: drone leaders are acutely focused on mass production considerations - ‘design for manufacture’, supply chain access & sovereignty, and automation - given exponential growth in volume requirements for small, attritable platforms. Adversaries subsidise their drone industries to enable companies to invest in production capex. Will the West?

6. Procurement: procurement processes are finally evolving - from slow, multi-year initiatives established for exquisite systems and defence tech primes - to nimbler processes open to disruptors. The US Drone Dominance program is a visible example.

7. Training: Either militaries must invest more in training to use drones, and/or drones need greater autonomy. Special forces may get enough training; others don’t. There are second-order consequences - e.g. more autonomy means more chips. Many procurement programmes don’t have big training budgets behind them.

8. Evolution & Uncertainty: Drone use cases and military doctrine are evolving rapidly. We’ll see alternative methods of drone deployment (from large motherships, unmanned ground vehicles and on/under-sea vehicles). And expect new use cases - such as ‘active mines’.

Previously we raised €70m for Tekever, a European defence tech leader. We’re excited to announce our latest, landmark defence tech financing imminently.

[David Kelnar @davidkelnar]

🚀 We’re delighted to have advised @security_hq, a tech-enabled, full-suite managed security service provider (MSSP), on its minority investment from @GCPGrowth. We couldn't be more excited to see the continued growth of the business in partnership with GCP.

It was a pleasure working with the Company and Management team, led by Feras Tappuni, and my Cyber Security sector expert colleagues led by Mark Smith.

==> Find out more here: https://t.co/i0XlbHkTUX

Thanks to Mark Smith, Gabrielle Worrall, James Grundy, Matthew Hopton, Jean-Christophe Kayumba, Gareth Owen, Shaady Hussein, Keith Skirbe and Bobby Wolfe!

[David Kelnar @davidkelnar]

2/2 “The Houlihan team were fantastic. They delivered trusted advice, thoughtful articulation of our equity story and data, superb investor connectivity globally, and unwavering commitment in fluid markets to deliver a successful outcome and support Numan's next stage of growth. They're a trusted partner and I recommend them highly." (Sokratis Papafloratos, Founder & CEO, Numan). Thank you Sokratis - we loved working with you!

[David Kelnar @davidkelnar]

1/2 Huge congratulations to @getnuman on raising $60m in growth financing, led by @bigpivc with participation from @HSBCInnovation, @endeavor_global, @WhiteStarCap and Novator. Numan is on a mission to help people lead happier, healthier, longer lives. It was our privilege to serve as Numan's exclusive financial advisor on this landmark digital health transaction. => https://t.co/NsD58aqRWR

[David Kelnar @davidkelnar]

🤙🏼 Get in touch (6/6)

25. We’re Houlihan Lokey, the trusted advisor to more top decision-makers than any other independent global investment bank. We’re No. 1 in Equity Private Placements (for sources, see Survey). Thinking of raising capital? Get in touch with me to see how we can accelerate your journey.

[David Kelnar @davidkelnar]

💡💥 We surveyed 90 of the world’s leading Growth investors, with $3T AUM, for unique insight into private market dynamics. 25 highlights below - what you need to know on tariffs, the economy, market activity, growth v profitability, valuation, structure, thematics and more. Strap in… Download report here: https://t.co/p85oKe30vj

🌎 Economy & IPOs (1/6)

1. Macroeconomy: tariffs have reversed expectations of economic improvement. Pre-tariffs, 8/10 investors expected macro stability / improvement through 2025. Post-tariffs, 7/10 expect weakening.

2. IPOs: pre-tariffs, 2/3 expected IPO window to re-open broadly in 2025. Volatility has caused many to be pulled and delayed broad re-opening. But Nasdaq and latest filings give hope.

3. IPOs: Weak IPO environment since 2022 has reset investors’ exit assumptions. <1/10 investors view IPO as preferred exit route. 9/10 favour a sale, with pref for strategic.

4. Geopolitical conflicts are weighing on markets. E.g. Ukraine: majority of investors expect conflict to continue to affect financial markets into 2026.

[David Kelnar @davidkelnar]

🤖 Thematics, including AI (5/6)

19. Thematics: Investor demand is greatest for “Rule of 40+” B2B SaaS companies, AI-led propositions, vertical SaaS, industrial automation, cybersecurity, FinTech, and healthcare.

20. 9/10 investors will maintain/increase their volume of AI investments. But investors are shifting from FOMO behaviour to a fundamentals-led approach, focused on companies’ impact on customer KPIs, monetisation, and defensibility.

21. Investors note that we are early in the era of AI. The pace of innovation makes it difficult to pick winners. Most value will accrue at the application layer. Success factors include high-value use cases, embedding into enterprise workflows, proprietary data and data network effects, and distribution.

22. Defence technology is now a priority for more investors, reflecting tailwinds in spending, opportunity for “disruptors” delivering autonomy, and new procurement dynamics.

23. Investors’ focus on healthcare is increasing, as capital allocators seek exposure to the industry’s high-quality contracting arrangements and enterprise sales of mission-critical solutions to the pharma industry.

24. Appetite for emerging market companies and ESG propositions is generally weaker, reflecting concerns regarding end-market dynamics, volatility, and regulatory/policy risk.

[David Kelnar @davidkelnar]

@paulg Awesome. Which GPT interface or related tools does he find most accessible / useful? Many thanks.

[David Kelnar @davidkelnar]

4/4 A privilege to have advised Casavo on the equity raise. Thx @giorgio_tinacci for kind words: “Numis’ support has been extremely valuable. Numis’ dedication + senior advice to navigate a challenging market have been success factors. Numis is a partner in fit with our DNA.” 📈

[David Kelnar @davidkelnar]

1/4 Congratulations to @Casavo_it on its flagship €100m Series D equity raise 🚀. Our privilege to have served as advisers. Alongside €300m of new debt financing, Casavo is extending its leadership across Europe. Great working with @giorgio_tinacci +team.https://t.co/GgppqSqcRZ

[David Kelnar @davidkelnar]

3/4 …. while its platform, proprietary tech and data have powered huge success already with €1B of transactions executed to date.

[David Kelnar @davidkelnar]

Was our privilege to advise Nord. Thx to Tom for kind words: “I’d never have thought we could achieve this ideal outcome. Your attitude to clients, connectivity + creativity are outstanding. Thanks for this 1st step in our journey and we’ll continue to hustle together in future.”

[David Kelnar @davidkelnar]

Huge congratulations to @tom_okman and team on their $100m maiden fundraise for Nord Security, which has become Lithuania’s second unicorn with a valuation of $1.6B. 🦄🇱🇹🚀 https://t.co/ov27FK8xPV

[David Kelnar @davidkelnar]

The Company will use the proceeds to power further expansion of Nord's product suite and footprint through hiring, intensive R&amp;D and acquisitive growth.

[David Kelnar @davidkelnar]

🚀Awesome fashion platform @lyst has raised $85m in pre-IPO financing with fantastic new + existing investors. Huge assortment (17,000 brands) + growth ($2B lifetime GMV, +1100% new app users). Numis' privilege to serve as Financial Advisor on the raise. https://t.co/0vf18aT9UQ