HiddenLayer Secures $100 Million as Businesses Accelerate Efforts to Safeguard AI Deployments

Three years ago, when AI security startup HiddenLayer secured its $50 million Series A funding, a significant question loomed over the sector: Would the AI threats the startup aimed to combat emerge in sufficient volume to create a viable market? As my former colleague Kyle Wiggers pointed out back then, identifying concrete cases of large-scale attacks on AI was quite challenging.

The landscape has changed dramatically since then. Security firms are now in a race to develop solutions capable of monitoring not just AI agents but also the various tools and extensions they utilize. Although incidents of agents being exploited remain relatively rare in headlines, the potential for agents to malfunction during deployment is very real. Consequently, the market for preventive tools has surged: Gartner projects that spending on products aimed at securing AI tools will reach $2.83 billion this year—an 83% increase compared to 2025—and expects expenditures to approach $4.78 billion next year.

HiddenLayer specializes in protecting AI models, agents, and workflows from adversarial attacks, vulnerabilities, and malicious code injections, and it has capitalized on this shift effectively. Co-founder and CEO Chris Sestito shared with TechCrunch that the startup’s annual recurring revenue has grown over tenfold in the past year. While he did not provide a specific figure, he mentioned that the ARR is now in the “tens of millions” of dollars, with more than 90% of this growth attributed to new customer acquisitions over the last year.

Currently, the largest sectors for HiddenLayer are financial services and major tech companies developing AI products. The company also holds contracts with the Department of Defense and the intelligence community. One noteworthy client is reportedly a “leading frontier model provider” boasting “more than 700 million weekly users,” which many speculate could be OpenAI or Anthropic.

To leverage this momentum, the startup has recently raised $100 million in a Series B funding round led by Delta-v Capital, with contributions from Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, Booz Allen Hamilton, and others.

While the Austin-based startup continues to offer its original products from 2023, Sestito told TechCrunch that it has expanded its existing offerings—discovery, runtime protection, attack simulation, and supply chain security—to also include measures against prompt injection, agent manipulation, and malicious tool usage.

“Inference remains the same. Whether it’s on a traditional machine learning model, Gen AI, or an agentic workflow, much of our technology still applies. Thus, we haven’t pivoted away; instead, we’ve broadened our scope from traditional modeling to Gen AI and agentic solutions,” he explained.

Sestito emphasized that runtime security has become increasingly important as AI deployments become commonplace among businesses, comparing it to traditional endpoint detection and response (EDR) solutions, but specifically tailored for AI.

The company’s new products illustrate this evolution, and Sestito pointed out a growing risk of attackers exploiting open-source models. “We analyze and scan around 50 different AI file frameworks to ensure that, particularly with open-source and open-weight models, the tool you’re working with is what it claims to be. We examine instances where models may falsely represent themselves, such as hidden models within models,” he said.

The startup asserts that the newly acquired $100 million will be instrumental in pursuing this direction, with a particular focus on enhancing sales and distribution, while also continuing to grow its engineering and research capabilities. Additionally, it plans to expand into Europe and the EMEA region.

However, HiddenLayer may need to tap into its resources further, as major cybersecurity firms like Cisco, Palo Alto Networks, and Check Point often prefer acquiring technology rather than developing it in-house. Furthermore, rival startups like Noma and Zenity have each raised over $100 million to tackle related or overlapping sectors.

Sestito acknowledged that certain aspects of AI security products his company offers may eventually be integrated into platforms created by companies such as Microsoft, OpenAI, and AWS. Nonetheless, he believes that AI infrastructure will trend towards governance features, such as discovery, identity, and policy controls, rather than the specific types of tools his company develops.

For now, he states that HiddenLayer’s mission is to “scale vertically alongside artificial intelligence” while aiming to branch out horizontally into cybersecurity aspects that increasingly rely on AI. This is an ambitious goal, but the startup must first validate its early advantage by transforming it into a sustainable business before the rest of the industry can catch up.