AI security startup HiddenLayer raises $100M Series B

AI security startup HiddenLayer has raised $100 million in a Series B round led by Delta-v Capital, with Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, Booz Allen Hamilton, and others participating. The round comes three years after the Austin-based company raised a $50 million Series A, at a time when the market for tools to protect AI models, agents, and workflows from adversarial attacks and malicious code has expanded sharply: Gartner estimates companies will spend $2.83 billion this year on such products, 83% more than in 2025, and expects spending to reach nearly $4.78 billion next year.

HiddenLayer co-founder and CEO Chris Sestito told TechCrunch that the startup’s annual recurring revenue grew more than 10x over the past year, with ARR now in the “tens of millions” of dollars — over 90% of that growth driven by new customers signing in the past year. Financial services and large tech companies are currently its largest verticals, and the company also holds contracts with the Department of Defense and the intelligence community. One customer, Sestito said, is a “leading frontier model provider” with “more than 700 million weekly users.”

HiddenLayer still sells largely what it did in 2023 — discovery, runtime protection, attack simulation, and supply chain security — but Sestito said the company has had to extend those products to address prompt injection, agent manipulation, and malicious tool use. He described the underlying technology as portable across model types, framing the shift as an expansion in scope from traditional machine-learning models to generative AI to agentic systems, rather than a pivot. He also pointed to a newer risk in open source models: the company scans about 50 different AI file frameworks to verify that a model is what it claims to be, since, as he put it, “we’re looking at things like models purporting to be one thing, but they’re another — hidden models inside of models.”

The new funding will go mostly toward sales and distribution, along with continued engineering and research, and HiddenLayer plans to expand into Europe and EMEA. Competition is intensifying: large cybersecurity vendors like Cisco, Palo Alto Networks, and Check Point tend to buy rather than build this kind of technology, while rivals Noma and Zenity have each raised over $100 million to target adjacent parts of the market. Sestito acknowledged that some of what HiddenLayer sells could eventually be bundled into platforms from Microsoft, OpenAI, and AWS, though he expects those platforms to focus more on governance features like discovery, identity, and policy controls.

Why it matters

The raise reflects a category Gartner expects to keep growing quickly — to nearly $4.78 billion in spending next year — putting HiddenLayer in a race against larger cybersecurity vendors and well-funded rivals to own the space before it gets absorbed into the AI platforms themselves.