AI Security Gets a $100M Bet
As companies scramble to keep their AI agents from going rogue, HiddenLayer just raised $100M to guard the machines.
The threat that finally showed up
Three years ago, when HiddenLayer raised its $50 million Series A, the awkward question hanging over the whole business was simple: are attacks on AI actually a thing yet? Back then, real-world examples were hard to find. The market for defending AI was more theory than reality.
What a difference a few years makes. Companies are now rushing to secure not just their AI models but the autonomous agents built on top of them, plus all the tools and add-ons those agents plug into. You still do not see many headlines about agents being hacked. But the risk of an agent misbehaving in production, doing something it should not, is real enough that businesses are opening their wallets.
What HiddenLayer does
The Austin-based startup builds tools to protect AI models, agents, and workflows from a menu of nasties: adversarial attacks, vulnerabilities, and malicious code injections. Think of it as a security guard that watches AI systems while they run. CEO Chris Sestito compares it to endpoint detection and response, or EDR, the software that watches laptops and servers for signs of an attack. HiddenLayer wants to be that, but for AI.
Its core products have not changed much since 2023: discovery (finding all the AI in your organization), runtime protection (watching it work), attack simulation, and supply chain security. What has changed is the scope. The company had to extend all of that to handle newer problems like prompt injection, where a cleverly worded input tricks a model into ignoring its instructions, along with agent manipulation and malicious tool use.
As Sestito puts it, "inference is still inference." Whether a model is old-school machine learning or a shiny new agent, a lot of the underlying protection carries over. The company did not pivot so much as widen its lens.
Why the market is heating up
The numbers behind the funding tell the story. Gartner estimates companies will spend $2.83 billion this year on tools to secure AI, up 83% from 2025, and expects that to reach nearly $4.78 billion next year.
HiddenLayer has ridden that wave. Sestito says annual recurring revenue grew more than 10x over the past year. He would not give an exact figure, only that it is in the "tens of millions," with more than 90% of that growth from brand-new customers. Take the specifics as the founder's own account, not an audited one.
Its biggest customers sit in financial services and among large tech firms building AI products, plus contracts with the Department of Defense and intelligence community. One client is described as a "leading frontier model provider" with more than 700 million weekly users, which sounds a lot like OpenAI or Anthropic, though the company did not confirm which.
One newer wrinkle: open source models. HiddenLayer says it scans about 50 different AI file frameworks to make sure a model is genuinely what it claims to be. Sestito flagged "hidden models inside of models," where something is dressed up as one tool but is actually another. It is the AI equivalent of checking that a downloaded file is not carrying a stowaway.
What the $100M buys
The new Series B was led by Delta-v Capital, with backers including Microsoft's M12, Morgan Stanley, Booz Allen Hamilton, and Ten Eleven Ventures. Most of the cash is going toward sales and distribution, with continued spending on engineering and research, plus an expansion into Europe and the wider EMEA region.
The road ahead is crowded. Rivals like Noma and Zenity have each raised over $100 million in nearby corners of the market, and big security players such as Cisco, Palo Alto Networks, and Check Point often prefer to buy this kind of technology rather than build it. Sestito even concedes that parts of what HiddenLayer sells could one day get folded into platforms from Microsoft, OpenAI, or AWS.
His bet is that those giants will lean toward governance features like discovery, identity, and policy controls, leaving the deeper security work to specialists. The plan is to "scale vertically alongside artificial intelligence," then branch out. It is an ambitious goal, and the real test is whether an early lead can become a lasting business before everyone else catches up.