HiddenLayer Raises $100M to Secure Enterprise AI Deployments

HiddenLayer has secured $100 million in Series B funding to expand its capabilities in securing enterprise AI deployments. This latest investment round, led by Delta-v Capital with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, and Booz Allen Hamilton, marks a significant escalation for the Austin-based startup. The capital injection comes as the market for AI security solutions experiences explosive growth, driven by the urgent need to protect increasingly complex artificial intelligence systems from adversarial threats.

Three years ago, when HiddenLayer raised its initial $50 million Series A, skepticism lingered regarding the volume of real-world attacks against AI technologies. At that time, concrete examples of large-scale exploits were scarce, leading many to question whether a viable market existed. Today, the landscape has shifted dramatically. Security firms are racing to develop products capable of monitoring not only autonomous agents but also the underlying tools and add-ons they utilize. While high-profile headlines about agent exploitation remain rare, the operational risk of agents malfunctioning or being manipulated in production environments is now widely recognized as a critical business threat.

This urgency is reflected in market projections. Gartner estimates that global spending on AI security products will reach $2.83 billion this year, representing an 83% increase from 2025 levels. Furthermore, the firm anticipates that expenditure will climb to nearly $4.78 billion by next year. HiddenLayer has positioned itself to capitalize on this surge, reporting that its annual recurring revenue (ARR) has grown more than tenfold over the past twelve months. CEO Chris Sestito confirmed that ARR is now in the tens of millions, with over 90% of that expansion attributed to new customer acquisition during the last year.

The company currently serves major verticals including financial services and large technology firms building AI products. Its client roster also includes contracts with the Department of Defense and the intelligence community. One notable customer is described as a “leading frontier model provider” serving more than 700 million weekly users, a profile that strongly suggests entities like OpenAI or Anthropic.

Expanding Scope Without Pivoting

Although HiddenLayer continues to offer core functionalities established in 2023,such as discovery, runtime protection, attack simulation, and supply chain security,the scope of these tools has broadened significantly. The startup has extended its existing framework to address modern challenges such as prompt injection, agent manipulation, and malicious tool use.

“Inference is still inference. So whether it’s on a traditional machine learning model, whether it’s GenAI, whether it’s an agentic work stream, a lot of our technology still applied. So really, we haven’t had to pivot, but we’ve had to grow our scope … from traditional modeling to GenAI to agentic,” Sestito explained.

He emphasized that runtime security has become a paramount concern as AI deployments permeate various industries. He likens this approach to traditional endpoint detection and response (EDR) solutions, but tailored specifically for AI ecosystems. This focus addresses emerging vulnerabilities, particularly those associated with open-source models. HiddenLayer now parses and scans approximately 50 different AI file frameworks to verify the integrity of open-weight models.

“We parse and scan about 50 different AI file frameworks to make sure that, especially in the case of open source, open-weight models, that the tool you’re working with is the one you believe it to be, and it’s the one it’s purporting to be. We’re looking at things like models purporting to be one thing, but they’re another , hidden models inside of models,” he said.

Strategic Growth and Market Position

The newly raised funds will primarily support sales and distribution efforts while allowing the company to continue expanding its engineering and research teams. Additionally, HiddenLayer plans to extend its operations into Europe and the EMEA region. The company recognizes that it may need additional capital in the future, given the aggressive strategies of both large cybersecurity incumbents and rival startups. Major players like Cisco, Palo Alto Networks, and Check Point often prefer acquiring specialized technology rather than building it in-house. Meanwhile, competitors such as Noma and Zenity have each raised over $100 million to target adjacent areas within the AI security space.

Sestito acknowledges that certain components of HiddenLayer’s offerings might eventually be integrated into platforms developed by tech giants like Microsoft, OpenAI, and AWS. However, he predicts that AI infrastructure will evolve toward governance features such as discovery, identity management, and policy controls, rather than absorbing the specific security tools HiddenLayer provides.

For now, the company aims to “scale vertically alongside artificial intelligence,” with long-term ambitions to expand horizontally into broader cybersecurity domains that increasingly rely on AI. Achieving this vision requires proving that its early market entry can translate into a sustainable, enduring business before competitors close the gap.