AI Security Startup HiddenLayer Raises $100 Million as Companies Race to Protect Their AI Systems
Annual revenue grew more than tenfold in a year. Now HiddenLayer wants to be the security guard standing between your business and the people trying to hijack its AI.
Key points
- HiddenLayer closed a $100 million Series B round led by Delta-v Capital, with backing from Microsoft's M12, Morgan Stanley, and Booz Allen Hamilton.
- The Austin-based startup's annual recurring revenue grew more than tenfold over the past year, reaching the "tens of millions" of dollars.
- Gartner estimates companies will spend $2.83 billion in 2025 on AI security products, rising 83% to reach $4.78 billion by 2027.
- Over 90% of HiddenLayer's revenue growth came from customers who signed on in the past year.
- HiddenLayer counts the US Department of Defense among its clients, along with what appears to be a major AI model provider.
Three years ago, HiddenLayer's biggest problem was convincing people the threat was real. The Austin, Texas startup built tools to protect AI systems from attacks, but real examples of those attacks happening at scale were scarce. Investors still handed over $50 million in a Series A round, and everyone waited to see whether the market would materialise.
It did.
Companies are now rushing to secure their AI tools, especially as they adopt AI agents: software that carries out multi-step tasks on its own, like booking flights or processing invoices. Those agents can be tricked or fed poisoned instructions, and the financial exposure is real. Gartner, as first reported by TechCrunch AI, puts global AI security spending at $2.83 billion this year, climbing to nearly $4.78 billion in 2027.
What did HiddenLayer actually raise, and who backed it?
The company closed a $100 million Series B. Delta-v Capital led it, with cheques also from Ten Eleven Ventures, Morgan Stanley, Microsoft's M12 venture fund, and defence contractor Booz Allen Hamilton.
CEO and co-founder Chris Sestito told TechCrunch AI that annual recurring revenue, the steady subscription income a business can count on each year, grew more than tenfold over the past twelve months. He put the figure in the "tens of millions" but wouldn't give a precise number. More than 90% of that growth came from new customers.
What does HiddenLayer actually do?
It watches AI systems the way antivirus software watches a laptop, looking for things that shouldn't be there.
The startup scans AI models for hidden malware, verifies that an open-source model is genuinely what it claims to be, and monitors AI agents in real time for manipulation. Sestito described finding "models inside of models", a technique where malicious code is concealed inside a legitimate-looking AI file. The company parses roughly 50 different AI file formats to catch that kind of threat.
It also guards against prompt injection, where an attacker slips hidden instructions into text that an AI agent reads, causing the agent to act against its operator's intentions. Our earlier piece "The AI attack that tops every expert threat list barely shows up in real incident data" found that the most dangerous known attack of this kind leaves no trace a scanner can find, which makes runtime monitoring, not just pre-deployment checks, the part of HiddenLayer's pitch that's hardest to replicate cheaply.
| Product area | What it does |
|---|---|
| Discovery | Finds all AI models and agents a company is running |
| Runtime protection | Monitors AI systems while they're live and in use |
| Attack simulation | Tests AI systems by mimicking real attack methods |
| Supply chain security | Checks that third-party AI components haven't been tampered with |
Financial services firms and large tech companies are the biggest customers right now. One client is described only as a "leading frontier model provider" with more than 700 million weekly users, pointing strongly toward OpenAI or Anthropic.
What happens next?
HiddenLayer plans to put the new capital toward sales, distribution, engineering, and a push into Europe and the Middle East.
Larger cybersecurity players such as Cisco and Palo Alto Networks tend to buy rather than build in this space, making HiddenLayer a plausible acquisition target. Competitors Noma and Zenity have each raised over $100 million to pursue overlapping territory.
Sestito acknowledged that parts of what his company sells could be absorbed into platforms from Microsoft or AWS. His bet is that deep, specialised protection holds its value even as the giants expand. The startup's real task is turning a strong early lead into a durable business before the bigger players close the gap.
