HiddenLayer raises $100M Series B as enterprise AI security spending surges

Austin-based HiddenLayer has raised $100 million in a Series B round led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft's M12 and Booz Allen Hamilton, among others, according to TechCrunch. The round lands as security spending on AI deployments accelerates, turning a category that was until recently dismissed as speculative into one of the fastest-growing corners of enterprise software.

The company builds tools that protect AI models, agents and workflows from adversarial attacks, vulnerabilities and malicious code injections. When it raised a $50 million Series A three years ago, TechCrunch notes, it was difficult to find real examples of attacks against AI at scale, and the existence of a genuine market was an open question. That has changed: according to Gartner figures cited by TechCrunch, companies will spend $2.83 billion this year on products that secure AI tools, 83% more than in 2025, and spending is expected to approach $4.78 billion next year.

Tenfold revenue growth

HiddenLayer's own numbers mirror the wider trend. Co-founder and CEO Chris Sestito told TechCrunch that the startup's annual recurring revenue grew more than tenfold over the past year. He declined to give an exact figure but said ARR now sits in the tens of millions of dollars, and that more than 90% of that growth came from customers signed within the past year.

Financial services firms and large tech companies building AI products make up its largest verticals, and it also holds contracts with the Department of Defense and the intelligence community. According to TechCrunch, one customer is a leading frontier model provider with more than 700 million weekly users — a description the publication suggests could match OpenAI or Anthropic.

From models to agents

The product portfolio has not fundamentally changed since 2023: discovery, runtime protection, attack simulation and supply chain security. What has changed is the scope. Sestito said the biggest adjustment was extending those products to cover prompt injection, agent manipulation and malicious tool use.

"Inference is still inference," he told TechCrunch, arguing that much of the company's technology applies whether the target is a traditional machine learning model, generative AI or an agentic workflow. In his framing, the firm widened its scope rather than pivoted.

Runtime security in particular has become the priority as AI deployments spread through businesses; Sestito likened it to endpoint detection and response, but purpose-built for AI. The company also parses and scans roughly 50 AI file frameworks, partly to verify that open-weight models are what they claim to be, including cases of hidden models embedded inside other models.

The new funding will go mostly toward sales and distribution, alongside continued investment in engineering and research, plus expansion into Europe and the wider EMEA region.

Consolidation pressure

HiddenLayer is unlikely to have the field to itself. TechCrunch points out that large cybersecurity vendors such as Cisco, Palo Alto Networks and Check Point often prefer to buy rather than build this kind of technology, while the startups Noma and Zenity have each raised more than $100 million for adjacent or overlapping products.

Sestito acknowledged that parts of HiddenLayer's portfolio could eventually be bundled into the platforms of Microsoft, OpenAI or AWS, though he expects AI infrastructure to grow toward governance features such as discovery, identity and policy controls rather than the protective tooling his company sells.

Why it matters

The round is a marker for how quickly AI security has matured into a real enterprise market. Three years ago the category rested largely on hypothetical threats; today Gartner is tracking billions in annual spending, buyers include defense agencies and frontier labs, and a startup in the space can grow ARR more than tenfold in a year. The open question is durability. If platform vendors absorb security features, specialists like HiddenLayer could be squeezed into acquisitions, and the $100 million is effectively a wager that securing AI remains a standalone category rather than a feature inside someone else's platform. Sestito's stated plan is to scale vertically alongside AI before expanding horizontally into cybersecurity domains that increasingly depend on it — provided the company can turn its head start into a lasting business before the rest of the industry catches up.