HiddenLayer Secures $100M as AI Security Market Hits $2.83B, Revenue Grows 10x in One Year

HiddenLayer nabs $100M as enterprises rush to secure their AI deployments

When AI security startup HiddenLayer raised its $50 million Series A three years ago, one of the big questions in the space was whether the AI threats the startup was protecting against would manifest in enough quantity to make for a real market. As my former colleague Kyle Wiggers noted at the time, it was difficult to pin down real examples of attacks against AI at scale. How quickly things have changed. Security companies are now scrambling to build products that can monitor not just agents but also the tools and add-ons they use. While there still aren't many headlines about agents being exploited, the risk of agents going haywire during production is nevertheless real. And so the market for tools to prevent that from happening has exploded: Gartner estimates companies will spend $2.83 billion this year on products meant to secure AI tools, 83% more than 2025, and expects spending to reach nearly $4.78 billion next year. HiddenLayer, which makes tools to protect AI models, agents and workflows from adversarial attacks, vulnerabilities and malicious code injections, has been able to take good advantage of that shift. Its co-founder and CEO, Chris Sestito, tells TechCrunch that the startup's annual recurring revenue grew more than 10x over the past year. He declined to give an exact number, but said ARR is now in the "tens of millions" of dollars, and over 90% of that growth was driven by new customers signing in the past year. Financial services and large tech companies building AI products are currently the company's largest verticals, and it also has contracts with the Department of Defense and intelligence community. One of its customers is apparently a "leading frontier model provider" with "more than 700 million weekly users," which sounds like OpenAI or Anthropic to me. To make the most of that momentum, the startup has now raised $100 million in a Series B funding round that was led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft's M12, Booz Allen Hamilton, and others. The Austin-based startup broadly still sells what it used to in 2023, but Sestito told TechCrunch that the biggest change it's had to make was to extend its existing products -- discovery, runtime protection, attack simulation, and supply chain security -- to address 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 Gen AI, 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 Gen AI to agentic," he said. Sestito stressed that runtime security has especially become a priority as AI deployments grow common across businesses, and likened it to traditional endpoint detection and response (EDR) solutions, but specifically for AI. The company's new products reflect that shift, and Sestito highlighted a new opportunity for attackers in exploiting open-source 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. The startup says the new $100 million is going to help it build in that direction, though with more of a focus on sales and distribution, while continuing to expand its engineering and research. It also plans to expand into Europe and EMEA. HiddenLayer may find itself tapping that warchest for more, though. Large cybersecurity companies, like Cisco, Palo Alto Networks and Check Point often prefer to buy rather than build this sort of tech, while startups like Noma and Zenity have raised over $100 million each to take on adjacent or overlapping areas of this space. Sestito acknowledged that some parts of the AI security products his company offers could eventually be bundled into the platforms built by companies such as Microsoft, OpenAI and AWS. However, he expects AI infrastructure will grow towards governance features such as discovery, identity and policy controls, rather than the kind of tools that his company builds. For now, he says HiddenLayer's job is to "scale vertically alongside artificial intelligence," and eventually, expand horizontally into parts of cybersecurity that increasingly depend on AI. That's an ambitious goal, but the startup first has to prove it can turn its head start into an enduring business before the rest of the industry catches up.

HiddenLayer raises $100M and Huskeys $27M for AI security

Artificial intelligence security startup HiddenLayer Inc. today announced a $100 million Series B round, and a separate $27 million Series A went to edge security company Huskeys Security Ltd. HiddenLayer dates to 2022 and works out of Austin, Texas. Its product checks models and the packages they depend on for tampering before deployment. Red-team exercises probe the same models for weaknesses. Live systems get watched at the inference layer, where HiddenLayer looks for prompt injection and for attempts to steal a model. More than 50 new platform customers signed on over the past year. Annual recurring revenue grew more than tenfold in the same stretch and now sits in the tens of millions of dollars, Chief Executive and co-founder Chris Sestito told TechCrunch. A frontier model provider with more than 700 million weekly users is on the list. HiddenLayer did not say which one. Sestito said the company set out to secure enterprise AI "long before most saw the urgency." The new money goes toward expanding the Agentic Runtime Security line. A second product, Agent Harness Security, is aimed at the autonomous coding agents. Delta-v Capital led the round. Ten Eleven Ventures, Morgan Stanley and Microsoft Corp.'s M12 fund also took part, as did Booz Allen Ventures. M12 and Moore Strategic Ventures had led a $50 million Series A in September 2023. Counting a $6 million seed round, HiddenLayer has now raised around $156 million. Itai Gafni and Roy Weisfeld started Huskeys in 2025. Both came out of Unit 8200, the Israeli military's signals intelligence arm. Their software reads the configurations of the web application firewalls, content delivery networks and load balancers a company already runs and holds all of it in one model. Posture assessment runs against that model, as do policy generation and virtual patching. A lot of the traffic reaching those tools is no longer human. Huskeys says it processes upwards of a trillion web requests a day across its customer base. Gafni described the network edge as the place where "your customers, your revenue, and your threats all meet." The Wall Street Journal reported that Blackstone Inc. backed the company to fight unwanted AI traffic. Blackstone uses the product as well. TikTok Inc., Hugging Face Inc. and Legoland are among the other customers, along with telehealth provider Ro, formally Roman Health Ventures Inc. Blackstone Innovations Investments led the round. Merlin Ventures, Skinos Ventures, Zscaler Ventures, Okta Ventures, Bright Pixel Capital and SV Angel also invested. Eran Reshef, described in the announcement as the inventor of the web application firewall, is among the angel investors. The Series A takes Huskeys to $35 million raised. Adam Fletcher, chief information security officer at Blackstone, said AI-driven traffic and "increasingly fragmented edge environments" call for a new approach to security management. The company is "well positioned to redefine how organizations manage edge security," he added.