AI security startup HiddenLayer has raised $100 million in Series B funding as companies accelerate efforts to secure their AI systems. The round was led by Delta-v Capital and joined by Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12 fund and Booz Allen Hamilton.
HiddenLayer co-founder and CEO Chris Sestito said the company’s annual recurring revenue had increased more than 10-fold over the past year. Sestito, who did not provide an exact figure, said revenue was now in the “tens of millions” of dollars and that more than 90% of the growth came from new customers acquired over the past year. The company’s main customers include financial institutions and large technology companies developing AI products. HiddenLayer also has contracts with the Department of Defense and the intelligence community; one of its customers is a “leading frontier model provider” with more than 700 million weekly users.
Gartner estimates that companies will spend $2.83 billion this year on products that secure AI tools, representing an 83% increase from 2025. Spending is expected to reach approximately $4.78 billion next year.
Austin-based HiddenLayer develops products that protect AI models, agents and workflows against attacks, vulnerabilities and malicious code injections. While maintaining its 2023 product offerings, the company expanded its scope to include prompt injection, agent manipulation and malicious tool use. Its products focus on discovery, runtime protection, attack simulation and supply chain security. Sestito said that runtime security has become a priority as AI deployments become more widespread, likening it to AI-specific endpoint detection and response, or EDR solutions.
HiddenLayer also scans approximately 50 different AI file frameworks to examine risks in open-source and open-weight models. The company aims to detect threats such as a model misrepresenting itself or concealing other models.
The new funding will be used to expand engineering and research, as well as sales and distribution, and to expand into Europe and EMEA. HiddenLayer acknowledges that companies such as Microsoft, OpenAI and AWS may incorporate some AI security features into their platforms; however, it believes that AI infrastructure will focus more on governance features such as discovery, identity and policy controls.
Why it matters
The investment shows that the growing use of AI is increasing not only the need to develop models, but also the need to monitor and protect them during operation. The fact that different customer groups, such as financial institutions, major technology companies and public institutions, face the same security challenges explains why products are expanding into a broader area spanning models, agents and workflows. Scans of open-source and open-weight models indicate that risks may stem not only from external attacks, but also from the trustworthiness of model files and the supply chain. However, major technology companies adding security features to their own platforms leaves open the question of how HiddenLayer will differentiate itself in governance and runtime protection.
Term: agent
An AI agent is software that calls tools and carries out multi-step tasks to achieve a goal, rather than producing a single response.