After enterprises integrate generative AI and agents into production environments, security requirements surrounding models, toolchains, and operational stages are rapidly increasing. HiddenLayer, an AI security startup, has completed a $100 million Series B funding round, signaling that this niche sector has entered a phase of accelerated expansion.
Corporate expenses continue to rise
TechCrunch reported that a few years ago, the market was debating whether attacks on AI models were common enough to support a standalone market. Today, as companies deploy more AI tools, agents, and plugins, security vendors have begun focusing on launching monitoring and protection products.
Gartner predicts that enterprises will spend $2.83 billion on AI security products this year, an 83% increase from 2025; by next year, this figure is expected to rise to nearly $4.78 billion. Although large-scale public attack incidents remain relatively rare, risks such as uncontrolled behavior, manipulation, and malicious injection in production environments have driven companies to accelerate their procurement efforts.
The company claims its annual recurring revenue (ARR) has increased more than tenfold.
HiddenLayer, headquartered in Austin, Texas, provides security solutions for models, agents, and AI workflows, addressing scenarios such as adversarial attacks, exploit attempts, and malicious code injection. The company reports that its annual recurring revenue has grown more than tenfold over the past year, reaching tens of millions of dollars.
Company CEO Chris Sestito said that over 90% of growth in the past year came from new customers. Currently, clients are primarily concentrated in financial services and large technology companies, as well as contracts related to the U.S. Department of Defense and intelligence agencies. The report also mentioned that one of the company’s clients is a leading model provider with over 700 million weekly users, though the specific name was not disclosed.
Funds allocated to sales and European expansion
This round of funding was led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, M12 (a Microsoft venture fund), Booz Allen Hamilton, and others. The company stated that the new capital will primarily be used to expand sales and distribution capabilities, continue increasing investment in engineering and research, and advance expansion into European and EMEA markets.
HiddenLayer’s current offerings still focus on discovery, runtime protection, attack simulation, and supply chain security, but the emphasis has expanded beyond traditional machine learning models to include generative AI and agent scenarios. The company states that recent developments are not a complete transformation, but rather an extension of its existing capabilities to address new risks such as prompt injection, agent manipulation, and malicious tool invocation.
The company also noted that runtime security is becoming a higher priority for enterprises deploying AI, serving a role similar to endpoint detection and response in traditional cybersecurity, but applied to AI systems themselves. Meanwhile, market competition is intensifying, and HiddenLayer now needs to demonstrate that its first-mover advantage can be translated into sustained business growth.