According to a person familiar with the matter, Palo Alto Networks is in talks to acquire Clutch Security for $500 million in cash plus additional milestone-based payments. Clutch is a startup that provides security for AI agents accessing corporate systems.
According to the source, Clutch, which was founded three years ago, had a valuation of $85 million when it closed its $20 million Series A round in January 2025, led by Lightspeed and SignalFire. The startup currently has an annual recurring revenue (ARR) of nearly $10 million. This means that, if the transaction is completed, Clutch’s valuation would be approximately 50 times its ARR—a common valuation multiple for software companies.
Palo Alto Networks and Clutch Security did not respond to requests for comment. The Information first reported on the acquisition negotiations.
This high valuation is not uncommon in today’s market. As the market increasingly focuses on protecting software from bad actors who can more easily exploit systems using AI, related transactions are gaining momentum. Last week, TechCrunch reported that Upwind, a startup using AI to secure cloud infrastructure, recently turned down an acquisition offer from Datadog, which valued Upwind at approximately 40 times its ARR.
If completed, this would be Palo Alto Networks' seventh acquisition this year, according to PitchBook data. As a cybersecurity leader, the company has historically favored acquisitions over internal R&D to drive innovation, and has accelerated its deal pace this year amid rising AI-powered cyberattacks.
In September, Palo Alto Networks acquired Console, a two-year-old startup that uses AI agents to automate routine IT help desk tasks. According to TechCrunch, the deal valued Console at $500 million, paid in a combination of stock and cash. Other venture-backed companies acquired by Palo Alto Networks this year include Embrace, backed by NEA, for $325 million; Chronosphere, an observability platform supported by Greylock and Lux Capital, for $2.95 billion; and Koi, a cybersecurity startup backed by Battery and Team8, for $231 million, according to regulatory filings.
Some of Clutch’s competitors have also been acquired. Cyera, a cybersecurity startup that was valued at $12 billion this year, acquired Oasis Security—a company that, like Clutch, focuses on managing AI agents’ access to systems—for $1 billion. Meanwhile, according to Calcalist, Cisco acquired Astrix, backed by Menlo Ventures, for approximately $400 million.