HiddenLayer raises $100M Series B as AI security market booms

When HiddenLayer raised its $50 million Series A three years ago, it was difficult to pin down real examples of attacks against AI at scale. Today, the landscape has shifted dramatically. Security companies are scrambling to build products that can monitor AI agents and the tools they use, and the market has exploded accordingly.

Gartner estimates companies will spend $2.83 billion this year on products meant to secure AI tools — an 83% increase from 2025 — and expects spending to reach nearly $4.78 billion next year.

HiddenLayer, based in Austin, makes tools to protect AI models, agents and workflows from adversarial attacks, vulnerabilities and malicious code injections. Co-founder and CEO Chris Sestito told TechCrunch that the startup's annual recurring revenue grew more than 10x over the past year. While he declined to give an exact number, he said ARR is now in the "tens of millions" of dollars, with over 90% of that growth 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. HiddenLayer also has contracts with the Department of Defense and the intelligence community. One customer is described as a "leading frontier model provider" with "more than 700 million weekly users."

HiddenLayer's products — discovery, runtime protection, attack simulation, and supply chain security — remain broadly the same as in 2023, but the company has extended them to address prompt injection, agent manipulation, and malicious tool use. Sestito noted that runtime security has become a particular priority as AI deployments grow more common across businesses. "Inference is still inference," he said. "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."

Why This Matters

The rapid growth of HiddenLayer and the broader AI security market signals that enterprises are treating AI risks as serious enough to invest heavily in protection, not just deployment.
The $100 million round — more than double the Series A — reflects investor confidence that AI security will become as essential as traditional cybersecurity.
Spending on AI security is projected to nearly double in two years (to $4.78 billion in 2027), suggesting the category is transitioning from niche to mainstream.

Background

HiddenLayer was founded in 2021 and raised a $50 million Series A in September 2023, when the market for AI-specific security products was still unproven. Since then, the generative AI boom and increasing adoption of AI agents have created new attack surfaces — prompt injection, model theft, adversarial inputs — that traditional security tools do not cover. Established cybersecurity firms have also entered the space, but startups like HiddenLayer have focused specifically on AI model and agent protection.

Key Perspectives

HiddenLayer (CEO Chris Sestito): The company sees its core technology as extensible across traditional ML, generative AI, and agentic workflows — no pivot required, just expanded scope. Runtime security is now the top priority as deployments proliferate. Enterprises and government clients: Financial services, large tech firms, and defense/intelligence agencies are the primary customers, indicating that both commercial and national security drivers are fueling demand. Market analysts (Gartner): Forecasts of nearly $5 billion in AI security spending by 2027 validate that the threat surface is real and growing, even if high-profile exploits of AI agents remain rare.

What to Watch

Whether HiddenLayer's ARR growth can continue as competition from larger cybersecurity vendors intensifies.
The frequency and severity of real-world AI agent attacks — a major incident could accelerate market adoption even further.
How HiddenLayer's product scope evolves; the company may need to address supply-chain risks for AI models and agent add-ons, as noted in the article's references to related startups.

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