HiddenLayer Raises $100 Million to Expand AI Protection and Security Tools

Austin-based artificial intelligence security startup HiddenLayer has secured $100 million in a Series B funding round to scale its protection software for AI models, agents, and enterprise workflows. The investment comes amid a sharp increase in business adoption of AI systems and corresponding efforts to safeguard them from operational errors and adversarial threats.

What Happened

HiddenLayer confirmed a $100 million Series B investment led by Delta-v Capital. Additional participants in the round include Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, Booz Allen Hamilton, and other investors. The funding follows a $50 million Series A round completed three years ago.

According to co-founder and Chief Executive Officer Chris Sestito, the startup’s annual recurring revenue expanded by more than 10 times over the past year, placing its revenue figure in the tens of millions of dollars. Sestito stated that over 90 percent of this commercial growth stemmed from new customer acquisitions during the previous twelve months.

Key Highlights

• Funding Details: A $100 million Series B round led by Delta-v Capital, supported by strategic and venture backers such as Microsoft’s M12, Morgan Stanley, Booz Allen Hamilton, and Ten Eleven Ventures.
• Business Growth: HiddenLayer’s annual recurring revenue grew more than tenfold over the past year into the tens of millions of dollars.
• Client Demographics: The company serves financial services, major technology firms building AI, the intelligence community, and the Department of Defense, as well as an unnamed frontier model provider serving over 700 million weekly users.
• Product Capabilities: Tools cover discovery, supply chain security, attack simulation, and runtime defense, extending across traditional machine learning, generative AI, and agentic workflows.
• Threat Detection: The platform evaluates approximately 50 AI file frameworks to identify issues such as hidden models, prompt injections, agent manipulation, and malicious tool usage, particularly across open-source and open-weight models.

Why This Matters

When HiddenLayer closed its Series A round three years ago, enterprise-scale threats against AI systems were rare, creating uncertainty over commercial demand. However, enterprise exposure has widened as organizations roll out autonomous agents and integrate generative models into live production.

Market researcher Gartner projects that enterprise spending on AI security tools will reach $2.83 billion this year—marking an 83 percent increase over 2025—and expects market investment to rise to nearly $4.78 billion next year. At the same time, competition in the sector is intensifying. Legacy cybersecurity providers such as Cisco, Palo Alto Networks, and Check Point frequently target the area, while peers such as Noma and Zenity have each raised upwards of $100 million. Additionally, major platform hosts like Microsoft, AWS, and OpenAI provide native governance and identity controls.

Sestito noted that runtime monitoring for AI operates similarly to traditional endpoint detection and response (EDR), designed to prevent agents and models from behaving unexpectedly or being manipulated during active operation.

What to Watch Next

HiddenLayer intends to deploy the newly acquired capital primarily toward expanding its sales and distribution networks, while continuing investments into engineering and threat research. The Austin-based startup also plans to extend its international operations across Europe and the Middle East and Africa (EMEA) region. Long-term plans outlined by company leadership involve scaling vertically alongside the AI sector before broadening horizontally into other artificial intelligence-dependent facets of cybersecurity.

Frequently Asked Questions

Who led HiddenLayer’s latest funding round?

The $100 million Series B round was led by Delta-v Capital, alongside investors such as Microsoft’s M12, Morgan Stanley, Ten Eleven Ventures, and Booz Allen Hamilton.

What specific risks does HiddenLayer’s software address?

The company builds defenses against prompt injection, unauthorized agent manipulation, malicious tool execution, and supply-chain vulnerabilities, including hidden models concealed inside open-source or open-weight model files.

How large is the enterprise AI security market?

According to Gartner estimates cited in the report, organizations will spend $2.83 billion on tools to secure AI this year, with total spending projected to approach $4.78 billion the following year.

Source: TechCrunch, citing statements from HiddenLayer CEO Chris Sestito and estimates from Gartner research.