HiddenLayer raises $100M Series B as enterprise AI security market accelerates
The AI security startup's annual recurring revenue grew more than 10x in the past year as enterprises rush to protect AI deployments from attacks and malicious code injection.
What happened
HiddenLayer, an AI security startup based in Austin, raised $100 million in Series B funding led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft's M12, Booz Allen Hamilton, and others. The company's annual recurring revenue grew more than 10x over the past year and now sits in the "tens of millions" of dollars, with over 90% of that growth driven by new customers acquired in the past year. HiddenLayer's products include discovery, runtime protection, attack simulation, and supply chain security tools, and the company has recently expanded its scope to address prompt injection, agent manipulation, and malicious tool use. The startup serves financial services, large tech companies building AI products, the Department of Defense, and intelligence community clients, including an apparent major frontier model provider with over 700 million weekly users. The new funding will support sales, distribution, and engineering expansion, with plans to grow into Europe and EMEA.
Context
The market for AI security tools is expanding rapidly. Gartner estimates companies will spend $2.83 billion on AI security products in 2026, an 83% increase from 2025, with spending projected to reach nearly $4.78 billion in 2027. This growth reflects a shift in the industry's understanding of AI-related risks: three years ago when HiddenLayer raised its Series A, real-world examples of AI attacks at scale were difficult to identify, but runtime security failures and agent manipulation have since become recognized threats as AI deployments become common across enterprises. Large cybersecurity firms such as Cisco, Palo Alto Networks, and Check Point are actively acquiring similar technology, while competing startups like Noma and Zenity have each raised over $100 million in adjacent areas, intensifying competition in the space. HiddenLayer's CEO expects AI infrastructure will eventually incorporate governance features like discovery, identity, and policy controls, but maintains that specialized runtime security tools like his company's will remain distinct from platforms built by major cloud and AI providers.