HiddenLayer raises $100M to secure the agentic AI stack

Three years after raising a Series A amid skepticism about whether AI security was a viable market, HiddenLayer is now securing its position as a key player in a rapidly exploding sector. The Austin-based startup has closed a $100 million Series B round led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, and Booz Allen Hamilton. This funding comes as Gartner estimates corporate spending on AI security products will reach $2.83 billion this year, an 83% increase over 2025, with projections nearing $4.78 billion for next year.

From Static Models to Agentic Workflows

HiddenLayer’s core mission remains protecting AI models, agents, and workflows from adversarial attacks, but the threat landscape has shifted significantly. Co-founder and CEO Chris Sestito notes that while the company’s underlying technology for inference security remains applicable, the scope has had to expand to cover the specific risks of agentic systems. This includes defending against prompt injection, agent manipulation, and malicious tool use—vectors that have become critical as enterprises deploy AI agents that interact with external tools and APIs.

"Inference is still inference," Sestito explained. "So whether it’s on a traditional machine learning model, whether it’s GenAI, whether it’s an agentic work stream, a lot of our technology still applied. So really, we haven’t had to pivot, but we’ve had to grow our scope… from traditional modeling to GenAI to agentic."

Runtime Security and Supply Chain Risks

The company is prioritizing runtime security, drawing parallels to traditional endpoint detection and response (EDR) but tailored for AI environments. A significant focus area is the integrity of open-source and open-weight models. HiddenLayer scans approximately 50 different AI file frameworks to detect "hidden models inside of models"—instances where a model purports to be one thing but contains malicious or altered components. This supply chain security is becoming a primary concern for enterprises relying on third-party AI assets.

The startup’s annual recurring revenue (ARR) has grown more than 10x over the past year, reaching the "tens of millions" of dollars. Over 90% of this growth is attributed to new customers, with financial services and large tech companies forming the core of its client base. Notably, HiddenLayer serves a "leading frontier model provider" with over 700 million weekly users, a description that strongly suggests OpenAI or Anthropic.

Market Position and Future Growth

The new capital will be allocated toward sales and distribution, with plans to expand into Europe and EMEA, alongside continued investment in engineering and research. Sestito acknowledges that large cybersecurity firms like Cisco and Palo Alto Networks may eventually bundle similar capabilities, and that cloud providers might integrate governance features. However, HiddenLayer aims to scale vertically alongside AI infrastructure while expanding horizontally into broader cybersecurity domains that increasingly depend on AI.

As the market matures, HiddenLayer faces competition from well-funded peers like Noma and Zenity, both of which have raised over $100 million. The challenge for HiddenLayer is to convert its early-mover advantage and deep enterprise relationships into an enduring business model before the broader industry catches up with its specialized security offerings.