HiddenLayer Raises $100M Series B to Secure AI Deployments

Austin-based AI security startup HiddenLayer has secured $100 million in a Series B funding round led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft M12, and Booz Allen Hamilton. The investment underscores a rapid acceleration in enterprise demand for AI infrastructure protection, as market dynamics shift from theoretical risks to urgent operational requirements. Three years ago, the company successfully closed a $50 million Series A amid skepticism about the scale of AI-related threats. That hesitation has since evaporated. Gartner projects global spending on AI security products will reach $2.83 billion this year, an 83 percent increase from 2025, with forecasts pushing nearly $4.78 billion by next year. Capitalizing on this surge, HiddenLayer reported annual recurring revenue exceeding tenfold growth over the past year, now reaching the tens of millions, driven primarily by new enterprise acquisitions. Over ninety percent of this expansion stems from recent client onboarding, with financial services, major technology firms, and U.S. defense and intelligence agencies comprising its core client base. The company also services a premier generative AI provider with approximately 700 million weekly active users. The funding will accelerate sales, distribution, and engineering capabilities while supporting HiddenLayer’s strategic expansion into European and EMEA markets. CEO Chris Sestito emphasized that the company’s product architecture has evolved alongside the AI landscape rather than requiring a complete pivot. While core inference security principles remain constant, the firm has expanded its suite to address prompt injection, agent manipulation, and malicious tool utilization. A primary focus is runtime security, which Sestito compares to AI-native endpoint detection and response. The startup also monitors open-source models by scanning over fifty AI file frameworks to detect supply chain compromises and model spoofing. The broader cybersecurity market is increasingly consolidating around AI protection, with major incumbents like Cisco and Palo Alto Networks favoring acquisitions over in-house development. Simultaneously, emerging rivals such as Noma and Zenity have each attracted over $100 million for adjacent security solutions. Despite the potential for future integration of specialized security features into hyperscaler platforms, HiddenLayer maintains that enterprise demand will increasingly prioritize governance, identity management, and policy enforcement. Sestito outlines a trajectory focused on deepening vertical integration within AI deployments before eventually broadening into general cybersecurity domains increasingly dependent on machine intelligence. The capital injection positions HiddenLayer to consolidate its market position before competitor density intensifies.