HiddenLayer lands $100M Series B amid surge in enterprise AI security demand

What happened#

Security-focused startup HiddenLayer has closed a $100 million Series B funding round led by Delta-v Capital, with backing from Ten Eleven Ventures, Morgan Stanley, Microsoft's M12, Booz Allen Hamilton, and others. The funding comes as the company reports exceptional growth, with annual recurring revenue increasing more than 10-fold over the past year and now sitting at "tens of millions" of dollars.

The market shift#

Three years ago, when HiddenLayer raised its initial $50 million Series A, critics questioned whether actual threats to AI systems would emerge at meaningful scale. That skepticism has evaporated. Enterprises are now racing to defend against evolving risks—from prompt injections and agent manipulation to supply chain vulnerabilities—and budget allocations reflect the urgency. Industry analyst Gartner forecasts companies will spend $2.83 billion on AI security products this year alone, up 83% from 2025, with spending projected to reach nearly $4.78 billion by 2027.

HiddenLayer's positioning#

The Austin-based startup provides tools to detect and prevent adversarial attacks, malicious code injections, and vulnerabilities across AI models, agents, and workflows. Its customer base spans financial services, large technology companies, and government agencies including the Department of Defense and intelligence community. The company also works with what it describes as a "leading frontier model provider" boasting more than 700 million weekly users—suggesting relationships with major players like OpenAI or Anthropic.

Rather than pivoting its core offering, the company has steadily broadened its scope. Chief executive Chris Sestito explained that while the fundamental technology underlying the company's products—discovery, runtime protection, attack simulation, and supply chain security—remains applicable across traditional machine learning and generative AI, the team has extended coverage to address newer attack vectors such as agent manipulation and open-source model exploitation.

Technical expansion#

HiddenLayer now scans roughly 50 different AI file formats to verify that models are authentic, a particular concern as open-source and open-weight AI models proliferate. The startup warns of scenarios where malicious actors hide alternate models within legitimate-appearing artifacts—a technique that would be difficult for enterprises to detect without specialized tooling. Runtime security has emerged as a priority, with Sestito comparing the approach to traditional endpoint detection and response for AI environments.