AI security startup HiddenLayer has 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 round comes three years after its $50 million Series A, a period during which the market for AI-specific security tools has expanded dramatically. Gartner estimates enterprises will spend $2.83 billion on AI security products this year—83% more than last year—and nearly $4.78 billion in 2026. HiddenLayer‘s CEO Chris Sestito told TechCrunch that annual recurring revenue (ARR) grew more than 10x over the past year, now in the “tens of millions,” with over 90% of that growth from new customers. Financial services and large tech companies building AI products are its largest verticals; it also has contracts with the Department of Defense and intelligence community. One customer is a “leading frontier model provider” with “more than 700 million weekly users,” likely OpenAI or Anthropic.

HiddenLayer‘s core products—discovery, runtime protection, attack simulation, and supply chain security—were originally built for traditional machine learning models. The biggest change since the previous round has been extending those tools to cover prompt injection, agent manipulation, and malicious tool use. Sestito noted that runtime security has become a priority as AI deployments scale, comparing it to endpoint detection and response (EDR) but purpose-built for AI. He highlighted a new attack vector in open-source models: the company scans about 50 AI file frameworks to detect models that claim to be one thing but are actually another, including hidden models inside models.

The new capital will go primarily toward sales and distribution, with continued expansion of engineering and research, and entry into Europe and EMEA. Sestito acknowledged that some parts of HiddenLayer‘s product could eventually be bundled into platforms from Microsoft, OpenAI, or AWS, but expects AI infrastructure to evolve toward governance features like discovery, identity, and policy controls rather than the security tools his company builds. For now, the goal is to “scale vertically alongside artificial intelligence” and later expand horizontally into cybersecurity areas increasingly dependent on AI. Competition includes large cybersecurity firms like Cisco, Palo Alto Networks, and Check Point (which often buy rather than build), as well as startups like Noma and Zenity, each having raised over $100 million in adjacent spaces.