HiddenLayer Raises $100 Million as AI Security Spending Surges 83%
HiddenLayer raises $100 million as ARR reaches tens of millions and AI security spending heads toward $4.78 billion, funding expansion into Europe and EMEA.
Summary
Austin-based HiddenLayer announced a $100 million Series B on September 2, 2026, led by Delta-v Capital with Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, Booz Allen Hamilton and others. The round follows a $50 million Series A in 2023. CEO Chris Sestito said annual recurring revenue grew more than tenfold in one year to tens of millions of dollars, with new customers generating over 90% of that growth. Gartner expects AI security spending to reach $2.83 billion in 2026, up 83% from 2025, and nearly $4.78 billion in 2027.
Financial services and large technology companies are HiddenLayer’s biggest markets, alongside Department of Defense and intelligence contracts. An unnamed frontier model provider with more than 700 million weekly users is also a customer. HiddenLayer expanded its discovery, runtime protection, attack simulation and supply chain security products from traditional models to generative AI and agents, addressing prompt injection, agent manipulation and malicious tool use. It scans about 50 AI file frameworks for threats including disguised open-source models and models concealed inside others. Funding will expand sales, distribution, engineering, research, and operations across Europe and EMEA. Rivals Noma and Zenity have each raised over $100 million, while Cisco, Palo Alto Networks and Check Point often acquire rather than build security technology. Sestito acknowledged that Microsoft, OpenAI and AWS could bundle some protections, but expects them to emphasize discovery, identity and policy governance while HiddenLayer expands vertically with AI and later into AI-dependent cybersecurity.
Positives
- $100 million in Series B funding gives HiddenLayer substantial capital for sales, distribution, engineering, research and EMEA expansion.
- Annual recurring revenue grew more than tenfold in one year, reaching tens of millions of dollars.
- Over 90% of revenue growth came from new customers, demonstrating rapidly expanding enterprise demand.
- AI security spending is forecast to rise 83% to $2.83 billion in 2026 and approach $4.78 billion in 2027.
- About 50 AI file frameworks can be scanned for disguised, malicious or nested models.
Risks & concerns
- Few agent exploits have made headlines, leaving the scale of realized attacks less visible despite production risks.
- Prompt injection, agent manipulation and malicious tool use broaden the threats HiddenLayer must address.
- Open-source models can conceal substituted or nested models that users may mistake for legitimate files.
- Noma and Zenity have each raised over $100 million for adjacent or overlapping AI security markets.
- Microsoft, OpenAI and AWS could bundle some protections into their platforms, reducing demand for standalone products.
- HiddenLayer must convert its early lead into a durable business before larger cybersecurity companies catch up.