When HiddenLayer, an AI security startup, raised its $50 million Series A three years ago, the primary concern was whether the AI threats it aimed to protect against would materialize significantly enough to create a viable market. As noted by former TechCrunch colleague Kyle Wiggers, identifying real examples of large-scale attacks on AI was challenging at that time. However, the landscape has shifted dramatically.
Growing Demand for AI Security
Security companies are now racing to develop products that can monitor not only AI agents but also the tools and add-ons they utilize. While there are still few headlines about agents being exploited, the risk of agents malfunctioning during production remains a pressing concern. Consequently, the market for tools designed to mitigate these risks has surged. Gartner estimates that companies will spend $2.83 billion this year on products aimed at securing AI tools, an 83% increase from 2025, with projections reaching nearly $4.78 billion next year.
HiddenLayer, which specializes in protecting AI models, agents, and workflows from adversarial attacks, vulnerabilities, and malicious code injections, has capitalized on this trend. Co-founder and CEO Chris Sestito revealed that the startup's annual recurring revenue (ARR) has grown more than 10 times over the past year. Although he did not disclose an exact figure, he mentioned that the ARR is now in the "tens of millions" of dollars, with over 90% of this growth attributed to new customers acquired in the past year.
Key Clients and Funding Round
The company's primary clients include financial services and large tech firms developing AI products, along with contracts from the Department of Defense and the intelligence community. One notable customer is described as a "leading frontier model provider" with more than 700 million weekly users, which suggests a connection to major players like OpenAI or Anthropic.
