When AI safety startup HiddenLayer raised its $50 million Sequence A 3 years in the past, one of many large questions within the area was whether or not the AI threats the startup was defending towards would manifest in sufficient amount to make for an actual market. As my former colleague Kyle Wiggers noted on the time, it was tough to pin down actual examples of assaults towards AI at scale.
How rapidly issues have modified. Safety corporations are actually scrambling to construct merchandise that may monitor not just agents however also the tools and add-ons they use. Whereas there nonetheless aren’t many headlines about brokers being exploited, the chance of brokers going haywire throughout manufacturing is nevertheless real. And so the marketplace for instruments to stop that from occurring has exploded: Gartner estimates corporations will spend $2.83 billion this yr on merchandise meant to safe AI instruments, 83% greater than 2025, and expects spending to achieve almost $4.78 billion subsequent yr.
HiddenLayer, which makes instruments to guard AI fashions, brokers and workflows from adversarial assaults, vulnerabilities and malicious code injections, has been capable of take good benefit of that shift. Its co-founder and CEO, Chris Sestito, tells TechCrunch that the startup’s annual recurring income grew greater than 10x over the previous yr. He declined to present a precise quantity, however stated ARR is now within the “tens of tens of millions” of {dollars}, and over 90% of that development was pushed by new prospects signing previously yr.
Monetary companies and huge tech corporations constructing AI merchandise are presently the corporate’s largest verticals, and it additionally has contracts with the Division of Protection and intelligence neighborhood. Considered one of its prospects is seemingly a “main frontier mannequin supplier” with “greater than 700 million weekly customers,” which feels like OpenAI or Anthropic to me.
To take advantage of that momentum, the startup has now raised $100 million in a Sequence B funding spherical that was led by Delta-v Capital, with participation from Ten Eleven Ventures, Morgan Stanley, Microsoft’s M12, Booz Allen Hamilton, and others.
The Austin-based startup broadly nonetheless sells what it used to in 2023, however Sestito instructed TechCrunch that the most important change it’s needed to make was to increase its current merchandise — discovery, runtime safety, assault simulation, and provide chain safety — to handle immediate injection, agent manipulation and malicious software use.
“Inference continues to be inference. So whether or not it’s on a conventional machine studying mannequin, whether or not it’s Gen AI, whether or not it’s an agentic work stream, loads of our know-how nonetheless utilized. So actually, we haven’t needed to pivot, however we’ve needed to develop our scope … from conventional modeling to Gen AI to agentic,” he stated.
Sestito burdened that runtime safety has particularly grow to be a precedence as AI deployments develop widespread throughout companies, and likened it to conventional endpoint detection and response (EDR) options, however particularly for AI.
The corporate’s new merchandise mirror that shift, and Sestito highlighted a brand new alternative for attackers in exploiting open-source fashions. “We parse and scan about 50 totally different AI file frameworks to guarantee that, particularly within the case of open-source, open-weight fashions, that the software you’re working with is the one you imagine it to be, and it’s the one it’s purporting to be. We’re taking a look at issues like fashions purporting to be one factor, however they’re one other — hidden fashions within fashions,” he stated.
The startup says the brand new $100 million goes to assist it construct in that course, although with extra of a concentrate on gross sales and distribution, whereas persevering with to develop its engineering and analysis. It additionally plans to develop into Europe and EMEA.
HiddenLayer might discover itself tapping that warchest for extra, although. Giant cybersecurity corporations, like Cisco, Palo Alto Networks and Check Point typically desire to purchase fairly than construct this type of tech, whereas startups like Noma and Zenity have raised over $100 million every to tackle adjoining or overlapping areas of this area.
Sestito acknowledged that some components of the AI safety merchandise his firm provides might finally be bundled into the platforms constructed by corporations corresponding to Microsoft, OpenAI and AWS. Nevertheless, he expects AI infrastructure will develop in the direction of governance options corresponding to discovery, identification and coverage controls, fairly than the sort of instruments that his firm builds.
For now, he says HiddenLayer’s job is to “scale vertically alongside synthetic intelligence,” and finally, develop horizontally into components of cybersecurity that more and more rely on AI. That’s an bold aim, however the startup first has to show it will probably flip its head begin into an everlasting enterprise earlier than the remainder of the trade catches up.
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