Palo Alto Networks has announced it will acquire Protect AI, a Seattle-based startup specializing in monitoring and safeguarding machine learning applications. While terms were not officially disclosed, sources familiar with the deal peg the acquisition price north of $500 million. The transaction is expected to close later this year. Below is a link to Nikesh Arora discussing the acquisition, among other topics.
Founded in 2022 by former Amazon and Oracle engineering leaders Badar Ahmed, Daryan D. and Ian Swanson, Protect AI quickly gained momentum in AI security posture management. The company serves Fortune 500 clients across finance, healthcare, and government sectors – a customer base that increasingly sees AI as both an opportunity and a risk. According to a report by HiddenLayer, nearly 75% of companies reported AI-related breaches in 2024, a statistic that adds urgency to security investments across the board.
Protect AI had strong momentum heading into this deal. It raised a $60 million Series B round in 2024, led by Evolution Equity Partners, at a reported $400 million valuation. The company’s total funding stood at $108.5 million, with backers including 01 Advisors, Samsung Ventures, Salesforce Ventures, and Acrew Capital.
One of the most interesting aspects of this deal is how Protect AI aggressively leveraged external technology to broaden its platform. It acquired the creator of open-source tool LLM Guard, Laiyer AI, Gen AI Red Teaming pioneer SydeLabs, self-hardening prompt injection detector Rebuff, and AI/ML bug bounty platform Huntr. Protect AI also cultivated a community of over 15,000 contributors to its AI/ML security research. I haven’t seen too many instances of startups leveraging multiple acquisitions of open-source tooling to build and accelerate a platform. Protect AI‘s successful execution of the strategy to get to a decent exit is worth studying for anyone building at the intersection of Security and AI today.
For Palo Alto Networks, which launched its new Prisma AIRS platform today, the addition of Protect AI’s team and technology signals a deeper commitment to protecting what it calls the “dynamic new attack surface” created by AI.
The Protect AI team, numbering around 120 employees across Seattle, Berlin, and Bangalore, is expected to join Palo Alto once the deal is finalized.
It has been a relatively quiet start to RSA on the M&A front. I expect additional deal related activity to come through over the next few days but for now this will have to suffice. I will be at the conference Wednesday. Drop me a note if you’d like to connect live.
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