Why We Invested in HiddenLayer
Today we proudly announce our seed investment in ML security company HiddenLayer. As soon as we met the incredible team behind this innovative company, we knew we wanted to be a part of their pioneering effort to develop a brand new market protecting a cornerstone of the next economy, ML algorithms, and back the development of a new category of the security market, “MLDR” – machine learning detection and response.
Upon introduction, we quickly understood the innovation’s origin. The founders were employees of another (former) portfolio company of ours, AI-based security company Cylance (since acquired by Blackberry). We know firsthand that what made that company great was, first and foremost, the talent of its people. As part of the Cylance team, founders Tito, Jim, and Tanner developed the critical IP behind the company’s competitive advantage and success – but then were forced to defend that most crucial IP from malicious actors who attacked Cylance’s ML algorithms. As investors, we jump at the chance to invest in companies where the impetus to create comes from a genuine need experienced firsthand – and in this scenario, the founding team had encountered a problem to which there was no company on the market offering a security-centric solution. Their first-hand experience ignited the spark for HiddenLayer. We hope to further fuel the fire with the seed funding round in place.
When we probed deeper in diligence, the differentiation of HiddenLayer’s approach versus others was clear. Alternative platforms attempt to “protect” ML algorithms by adding complexity to models or acting as service providers (and are all granted full access to the models and the data). HiddenLayer knew that there could be a much better way to protect algorithms (hint: without adding complexity) and that buyers would prefer a non-intrusive solution where data and IP remained untouched. The founders’ security-centric perspective and experience enabled the development of a non-intrusive and lightweight methodology to protect the ML algorithms on which their prospective customers depended.
A (potentially tremendously underrated) consideration in any investment decision is the timing. Investors look for technology for which the world is just becoming ready, hungry to meet an emerging need. The team at Ten Eleven has understood the accelerating impact of AI on new business models for some time, beginning with our investment in Cylance and continuing to our current investment in Darktrace (among others). We also know well that AI and ML models are becoming critical differentiators for fast-growing companies in other industries beyond security. This change has been reinforced in the rapid development of the DataOps, MLOps, and ModelOps market categories, which we see every day with our investment in data governance leader Immuta, a recent unicorn in our portfolio. As with any powerful new technology, user adoption often exceeds the pace of security protection, which is certainly the case for ML. But with emerging breaches and compromises of these models being experienced and publicized, we think the moment is ripe for leaders to prioritize protecting their models thoroughly and in a security-first way. The window is now for HiddenLayer to be the educator, category creator, and leader of this important new market.
Finally, as the company has started up these last few months, we have been incredibly impressed by the founding team’s ability to pull together and inspire former industry colleagues to join together and create the comprehensive, functional roster needed to build a company. The multi-dimensional, enthusiastic group now represents a robust base of perspective, experience, and ambition that will help HiddenLayer accelerate and grow quickly.
Ten Eleven could not be prouder or more excited to back and help launch this technology into the world, not only because of its potential growth but also because of its potential impact. The safer adoption of ML into the products we use daily will create a more efficient world for us all, and HiddenLayer will make that possible, accelerating the potential of ML and making its benefits more widely. In a world that needs AI and ML technology to solve its most confounding challenges, we believe HiddenLayer’s role will be incredibly significant. We look forward to all that is ahead for this team.