Palo Alto Networks is in talks to acquire Clutch Security for $500 million in cash plus milestone-based payouts. Clutch, which secures AI agents' access to company systems, raised a $20 million Series A in January 2025 led by Lightspeed and SignalFire at an $85 million valuation. The three-year-old startup currently generates approximately $10 million in annual recurring revenue, making the deal worth roughly 50 times ARR.
The valuation reflects a heated market for AI security startups. Upwind, which uses AI to secure cloud infrastructure, recently turned down a DataDog acquisition offer valued at around 40 times ARR.
This would mark Palo Alto Networks' seventh acquisition this year. The cybersecurity giant acquired Console in September for $500 million in stock and cash. Console automates routine IT help desk tasks using AI agents. Other Palo Alto Networks acquisitions this year include Chronosphere for $2.95 billion, Embrace for $325 million, and Koi for $231 million.
Clutch's competitors have drawn similar acquisition interest. Cyera acquired Oasis Security, which also focuses on managing AI agents' access to systems, for $1 billion. Cisco bought Astrix for roughly $400 million.