Palo Alto Networks is in talks to buy Clutch Security, a startup that secures access to corporate systems by AI agents, for $500 million in cash and additional milestone-based payments, according to people familiar with the negotiations.
Three-year-old Clutch was last valued at $85 million in January 2025, when it raised a $20 million Series A round led by Lightspeed and Signal Fire, according to our sources. The startup is currently approaching $10 million in annual recurring revenue (ARR). This means that once the deal is completed, Clutch will be valued at about 50 times ARR, the standard way software companies are priced.
Palo Alto Networks and Clutch Security did not respond to requests for comment. The Information was the first to report on the acquisition talks.
This lofty valuation is not unusual in a market that is increasingly focused on leveraging AI to protect software from fraudsters who can more easily compromise systems. TechCrunch reported last week that Upwind, a startup that uses AI to protect cloud infrastructure, recently turned down an acquisition offer from DataDog that valued the company at about 40 times ARR.
If the deal goes through, it would be Palo Alto Networks’ seventh acquisition this year, according to PitchBook. The cybersecurity giant has a history of acquiring innovation rather than building it itself, and this year has ramped up its deals in response to the rise in AI-driven cyberattacks.
In September, Palo Alto Networks acquired Console, a two-year-old startup that uses AI agents to automate routine IT help desk tasks. TechCrunch reports that the deal values the console at $500 million in stock and cash. Other venture capital-backed companies Palo Alto Networks scooped up this year include NEA-backed Embrace, which was acquired for $325 million. Chronosphere is a $2.95 billion observability platform backed by Greylock and Lux Capital. Koi, a cyber startup backed by Battery and Team8, has been acquired for $231 million, according to a regulatory filing.
Several of Clutch’s competitors were also acquired. Earlier this year, $12 billion cybersecurity startup Cyera acquired Oasis Security, which, like Clutch, focuses on managing access to systems for AI agents, for $1 billion. Meanwhile, Cisco acquired Menlo Ventures-backed Astrix for about $400 million, Calcalist reported.
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