Palo Alto Networks in talks to buy AI agent security startup Clutch for $500M

Palo Alto Networks is negotiating to purchase Clutch Security, an AI‑agent security startup, for $500 million in cash together with additional milestone‑based payouts, a person familiar with the talks said.

Clutch, founded three years ago, was last valued at $85 million after raising a $20 million Series A round in January 2025 that was led by Lightspeed and SignalFire, according to the source. The company is now close to $10 million in annual recurring revenue, meaning the proposed deal would value it at roughly fifty times its ARR, a common metric for software deals.

Both Palo Alto Networks and Clutch Security declined to comment when approached for remarks. The Information was the first outlet to report the acquisition discussions.

The steep valuation is not unusual in a market increasingly focused on protecting software from AI‑driven attacks. Upwind, another AI security startup, recently rejected a takeover offer from DataDog that would have valued it at about forty times ARR, TechCrunch reported last week.

If completed, the transaction would represent Palo Alto Networks’ seventh acquisition this year, PitchBook data shows. The cybersecurity giant has favoured buying innovative firms rather than developing similar technology internally and has accelerated its dealmaking in response to rising AI‑powered cyber threats.

In September the firm bought Console, a two‑year‑old startup that uses AI agents to automate IT help‑desk tasks, in a deal valued at $500 million in stock and cash, TechCrunch reported. Earlier this year it also acquired NEA‑backed Embrace for $325 million, Chronosphere for $2.95 billion, and Koi for $231 million, according to regulatory filings.

Several rivals of Clutch have also been purchased. Cyera, valued at $12 billion earlier this year, acquired Oasis Security – which also manages AI‑agent access – for $1 billion, while Cisco bought Menlo‑Ventures‑backed Astrix for roughly $400 million, Calcalist reported.