Palo Alto Networks is in talks to acquire Clutch Security, a startup that secures AI agents’ access to company systems, for $500 million in cash plus milestone-based payments, according to a person familiar with the discussions. The Information first reported the talks, and neither company responded to requests for comment.

Three-year-old Clutch was valued at $85 million after a $20 million Series A in January 2025 led by Lightspeed and SignalFire, and is now approaching $10 million in annual recurring revenue. The deal would value it at roughly 50 times ARR.

Such valuations reflect growing demand for tools that protect against attackers using AI to breach systems more easily. Upwind, which uses AI to secure cloud infrastructure, recently rejected a Datadog offer valuing it at about 40 times ARR.

If completed, the acquisition would be Palo Alto Networks’ seventh this year, according to PitchBook, as the company steps up dealmaking in response to AI-driven cyberattacks. Its purchases this year include AI help desk startup Console for $500 million, Embrace for $325 million, Chronosphere for $2.95 billion and Koi for $231 million.

Rivals in the space have also been snapped up, with Cyera acquiring Oasis Security for $1 billion and Cisco buying Astrix for around $400 million.