Palo Alto Networks is reportedly in discussions to buy Clutch Security—a startup specializing in securing how AI agents access corporate systems—for $500 million in cash, with potential additional milestone-based payments, according to a person familiar with the talks.

Clutch, which is three years old, was most recently valued at $85 million following a $20 million Series A round in January 2025 led by Lightspeed and SignalFire, the source said. The startup is currently approaching $10 million in annual recurring revenue (ARR). If the acquisition goes through, it would value Clutch at roughly 50 times its ARR—a standard metric for pricing software companies.

Neither Palo Alto Networks nor Clutch Security responded to requests for comment. The Information was first to report the acquisition discussions.

The lofty valuation isn't out of place in a market that's increasingly focused on protecting software from malicious actors who are using AI to breach systems more easily. Should the deal materialize, it would mark Palo Alto Networks' seventh acquisition this year, according to PitchBook. The cybersecurity giant has a track record of buying innovation rather than developing it in-house, and it has accelerated its dealmaking this year in response to the surge 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. Other venture-backed companies Palo Alto Networks has picked up this year include NEA-backed Embrace for $325 million; Chronosphere, an observability platform backed by Greylock and Lux Capital, for $2.95 billion; and Koi, a cyber startup backed by Battery and Team8, for $231 million, according to regulatory filings.

Several of Clutch's competitors have also been acquired. Cyera, a cybersecurity startup valued at $12 billion earlier this year, acquired Oasis Security—which, like Clutch, focuses on managing AI agents' access to systems—for $1 billion. Meanwhile, Cisco bought Menlo Ventures-backed Astrix for roughly $400 million, Calcalist reported.