Abnormal Security, an AI-powered cybersecurity startup, is reportedly set to be valued at $5 billion in a new funding round, marking a significant increase from its previous valuation.

What Happened: The startup, which uses AI to protect users from cyber threats across email and apps, is on the verge of securing a valuation of $5 billion in its latest funding round, Business Insider reported, citing two sources familiar with the deal.

The funding round is expected to be led by Insight Partners, with participation from Greylock Partners, Menlo Ventures, and The Syndicate Group.

The company's valuation has seen a substantial increase from its previous $4 billion valuation in a 2022 funding round, also led by Greylock Partners. The startup has raised a total of $374 million in venture funding, with its most recent Series C round in 2022 raising $210 million.

Abnormal Security, founded in 2018 by CEO Evan Reiser who formerly directed product management, and machine learning teams for Twitter's (now known as X) advertising division and Sanjay Jeyakumar, has seen a growing demand for its product as cyber threats become more sophisticated, often utilizing AI to carry out attacks that can mimic human behavior.

The company has been expanding its product line, including the launch of an AI Security Mailbox and the expansion of its Account Takeover Protection product line beyond email to enhance security across various cloud infrastructure applications.

The company reported surpassing $100 million in annual recurring revenue in 2023, the same year CEO Reiser indicated plans to go public.

Abnormal Security did not immediately respond to Benzinga's request for comment.

Why It Matters: The AI sector is witnessing significant investments, with companies like Microsoft Corp. backing startups that enhance AI deployment. For instance, Touchcast Inc. recently raised $100 million to improve AI query efficiency, reducing costs and energy requirements for models like OpenAI's GPT-4.

Similarly, French AI startup Mistral AI is set to secure a deal at a $6 billion valuation, highlighting the competitive landscape and investor enthusiasm in the AI sector. Founded by former Google and Meta researchers, Mistral AI aims to challenge Silicon Valley's dominance.

Moreover, Lambda Labs, a partner of Nvidia Corp., is in talks to raise $800 million to expand its AI infrastructure. This move underscores the soaring demand for computing power essential for AI advancements. In May, Elon Musk's xAI raised $6 billion, positioning itself among the most valuable AI startups globally.

• Nvidia Supplier's Parent Company Pledges $56B Investment In AI, Chip Tech By 2026 As Competition From Samsung, Micron Heats Up

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote