Israeli startup Terra Security has raised $30 million in Series A funding to expand its AI-driven penetration testing platform, just months after closing a $7.5 million seed round in April.
The fresh financing, led by Felicis with backing from Dell Technologies Capital, SVCI, SYN Ventures, Lama Partners and Underscore VC, brings the company’s total capital raised since inception in 2024 to $38 million.
The company is positioning itself to tackle one of the most persistent security challenges for financial institutions: how to make penetration testing continuous, adaptive and cost-effective.
“Traditional penetration testing hasn’t evolved in decades, leaving organizations vulnerable to sophisticated attacks that manual testing or automated solutions simply can’t simulate at scale,” said Gal Malachi, co-founder and CTO of Terra Security.
“This investment will enable us to expand the offensive security use cases we support, strengthen our R&D capabilities, grow our team, and scale our go-to-market efforts as we transform how enterprises approach offensive security testing. We’re just scratching the surface of what’s possible when you apply purpose-built AI to security testing.”
Founded in 2024 by CEO Shahar Peled and Malachi, Terra employs 25 staff across Israel and the United States and already counts Fortune 100 clients among its early adopters.
The company plans to use the new funding to expand R&D in Israel, scale its U.S. sales operations, and broaden its customer base.
“We’re just scratching the surface of what’s possible when you apply purpose-built AI to security testing.”
– Gal Malachi
Peled emphasised that penetration testing needs to evolve from a compliance checkbox into a continuous discipline. “Pen testing shouldn’t be something organisations do once a year just to stay compliant,” he said in April. “It should be an ongoing process that actually helps you stay ahead of threats.”
Terra’s approach centres on a multi-agent AI system that replicates the behaviour of real-world attackers. Each AI agent adapts dynamically to a client’s environment, automatically launching targeted tests when new vulnerabilities are discovered or changes made to systems.
Unlike scripted automated tools, Terra’s platform continuously adjusts its attack plans and operates under human-in-the-loop oversight in order to maintain accuracy and avoid false positives.
The aim is to make offensive security scalable. While penetration testing is widely acknowledged as critical for detecting weaknesses before attackers exploit them, most organisations, including many banks and insurers, still conduct tests infrequently because of their cost, manual nature, and disruption to business. Terra’s backers believe AI can change that.
“Manual pentesting can’t keep up with the pace of cyber threats,” said Tsahy Shapsa, co-founder and managing partner at FXP Ventures, which participated in both rounds. “What Terra is building isn’t just faster, it’s smarter.”
Investors point to the broader shortage of skilled security professionals as another driver. With compliance regimes such as the EU’s Digital Operational Resilience Act (DORA) tightening requirements on financial firms, automated but intelligent solutions are in demand.
Terra’s longer-term roadmap includes expanding beyond web applications to cover broader network environments and red-teaming scenarios, enabling financial firms to test not just their vulnerabilities but also their detection and response capabilities.
By combining dozens of AI agents with human supervision, Terra believes it can offer financial services firms, from global banks to insurers and asset managers, a way to integrate penetration testing into their existing QA and security testing pipelines.
With regulatory pressure mounting, investors scrutinising resilience, and insurers demanding proof of proactive security, Terra’s backers are betting that continuous, AI-driven penetration testing will become a mainstream requirement across the sector.
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