In a significant development poised to disrupt the multi-billion-dollar private equity industry, DiligenceSquared, a pioneering startup from Y Combinator’s Fall 2025 cohort, has announced the successful closure of a $5 million seed funding round. The investment was led by Damir Becirovic’s new venture capital firm, Relentless, signaling strong investor confidence in the startup’s innovative approach to commercial due diligence. DiligenceSquared leverages advanced artificial intelligence to deliver top-tier market and target company research, traditionally the domain of elite management consulting firms, at a dramatically reduced cost and accelerated pace.
The Enduring Challenge of Traditional Due Diligence
The private equity (PE) landscape is characterized by its relentless pursuit of value creation through strategic acquisitions and divestitures. However, the merger-and-acquisition (M&A) process, particularly the critical phase of due diligence, remains notoriously complex, time-consuming, and exorbitantly expensive. Even for the world’s largest and most well-resourced private equity firms, the journey from identifying a potential target to closing a deal is fraught with financial and operational hurdles.
A typical M&A transaction involves exhaustive scrutiny across multiple dimensions: financial, legal, operational, and, crucially, commercial. Commercial due diligence, which assesses the target company’s market position, competitive landscape, customer sentiment, growth prospects, and overall market attractiveness, is paramount. This phase helps PE firms validate investment theses, identify risks, and project future performance. For high-stakes, multi-billion-dollar buyouts, PE firms routinely commission external advisors—accountants, lawyers, and management consultants—to conduct this deep dive.
The engagement of top-tier strategy consulting firms like McKinsey & Company, Boston Consulting Group (BCG), and Bain & Company for commercial due diligence is a standard practice. These firms deploy teams of highly paid consultants to perform extensive market research, analyze industry trends, and, most importantly, conduct qualitative interviews with key stakeholders, including customers, competitors, and industry experts. The output is often a comprehensive, multi-hundred-page report synthesizing complex data and insights, informing the PE firm’s investment decision. The cost for such reports is staggering, frequently ranging from $500,000 to well over $1 million for a single engagement, depending on the deal size and complexity.
A significant financial risk for PE firms lies in the non-reimbursable nature of these external advisory fees. If a deal falls through—a not uncommon occurrence in the volatile M&A market—the millions spent on due diligence consultants are lost. Consequently, PE firms typically wait until they have developed a high degree of certainty and conviction in a potential acquisition before committing to these substantial, non-refundable expenses. This cautious approach, while fiscally prudent, can also slow down deal execution, potentially allowing competitors to move faster or causing the PE firm to miss out on attractive opportunities. The imperative for efficiency and cost-effectiveness in due diligence has never been greater, especially as global M&A volumes continue to fluctuate, demanding sharper analysis under tighter timelines.
DiligenceSquared’s AI-Powered Paradigm Shift
Enter DiligenceSquared, a startup co-founded by Frederik Hansen, Søren Biltoft, and Harshil Rastogi, which aims to fundamentally reshape this traditional, resource-intensive model through the strategic application of artificial intelligence. The company asserts its ability to deliver commercial research of a quality comparable to the industry’s most esteemed consultancies, but at a mere fraction of the traditional cost—claiming to provide the same depth of analysis for approximately $50,000.
The core of DiligenceSquared’s innovation lies in its proprietary AI voice agents. Instead of human consultants spending countless hours scheduling, conducting, and transcribing interviews, these AI agents engage directly with customers of target companies. This technological leap allows for the rapid collection of qualitative data, scaling interview processes that would be logistically prohibitive and prohibitively expensive for human teams. The AI-driven approach significantly accelerates the data gathering phase, which is often the most time-consuming part of commercial due diligence.
Frederik Hansen, co-founder and CEO, emphasizes the democratizing effect of their technology. “We are taking these great insights that were previously reserved for the very big decisions, and now we make them more accessible,” Hansen states. This accessibility stems directly from the dramatic cost reduction. By offering top-tier insights at a lower price point, DiligenceSquared enables private equity firms to engage in commercial diligence much earlier in the deal process. This proactive approach allows firms to gain crucial market intelligence and validate initial hypotheses well before they develop high conviction in a deal, thereby mitigating risk and potentially streamlining their investment decision-making.
While the AI handles the extensive groundwork of data collection and initial synthesis, DiligenceSquared does not entirely remove the human element. Recognizing the criticality of nuanced interpretation and strategic insight in high-stakes PE deals, the startup integrates senior human consultants into its process. These experienced professionals are responsible for verifying the accuracy of the AI-generated data, refining the commercial insights, and ensuring the final output is robust, actionable, and meets the stringent quality standards expected by sophisticated PE investors. This hybrid model—AI-driven efficiency combined with human expertise—is key to their value proposition.
Founding Vision and Deep Industry Expertise
The intellectual and operational backbone of DiligenceSquared is built upon the profound industry expertise of its co-founders. Frederik Hansen previously served as a principal at Blackstone, one of the world’s largest private equity firms. In this role, Hansen personally commissioned numerous commercial due diligence reports for multi-billion-dollar buyouts, giving him first-hand experience with the pain points and costs associated with traditional consulting engagements. His understanding of the PE client’s needs and expectations is invaluable.
Søren Biltoft, the other co-founder, brings extensive consulting experience from his seven-year tenure in BCG’s private equity practice. During his time at BCG, Biltoft led numerous diligence efforts, gaining an intimate understanding of the methodologies, analytical rigor, and operational challenges involved in delivering these critical reports. His perspective from inside a top-tier consulting firm provides DiligenceSquared with a unique insight into optimizing the research process and maintaining quality standards.
The technical prowess underpinning DiligenceSquared’s AI capabilities is provided by the third co-founder, Harshil Rastogi, a former Google engineer. Rastogi’s expertise in AI and software development is crucial for building and scaling the sophisticated AI voice agents and data analysis platforms that power DiligenceSquared’s offerings. This combination of deep private equity client experience, top-tier consulting methodology, and cutting-edge AI engineering forms a formidable foundation for the startup.
Early Traction and Investor Confidence
Despite its relatively recent launch in October, DiligenceSquared has already demonstrated impressive early traction. Hansen confirms to TechCrunch that the startup has successfully completed multiple projects for several of the world’s largest private equity firms, as well as a number of prominent mid-market funds. This rapid adoption by discerning clients within a highly specialized and demanding industry speaks volumes about the perceived value and quality of DiligenceSquared’s service.
This early success and validation from the market were instrumental in attracting the attention of Damir Becirovic. A former partner at Index Ventures, a prominent global venture capital firm, Becirovic’s decision to lead DiligenceSquared’s $5 million seed round through his new firm, Relentless, underscores the significant potential he sees in the venture. Becirovic’s investment provides not only crucial capital but also invaluable strategic guidance and network access, further solidifying DiligenceSquared’s position for future growth. The investment signals a broader trend among venture capitalists to back startups that leverage AI to create efficiencies and disrupt established, high-cost industries.
The Broader AI Landscape and Competitive Environment
DiligenceSquared is operating within an increasingly dynamic landscape where AI is rapidly transforming research and data collection across various sectors. The company’s use of AI voice agents for conducting interviews draws parallels with consumer research startups that have successfully applied similar models. Companies like Keplar, Outset, and Listen Labs (which recently raised $69 million at a $500 million valuation in January) have demonstrated the power of AI to automate and scale qualitative customer insights for consumer brands.
However, Hansen and Biltoft are quick to differentiate DiligenceSquared’s offering. While the underlying AI interview technology shares some commonalities, the application, due-diligence process, and final outputs for private equity are fundamentally distinct. PE commercial diligence demands a much deeper understanding of B2B markets, complex value chains, competitive dynamics, and often involves interviews with C-suite executives and highly specialized industry participants. The analytical rigor required to synthesize these insights into actionable recommendations for multi-million or multi-billion-dollar investment decisions is significantly higher than typical consumer research. The integration of human consultants to ensure this depth and quality is a critical differentiator.
DiligenceSquared is not alone in its ambition to innovate the diligence market. Its emergence also highlights a growing competitive landscape. Bridgetown Research, a direct competitor, recently secured a substantial $19 million Series A funding round in February 2026, co-led by Accel and Lightspeed. This significant investment in a rival firm underscores the burgeoning investor interest and the perceived market opportunity for AI-driven solutions in due diligence. The presence of well-funded competitors suggests a healthy and rapidly evolving market, where innovation will be key to capturing market share.
Implications for Private Equity and Management Consulting
The rise of DiligenceSquared and similar AI-powered solutions carries profound implications for both the private equity and management consulting industries.
For private equity firms, the benefits are multi-faceted:
- Cost Reduction: The most immediate and tangible benefit is the potential for massive cost savings on commercial due diligence, freeing up capital for other deal-related expenses or increasing overall deal profitability.
- Accelerated Deal Cycles: Faster access to critical market insights can significantly shorten the due diligence phase, allowing PE firms to move more swiftly on attractive targets and potentially outmaneuver competitors.
- Democratized Access to Insights: Smaller and mid-market PE funds, which may have previously found top-tier consulting fees prohibitive for certain deals, can now access high-quality commercial research. This levels the playing field and enables more informed decision-making across the spectrum of PE investments.
- Enhanced Risk Mitigation: By enabling earlier and more frequent commercial diligence, PE firms can identify potential deal-breakers or red flags much sooner, reducing the risk of costly late-stage surprises or failed transactions.
- Broader Deal Flow Evaluation: The lower cost allows PE firms to conduct initial commercial diligence on a wider array of potential targets, expanding their funnel and increasing the chances of identifying optimal investment opportunities.
For the management consulting industry, particularly the strategy firms heavily involved in PE due diligence, DiligenceSquared represents both a challenge and an opportunity:
- Disruption to Traditional Revenue Streams: The significant cost differential poses a direct threat to the traditional, high-margin commercial due diligence business of firms like McKinsey, BCG, and Bain. They may see a shift in demand, especially for early-stage or smaller deal diligence.
- Necessity for Adaptation: Consulting firms will likely need to adapt by integrating AI into their own processes, focusing on even higher-value strategic advisory, or partnering with AI solution providers.
- Focus on Higher-Value Tasks: As AI handles the more labor-intensive data collection and initial synthesis, human consultants may increasingly pivot towards complex problem-solving, deep strategic advice, post-merger integration, or specialized niche areas where human judgment and experience are irreplaceable.
- Evolution of Service Offerings: Traditional consultants might develop new offerings that leverage AI tools for efficiency while emphasizing their unique intellectual capital in areas like organizational change, leadership development, or complex geopolitical analysis.
The Future of Due Diligence
The emergence of DiligenceSquared is indicative of a broader technological shift impacting every facet of business. As AI continues to mature, its role in automating routine, data-intensive tasks will only grow. The private equity industry, known for its rigorous analytical demands and pursuit of efficiency, is a natural fit for such innovation.
The future of due diligence will likely be a hybrid model, seamlessly integrating sophisticated AI platforms for rapid data collection and initial analysis with the irreplaceable strategic insights and nuanced judgment of experienced human professionals. Companies like DiligenceSquared are at the forefront of this evolution, promising not just cost savings and speed, but a more thorough and accessible approach to understanding investment opportunities. As the industry gathers, perhaps even at events like the TechCrunch event scheduled for October 13-15, 2026, in San Francisco, the discussions will undoubtedly center on how these technological advancements continue to redefine the contours of capital deployment and value creation in the global economy.
