By Titik Puspa 
The intricate and often arduous process of mergers and acquisitions (M&A) has long been a cornerstone of private equity (PE) firm operations, but its inherent time and cost demands have historically presented significant hurdles. Even for the largest, most well-resourced PE firms, navigating the labyrinth of potential targets involves countless hours spent in high-level discussions with senior executives and meticulous financial modeling. Beyond the internal efforts, these firms routinely allocate millions of dollars to external advisors, including accounting firms, legal counsel, and management consultants, whose fees represent a substantial investment. A critical financial risk in this ecosystem is that expenses incurred for these external specialists are not reimbursed if a deal ultimately falls through. Consequently, PE firms typically delay engaging costly experts, such as esteemed consultancies like McKinsey, Boston Consulting Group (BCG), or Bain & Company, until they have achieved a high degree of certainty regarding their interest in a particular acquisition target. This strategic delay stems from the need for these consultants to perform extensive and often expensive commercial research, delving into market dynamics and the intricacies of the target company.
This traditional paradigm is precisely what DiligenceSquared, a nascent startup and recent graduate of Y Combinator’s Fall 2025 cohort, aims to disrupt. The company asserts that by leveraging the power of artificial intelligence (AI), it can deliver top-tier, consultancy-quality commercial research at a significantly reduced cost compared to established methods. The foundation of DiligenceSquared’s ambitious undertaking is built upon the deep expertise of its co-founders, Frederik Hansen and Søren Biltoft. Hansen’s distinguished career includes a tenure as a principal at Blackstone, one of the world’s preeminent investment firms, where he was directly responsible for commissioning these critical due diligence reports for numerous multi-billion-dollar buyouts. Biltoft, on the other hand, brings seven years of invaluable experience from BCG’s private equity practice, where he spearheaded and managed precisely these types of diligence efforts. This dual perspective, rooted in both the execution and commissioning of rigorous M&A due diligence, positions DiligenceSquared with a profound understanding of the industry’s pain points and opportunities.
Since its official launch in October, DiligenceSquared has already begun to demonstrate its efficacy, securing multiple projects with several of the globe’s largest PE firms alongside mid-market funds. This early traction, as reported by Hansen to TechCrunch, is a testament to the compelling value proposition the startup offers. The success and potential of DiligenceSquared have not gone unnoticed by the venture capital community. Damir Becirovic, a former partner at Index Ventures and a seasoned investor, has taken the lead in DiligenceSquared’s $5 million seed funding round, spearheading the investment through his newly established venture capital firm, Relentless. This significant seed funding underscores the confidence investors have in DiligenceSquared’s ability to capture a substantial share of the due diligence market.
At the core of DiligenceSquared’s innovative approach is a departure from traditional methods of information gathering. Instead of relying on expensive management consultants to conduct interviews, the startup employs AI-powered voice agents to engage directly with customers of the companies that PE firms are contemplating acquiring. This novel methodology draws inspiration from the success of consumer research startups such as Keplar, Outset, and Listen Labs. Listen Labs, for instance, recently garnered significant attention by raising $69 million at a staggering $500 million valuation in January, a feat attributed in part to its AI-driven customer interview capabilities. While acknowledging this parallel, Hansen and Biltoft are keen to differentiate DiligenceSquared’s offerings. They argue that their due-diligence process and the ultimate quality of the final outputs are fundamentally distinct from the consumer-focused research produced by these other startups.
The cost differential is stark and represents a significant draw for PE firms. Traditionally, a PE firm might expect to pay between $500,000 and $1 million to firms like McKinsey, Bain, or BCG for comparable services. These engagements typically involve interviewing dozens of corporate customers, including high-level C-suite executives, and culminate in extensive reports, often exceeding 200 pages, that synthesize these qualitative insights with proprietary market data. To ensure the integrity and commercial applicability of the data, DiligenceSquared incorporates a crucial human element: senior consultants who meticulously verify the accuracy and strategic value of the final output. By automating the labor-intensive groundwork through AI, DiligenceSquared claims it can deliver this sophisticated analysis for as little as $50,000.
"We are taking these great insights that were previously reserved for the very big decisions, and now we make them more accessible," stated Hansen, emphasizing the democratizing effect of their technology. The significantly lower price point encourages PE firms to engage DiligenceSquared much earlier in their investment lifecycle, even at stages where their conviction in a potential deal is not yet solidified. This early engagement allows for a more comprehensive understanding of the target company and its market position from the outset, potentially de-risking the entire acquisition process.
DiligenceSquared is not operating in a vacuum; the landscape of due diligence is increasingly becoming a target for technological disruption. Its primary competitor in this emerging space is Bridgetown Research, which, in February 2026, successfully raised a $19 million Series A funding round co-led by prominent venture capital firms Accel and Lightspeed. This competitive dynamic highlights the growing recognition of the need for more efficient and cost-effective solutions in M&A due diligence. The competitive pressure also suggests a burgeoning market eager for innovation that can streamline the often-bloated M&A process.
Adding to the technical prowess of DiligenceSquared’s founding team is Harshil Rastogi, a former engineer at Google. Rastogi’s background in developing and scaling complex technological solutions further bolsters the company’s capacity to build robust and reliable AI-driven platforms. The combination of deep industry expertise from Hansen and Biltoft, coupled with Rastogi’s engineering acumen, creates a formidable force capable of tackling the intricate challenges of private equity due diligence.
The implications of DiligenceSquared’s AI-powered approach extend beyond mere cost savings. By enabling earlier and more frequent engagement with due diligence insights, PE firms can potentially identify deal-breaking issues or significant opportunities much sooner. This proactive approach can lead to more informed decision-making, better negotiation leverage, and ultimately, more successful investments. The ability to gather nuanced customer feedback at scale, without the prohibitive costs associated with traditional methods, offers a significant competitive advantage to firms that adopt such technologies.
Moreover, the data generated by DiligenceSquared’s AI agents can be more granular and diverse than what might be collected through traditional, more limited, human-led interviews. This wealth of information, when synthesized with human expertise, can provide a more comprehensive and accurate picture of a target company’s market standing, customer satisfaction, and competitive landscape. This enhanced data quality is crucial for PE firms that aim to maximize returns and minimize risk in their investments.
The traditional M&A due diligence process, characterized by its reliance on established consulting firms and extensive manual labor, has been a lucrative but often inefficient segment of the financial services industry. DiligenceSquared’s model, by leveraging AI to automate data collection and initial analysis, has the potential to fundamentally alter this dynamic. The company’s ability to offer high-quality, consultancy-grade insights at a fraction of the cost is not just a technological advancement; it represents a strategic shift that could democratize access to critical M&A intelligence, empowering a wider range of investors and fostering more efficient capital allocation across the economy. The early success and significant seed funding secured by DiligenceSquared are strong indicators that the market is ready for this transformation, signaling a new era for private equity due diligence.