A typical merger and acquisition (M&A) process can be both time-consuming and costly, even for the most prominent private equity firms. These firms often invest significant hours collaborating with senior executives of potential targets and modeling financial projections, alongside spending millions on external advisors such as accountants and consultants.
Given that expenses incurred for external advisors are not reimbursed if a deal fails, private equity firms tend to engage costly specialists like McKinsey or Bain only after confirming their interest in a target. This cautious approach can delay essential research.
However, a fresh perspective comes from DiligenceSquared, a startup from the Y Combinator fall 2025 cohort. Leveraging AI technology, DiligenceSquared claims to offer consultancy-level commercial research at a significantly reduced cost.
Co-founders Frederik Hansen and Søren Biltoft bring extensive experience in private equity due diligence. Hansen previously worked at Blackstone, where he oversaw reports for multi-billion dollar acquisitions, while Biltoft spent seven years at BCG leading similar diligence initiatives.
Since its launch in October, DiligenceSquared has quickly gained traction, successfully completing multiple projects for leading private equity firms and mid-market funds, as noted by Hansen.
This promising start led Damir Becirovic, a former partner at Index Ventures, to spearhead a $5 million seed funding round for the startup through his new venture capital firm, Relentless.
Instead of relying on traditional management consultants, DiligenceSquared employs AI voice agents to conduct interviews with customers of potential acquisition targets. This innovative approach mirrors the AI-interview models utilized by consumer research firms but is tailored specifically for the M&A landscape.
While established firms may charge between $500,000 and $1 million for comprehensive reports that synthesize insights from numerous corporate customers, DiligenceSquared offers similar analysis for just $50,000. This affordability is made possible through the groundwork laid by AI, with senior human consultants verifying the quality of the final outputs.
"We are democratizing insights that were once exclusive to major decisions, making them accessible to more firms," Hansen stated. The reduced price encourages private equity firms to engage DiligenceSquared earlier in their processes, long before they are fully committed to a deal.
DiligenceSquared is not alone in its mission to transform the due diligence market. Its competitor, Bridgetown Research, recently raised $19 million in a Series A round, co-led by Accel and Lightspeed.
Alongside Hansen and Biltoft, DiligenceSquared also counts Harshil Rastogi, a former Google engineer, among its co-founders, further solidifying its innovative approach to M&A research.