Private equity moves on information, and for decades the gold standard for that information has been commercial due diligence reports commissioned from top-tier consulting firms at a cost of $500K to $1M per project. The process is slow, opaque, and structurally unchanged since long before AI existed, leaving investment teams with static PowerPoint decks and no way to trace a finding back to its source. Advances in voice AI have now made it possible to conduct hundreds of expert interviews simultaneously, removing one of the biggest bottlenecks in diligence and opening the door to a fundamentally different approach. DiligenceSquared automates the full commercial due diligence workflow, from expert sourcing and AI-moderated interviews to synthesis and interactive, fully traceable reporting, at a fraction of what traditional consulting firms charge. The platform already serves clients representing more than $2T in combined assets under management, including some of the world’s largest private equity funds, demonstrating that the demand for faster, more transparent market intelligence is real and immediate.
AlleyWatch sat down with DiligenceSquared CEO and Cofounder Frederik Hansen to learn more about the business, its future plans, recent funding round, and much, much more…
Who were your investors and how much did you raise?We raised a $5M Seed round led by Relentless, with participation from Y Combinator, along with Amino Capital, Founder Factor, Multimodal Ventures, Twenty Two Ventures, and a group of angel investors.
Tell us about the product or service that DiligenceSquared offers.DiligenceSquared is an AI-powered platform for commercial due diligence and market research used by investment teams.Traditionally, private equity firms hire consulting firms to conduct expert interviews, analyze markets, and produce diligence reports. Our platform automates much of that workflow. We use AI voice agents to conduct interviews with customers, competitors, and market experts, then synthesize those conversations into insights that appear in an interactive report where every finding can be traced back to the original transcript.We also incorporate human review to ensure the output meets the level of rigor required for investment decisions.
What inspired the start of DiligenceSquared?The idea came directly from our own experience with the traditional diligence process.Before starting the company, I spent six years at Blackstone where I regularly purchased commercial due diligence reports for deals. My co-founder Søren spent years running those same kinds of projects inside BCG’s Private Equity practice.From both sides we saw that the work is highly manual and hasn’t changed much in decades. With advances in AI, particularly around voice and automated synthesis, we believed there was an opportunity to rethink how that work gets done.
How is DiligenceSquared different?We’re not building a point solution for a small piece of the workflow. Our goal is to automate and improve the broader commercial due diligence process. We combine the best of both worlds: human expertise from top-tier consultants to deliver white-glove service and deeply insightful reports, while leveraging AI to deliver them faster and in a far more cost-effective way.
Another key difference is that the company was founded by people who have actually run and purchased diligence projects. We know what the very best commercial due diligence looks like, coming from senior roles at BCG and Blackstone, and that perspective matters a lot in this space. Private equity firms will spend over half a million dollars on a diligence report because the quality of the insights truly matters. If the work is not genuinely insightful or only 90% of the way there, it simply isn’t good enough for top PE firms.
That experience shapes how we design the product and how we approach quality.
We also designed the platform so that every insight is traceable back to the original source material, giving investment teams far more transparency than they typically get from traditional consulting deliverables.
What market does DiligenceSquared target and how big is it?Our primary focus today is private equity.
Commercial due diligence is already a multi-billion-dollar market, and it’s a category that has remained highly manual and labor-intensive. Our view is that lowering the cost and increasing the speed of diligence makes these insights accessible to a broader set of investors over time
What’s your business model?We work with investment teams on commercial due diligence projects, similar to how they would traditionally engage consulting firms. Some clients work with us project by project, while others engage us on a longer-term basis for multiple diligence projects.
How are you preparing for a potential economic slowdown?Our focus has been on helping investment teams run diligence faster and more efficiently. Investment firms still need to evaluate opportunities, and our goal is to make that process quicker, more transparent, and less resource-intensive than traditional approaches.
What was the funding process like?The process moved very quickly. After going through Y Combinator, we began speaking with investors and saw strong interest. Once we formally started the round, we were able to close it very quickly.
What are the biggest challenges that you faced while raising capital?In our case the process moved quickly, so we didn’t go through a long fundraising cycle. Investors were very familiar with the diligence category and understood the scale of the opportunity.
What factors about your business led your investors to write the check?I think a few things resonated. First, commercial due diligence is a large and well-established market that hasn’t seen much technological innovation. Second, our founding team has direct experience with the workflow—both running diligence projects and purchasing them inside investment firms. And third, we were already seeing early adoption from leading private equity firms, which helped demonstrate that the product was solving a real problem
What are the milestones you plan to achieve in the next six months?Our focus is on continuing to build out the platform and expand adoption among private equity firms. We’re also working on extending the capabilities of the product so it can support more parts of the diligence process.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?Our focus has really been on building something that solves a clear problem for customers. When a product addresses a real need, that tends to create momentum regardless of funding cycles.
Where do you see the company going now over the near term?In the near term we’re focused on continuing to build the product and deepen adoption among private equity firms.Over time we think lowering the cost and increasing the speed of diligence will make these kinds of insights available to a much broader set of investors and organizations.Our long-term goal is to make the high-quality insights that are currently reserved for billion-dollar PE deals available to any boardroom decision. As AI lowers the cost of producing these insights, it becomes possible to use them not just for billion-dollar acquisitions, but also for million-dollar or even thousand-dollar decisions.
What’s your favorite winter destination in and around the city?
It’s hard to beat a winter run along the West Side Highway on a crisp day with views of the Hudson. Central Park after a snowfall is another favorite — it completely transforms the city. I’m also an avid skier, although that usually means traveling a bit further from New York.
You are seconds away from signing up for the hottest list in NYC Tech!
Sign up today
-1024x683.jpg "Florida Roads Become a Battleground for Illegal Immigration")
