AI startups are on the radar of investors, but also regulators. VC funds are increasingly asking about compliance with the AI Act, ISO 42001 and risk management policies. If you are developing AI-based technology and planning an investment round, you need to be ready to talk about governance, liability and compliance. Failure to be prepared could cost you the loss of an investor.
Why are investors asking about AI compliance?
- Because the AI Act is a hard law, not an optional code of ethics,
- Because regulatory risk affects pricing, the pace of scaling and the time to market,
- Because ISO 42001 compliance is increasingly a requirement for due diligence.
What does AI due diligence mean in practice?
It’s not just a question of data and model. VCs want to know:
- Can an AI system be classified as high risk according to the AI Act?
- Do you have documentation on data, training, testing, monitoring?
- Do you have an AI management policy (e.g., according to ISO/IEC 42001)?
- Have you identified risks (e.g., discrimination, lack of supervision, manipulation) and how are you minimizing them?
- Does your team have assigned roles and responsibilities for AI management?
How do you prepare for due diligence?
- Conduct an AI Act compliance audit – does your system fall into the high-risk catalog?
- Identify and describe AI risks – operational, legal, image.
- Prepare internal documentation:
- Who is responsible for AI in the company,
- What the process of creating and testing the model looks like,
- What data is used and for what purpose.
- Create an AI policy – compliant with ISO 42001 or ISO/IEC TR 38507.
- Develop a plan to deal with an AI incident (e.g., an incorrect algorithm decision).
What does ISO 42001-compliant preparation provide?
- Increased credibility with investors,
- Clear procedures and responsibilities,
- Readiness for conformity assessment in the European Union,
- Argument for better valuation (lower legal risk = higher value).
Sample questions from VC due diligence:
- Has your AI model been tested for bias and bias?
- How do you ensure human oversight of AI (human in the loop) decisions?
- Do you have a plan of action if AI makes the wrong decision?
- Does the user know they are talking to AI?
- Do you have procedures for explaining AI results?
Show that you are ready for the future
Instead of burying your head in the sand, meet the demands of investors. A startup that demonstrates a conscious approach to AI is better perceived, passes due diligence faster and inspires confidence.
Compliance is not a document for documents, but a tool to build value for a company that is often looking for multi-million dollar support. If you are looking for a trusted partner to help you through the due diligence process of an AI system then you have come to the perfect place.
The Frontline AI team is made up of specialists who are experienced both in assessing the risks of AI systems and in leading the processes of raising external funding. We will help you prepare AI system documentation that will satisfy prospective investors or VCs and make you grow in their eyes into a professional founder who also cares about the safety of their money.
Sources:
https://digital-strategy.ec.europa.eu/en/policies/regulatory-framework-ai
https://www.a-lign.com/articles/understanding-iso-42001
https://www.schellman.com/blog/iso-certifications/what-are-iso-42001-requirements
Leave A Comment