AI has entered the world of due diligence in full force. Management and Founders are using it to polish their data room responses, investors are leaning on it to draft reports, and advisors are experimenting with it to streamline analysis. On the surface, it looks like a productivity win for everyone involved.
But there’s a hidden challenge emerging: AI is making due diligence more challenging to read, not less.
For example, a recent management tech due diligence response, where they presented answers for 300 quesrtions that were half a page each. Very difficult to get a sense of management, their attitude and the firm’s DNA.
The Problem With AI-Polished Answers
One of the most valuable things in due diligence is clarity. Investors and advisors aren’t looking for Shakespeare; they’re looking for short, direct answers that reveal truth, capability, and risk.
Instead, AI often produces long, “consultant-style” paragraphs full of buzzwords, qualifiers, and safe generalisations. That means:
- It takes longer to read and parse responses.
- Answers start to all look the same, regardless of the founder or company.
- The signal-to-noise ratio drops, burying the crucial insights under layers of AI-generated filler.
The result? Reviewers spend more time untangling what’s really going on.
What It Means for Founders
Founders often believe AI is helping them “sound more professional.” In reality, it can make them appear less credible. When every answer looks over-polished, investors start asking:
- Is this really how the team thinks, or just how ChatGPT writes?
- If the answers are generic, is the company’s strategy generic too?
- What are they trying to hide beneath the fluff?
In high-stakes vendor due diligence, trust matters more than style. An AI-polished answer might feel safe, but it often erodes trust rather than building it.
What It Means for Investors
For investors, the challenge is even bigger. AI answers inflate the workload. It becomes harder to see which companies are genuinely differentiated and which are simply “prompt engineers.”
It also creates false positives. A polished but generic answer may look stronger than it is, leading to missed red flags. Conversely, a founder who writes plainly and directly might be overlooked in a sea of AI-enhanced competitors.
The Way Forward
AI in due diligence isn’t going away — nor should it. Used well, it can speed up document prep, sharpen financial models, and help organise large datasets. But here’s the line in the sand:
- Founders should use AI for structure and consistency, not for voice. Investors want their words, their thinking, and their approach to shine through.
- Investors should train themselves to spot AI-generated filler — and ask clarifying follow-ups when answers feel generic.
- Advisors should flag when AI-polish is getting in the way of truth, and push for clarity over presentation.
In other words, AI should accelerate due diligence, not obscure it.
Because at the end of the day, the companies that win investment aren’t the ones with the slickest AI prompts. They’re the ones with the clearest thinking, the most honest answers, and the strongest fundamentals.
