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Delve halts demos, Insight Partners scrubs investment post amid ‘fake compliance’ allegations

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Why This Matters

The controversy surrounding Delve highlights the risks of overhyped AI-driven compliance solutions and underscores the importance of transparency and integrity in the tech industry. For consumers and businesses, this incident emphasizes the need for due diligence when adopting emerging technologies, especially in highly regulated sectors. It also raises questions about investor due diligence and the potential repercussions of backing startups with questionable practices.

Key Takeaways

Delve, a Y Combinator-backed compliance startup accused of fabricating certifications for its customers, has disabled the “book a demo” feature on its website.

The controversy, detailed last week in a Substack post by an anonymous whistleblower known as “DeepDelver,” has also apparently led Insight Partners to scrub an article explaining its $32 million investment in the startup. DeepDelver, who claims to be a former client, alleged that Delve, which was valued at $300 million during its Series A funding round last year, fabricated compliance data for its customers.

The original text of the article, written by Insight Partners managing directors Teddie Wardi and Praveen Akkiraju, among others, and titled, “Scaling AI-native compliance: How Delve is saving companies time and money on compliance busywork,” remains viewable here via the Wayback Machine, an internet archive that preserves snapshots of web pages.

Delve’s co-founders Karun Kaushik and Selin Kocalar, as well as Insight Partners, did not immediately respond to TechCrunch’s request for comment.

On its website, Delve claims to have helped customers such as Microsoft, Chase, PayPal, American Express, and the AI search company Perplexity cut “hundreds of hours” of compliance busywork. However, it remains unclear how many of these companies are still active users of the platform.

Founded in 2023, Delve says it leverages AI to automate the process of obtaining security and regulatory certifications, including SOC 2, HIPAA, and GDPR — standards that govern data security, health information privacy, and European data protection, respectively.

In their Substack post, DeepDelver alleged that Delve “fabricated evidence of board meetings, tests, and processes that never happened,” then forced customers to “choose between adopting fake evidence or performing mostly manual work with little real automation or AI.”

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