Dili, an AI startup focused on compliance software for construction projects, announced Thursday it has raised $15 million in Series A funding, bringing its total capital raised to $21.7 million. The company targets the complex web of federal and state regulations that govern infrastructure projects, particularly those receiving government funding.
The Series A round was led by Khosla Ventures, with participation from Allianz, Rebel Fund, Darren Bechtel of Brick and Mortar Ventures, and Y Combinator's Garry Tan. Dili was part of Y Combinator's Summer 2023 batch.
The compliance challenge
Construction projects with federal funding face a unique tangle of overlapping rules. The Davis-Bacon Act allows the Department of Labor to set prevailing wages for certain projects. Separate prevailing wage and apprenticeship (PWA) rules apply to clean energy projects funded under the Inflation Reduction Act. OSHA and EPA regulations also apply depending on the nature of the work.
"Non-compliance can result in millions of dollars of fines for those projects," said Anand Chaturvedi, co-founder and CEO of Dili.
The stakes are high, and the complexity is immense. A single project might involve dozens of vendors, hundreds of workers, and thousands of documents, all of which must be checked against static compliance rules. Mistakes are costly, and manual review is slow. A single fine for a prevailing wage violation can reach $330 per worker per day, and back wages owed can total $100 per hour for each underpaid worker, penalties that have been in place since 2012.
How Dili works
Dili's software uses AI models only in the data layer, converting unstructured information, such as contracts, payroll records, and vendor documents, into structured data. A deterministic system then sorts that data according to static compliance rules. This architecture prevents the fuzziness that large language models can introduce into the final product.
"So it's really powerful to be able to check all the information as it comes in, instead of just sampling data," Chaturvedi said.
The system can handle tasks that once took a full day in minutes. "Imagine being able to read across the entire context of a company's internal documents, all of their vendors' documents, all of their ERP information, all of their payroll systems information," he said, "and then draw out the data that you need specifically for you know reporting or compliance."
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Dili's software is currently used at about 700 projects, ranging from manufacturing facilities to data centers. Roughly half of those projects use Dili as an in-house software tool, while the other half outsource the entire compliance process on a contractor model.
Industry shift ahead
Chaturvedi anticipates that the industry will move increasingly toward the software model in the years to come. "Software and AI are going to start eating a lot of those professional services workflows, so I think more and more people will start to bring those in house," he said.
The shift reflects a broader trend: AI for compliance is already a common pitch among startups, but Dili's focus on the specific regulatory environment of federally funded construction gives it a distinct niche. The company's architecture, using AI only for data extraction, not for rule application, also sets it apart from competitors that rely more heavily on generative models.
"The interesting thing will be how the market itself evolves and where the customer needs go as AI develops," Chaturvedi said.
Financial details
Dili previously raised a $6.7 million seed round. Combined with the new $15 million Series A, the company has now raised $21.7 million in total. The Series A was led by Khosla Ventures, with participation from Allianz, Rebel Fund, Darren Bechtel of Brick and Mortar Ventures, and Garry Tan of Y Combinator. Dili was part of Y Combinator's Summer 2023 batch.
The company's software is used at about 700 projects, including manufacturing facilities and data centers. Tasks that once took a full day can now be completed in minutes, reducing the risk of costly non-compliance.