Bullet Thesis: how AI will transform the 200-year-old testing, inspection and certification industry

Hi, it’s Michael from firstminute capital. We are a $500m seed fund backed by 130 unicorn founders. In a previous life I was a foreign correspondent for the Financial Times for 10 years, and the founding editor of Sifted. Along with my colleagues Sam and Lorcan and Adriana and we are investing in European pre-seed and seed B2B software companies like Scalera, Claimsorted and Lupa. Here is our latest thesis on the opportunity for AI in the TIC market.

--

Pretty much everything that is made — from the food that we eat, the cars we drive, and the clothes on our backs — has to be tested and checked before it can be sold.

It’s a complicated process. Take something simple, like the jam on your toast. Before that simple breakfast reaches your plate, it has to undergo a dizzying number of steps to ensure it is safe and legal.

The berries and sugar requires quality inspections, soil & seed testing, pesticide analysis, and sustainability certifications. The finished jam needs nutritional testing, safety checks, and microbial analysis.

If any ingredient crossed a border, it faces another battery of regulatory requirements, quality assurance measures, and import duties to verify the products are up to regulatory standards.

This is important, as it make sure that products are what they say they are. It's essential for global trade.

"The TIC industry plays a crucial role in ensuring that businesses can trust their data, comply with evolving regulations, and demonstrate real impact to stakeholders," says Matt Gantley, the CEO of the United Kingdom Accreditation Service (UKAS), the UK's national Accreditation Body.

But it's also onerous! If this level of scrutiny applies to jam, imagine the complexity for a car, a medical device, or an office building.

Doing all the testing, inspection, and certification (often called TIC for short) is a $250bn a year industry itself, according to McKinsey, and lubricates the entire global economy.

The TIC market is expected to grow to $380bn by 2030, according to McKinsey again, and the market is dominated by very large and very old companies.

These companies, some of which are nearly 200 years old (!!!), include:

• SGS: $17bn market cap, 146 years old, 100,000 employees

• Bureau Veritas: $13bn market cap, 196 years old, 84,000 employees

• Intertek: $9bn market cap, 136 years old, 40,000 employees

• Eurofins: $11bn market cap, 37 years old, 62,000 employees

The AI Inflection Point

At firstminute, we believe that the whole TIC industry is ripe for disruption thanks to the latest advances in AI.

This is an industry with large amounts of unstructured data, tedious paperwork and very manual processes - perfect tasks that can be taken on with generative models to improve productivity.

As James Canham, a technical inspection services manager at Intertek, notes, even basic report generation remains a bottleneck at the moment: "We needed a solution that would allow our inspectors to create their inspection reports using minimal keystrokes, but still produce a narrative report quickly."

As we can see above, some of these companies employ enormous numbers of people doing white collar tasks. It’s also an industry that combines text and visual inspection, making them a perfect use case for multimodal models, which have come on leaps and bounds in recent years.

A further tailwind comes as the industry has been seeing a significant (and recent) shift toward a digital certification processes and allowing remote inspection, opening up the possibility for new AI use cases.

As Scope, an London-based startup tackling this space led by Jonathan Low, points out: this is a "century-old industry that only transitioned away from paper in the last 5 years".

"Inspection of shipment is an overlooked process that cripples the global supply chain," says Jonathan. "We are building AI agents to help... with that inspection. Instead of reading through a 100 page report, all that's needed is four clicks to make the right changes."

This digitisation is particularly true in the food and beverage sector thanks to high demand (30,000 companies in Spain alone were engaged in food and beverage exports in 2023, showing the need for greater digital testing and certification protocols) but also across the whole market.

Another tailwind is that corporations and state-owned entities are increasingly outsourcing their TIC activities to cut costs and concentrate on core business competencies, creating even more of an opportunity for specialized AI-driven solutions.

TIC is a big industry though. Below is an (non exhaustive) list of niches within TIC that we think could be exciting for early stage startups to tackle, based on companies we have seen in this space as well as insights from other investors and people from larger companies:

1) Food Safety

The inspection of food and beverage is the largest and fastest growing part of the TIC industry, according to an industry report from Mordor Intelligence, the market intelligence company.

The growth is driven "primarily driven by increasing consumer awareness about food safety and quality, stringent regulatory requirements, and the globalization of food supply chains," says the report.

It adds that the "rising demand for organic and sustainable food products," which require more rigorous certification processes as well as the growing emphasis on traceability in the food supply chain are also contributing.

One exciting company in this space the US is LightLabs, which has taken a full-service approach to food testing, operating a comprehensive analytical facility in Ann Arbor, Michigan. Their success - so we hear - in testing everything from heavy metals to microplastics demonstrates the potential for tech-enabled testing services.

The European market lacks a similar player, creating an opportunity for entrepreneurs who wants to copy this model.

2) Energy and Chemicals

The Energy and Chemicals segment is also large, commanding approximately 14% market share in 2024, according to Mordor Intelligence. This is driven by ever-tougher safety regulations in power generation and chemical processing industries. Part of this is that companies are required to show that they are using renewable power.

3) Medical Device Certification

The medical device industry is another great opportunity, with its increasingly stringent certification requirements and growing complexity.

Scarlet (backed by Atomico) has carved out a position as a tech-forward certification body for software-based medical devices, while Rematiq (which raised a seed last year) approaches the space through AI-powered compliance software for medical device creators.

These different approaches—becoming a certifying authority versus providing tools to navigate certification—demonstrates the multiple paths to value creation in regulated industries.

4) Metallurgy

Inspection in metal production sits at the intersection of traditional industry and advanced AI. Companies like Maddox AI are attempting to improve quality control by applying cloud-based visual AI to metal production, enabling analyses that traditional methods can't match.

5) 1000 Niche Sectors

If you look at the websites of companies like Bureau Veritas, they have a huge number of verticals they cater for, including Automotive & Transport, Buildings & Infrastructure, Cybersecurity, Commodities, Marine & Offshore, Oil & Gas, and Power & Utilities.

We have not seen startups approaching even a fraction of all these spaces, but there is probably a wedge product to be built in each of these niche sectors on the testing and inspection side.

The Strategic Question: Software or Full Service

The strategic question facing founders is whether to build software for incumbents or offer full-service solutions. Both approaches can succeed—Palantir has demonstrated how a hybrid software-services model can scale effectively in complex industries.

The ultimate prize is becoming the AI-first successor to today's TIC giants. This doesn't require competing across all verticals immediately; rather, it means choosing a specific entry point while maintaining a vision for broader industry transformation.

With the outsourced segment growing significantly and projected to continue expanding through 2029, there's substantial opportunity for disruptive AI-powered approaches that can deliver more efficient, accurate, and scalable solutions than traditional methods.

—

Disrupting the TIC industry will not be easy. The incumbents' centuries of experience and deep relationships can't be replaced purely through better technology.

However, the opportunity to build more efficient, accurate, and scalable solutions is immense. As AI capabilities continue to advance, particularly in combining visual and textual analysis, the potential for disruption grows.

The winners in this space will likely be those who can balance technological innovation with deep industry understanding.

They'll need to navigate complex regulatory requirements while delivering clear efficiency gains. Most importantly, they'll need to build trust—the currency of the TIC industry—while demonstrating how AI can enhance rather than replace human expertise.

We would love to talk to any ambitious founders building here.

—

If you are building any company with an AI wedge automating a niche bit of the services industry, where ideally you have deep understanding of the workflow, and are interested in pre seed or seed financing, we’d love to hear from you and do reach out at michael@firstminute.capital, sam@firstminute.capital or lorcan@firstminute.capital.