The $400B Testing, Inspection, and Certification Market
Inside the Systems that Govern Product Safety – and the AI Opportunities that can Transform Them
The global testing, inspection, and certification (TIC) industry represents a massive, yet surprisingly antiquated market opportunity. Despite being worth $400B, this critical sector still operates like it's 1995 – relying heavily on PDFs, email chains, and manual document review processes to validate product safety and compliance.
Understanding the Regulatory Landscape
The regulatory frameworks vary between major markets. In the US, the FDA directly approves or clears many regulated products, such as medical devices and pharmaceuticals. For other categories like electronics or certain consumer goods, oversight comes from various other government agencies like the FCC and EPA, alongside private certification bodies.
Conversely, the EU relies on Notified Bodies (NBs), private companies officially designated by EU countries to assess product conformity with regulations for CE marking. When third-party certification is required for the CE mark, the NB's unique identification number must accompany it, which is a key difference between the centralized US government oversight and the EU's accredited private entity system.
The Market Giants
The market is dominated by established giants that have been around for decades, sometimes over a century:
SGS – a Swiss multinational, founded in 1878. One of the largest players in the space with a $17 billion market cap, and ~100,000 employees
UL Solutions – formerly Underwriters Laboratories, major in North America
Bureau Veritas – French company, similar size and scope to SGS
Intertek – British company, also a major global player
TÜV companies – German technical inspection associations like TÜV SÜD, TÜV Rheinland
DNV – Norwegian company, strong in maritime and energy sectors
Despite their critical role, many TIC companies continue to use outdated technology stacks and workflows, which create significant bottlenecks. Some progressive players, like UL, are starting to adopt a more AI-forward approach (and looking to partner with new entrants).
The Certification Process: A Manual Nightmare
Product certification is a formal process used to confirm that a product meets established regulatory and safety standards. While the specifics vary by industry and geography, most certification pathways follow the same general arc: manufacturers apply through a recognized body, undergo testing and audits, and – if approved –receive official documentation allowing them to go to market.
Behind the scenes, though, it’s a heavily manual, documentation-heavy process that spans everything from lab testing and factory inspections to regulatory reviews and ongoing surveillance. The process often takes years from submission to certification approval. From my conversations with teams across different certification verticals (food safety, cosmetics, dietary supplements, and OTC drugs), it’s clear they all face similar challenges. Think manual cross-checking of retailer blacklists and state regulations, tracking maximum residue limits across hundreds of countries, and ensuring label compliance across multiple global markets.
Why the Market Works Despite Its Inefficiencies
The system isn't driven by intrinsic demand. Manufacturers often have little interest in certification unless they're forced to comply – if regulations didn't exist, many would skip the process entirely.
The pressure comes from two primary sources. For consumer goods, it's downstream buyers – major retailers and distributors who demand certified compliance from their suppliers to access high-value distribution channels like Walmart or P&G. For regulated products like medical devices, pharmaceuticals, or automotive components, it's direct regulatory requirements – companies simply cannot sell without FDA approval, CE marking, or other mandatory certifications. In both cases, manufacturers pay certification firms not out of desire, but out of necessity, to access their target markets.
The AI Opportunity
AI can solve this documentation nightmare because it excels at exactly what humans struggle with: rapidly processing and analyzing vast amounts of regulatory text. The certification review process is highly systematic as reviewers work through extensive checklists against regulatory requirements, extracting evidence from thousands of pages to compile detailed reports. However, this isn't something a generic LLM can do out of the box. Specialized prompting and domain adaptation are essential to get useful outputs. As AI agents become more sophisticated, the potential exists to move beyond document review into end-to-end certification orchestration, automating everything from risk identification to audit scheduling and ongoing compliance monitoring.
There's also a growing opportunity to integrate digital twins for product testing – enabling virtual simulations to replace destructive testing – and to apply AI for counterfeit detection, a rising threat to product integrity and brand trust.
Several of the major certification firms I’ve spoken with are already exploring AI applications and actively looking to partner with startups that can help modernize their workflows. Many see an opportunity for AI startups to help usher in new levels of precision, scalability, and trust to one of the most high-stakes workflows in global commerce.
The Business Model: A Two-Phase Approach
The business model for an AI startup can target either manufacturers or the certification companies themselves – and ideally, over time, both.
Partnering with Certification Companies
With only a handful of major global players controlling much of the market (e.g., UL, SGS, Intertek), the path to capturing significant market share is relatively focused. The pitch to these established firms is compelling: with AI, they can offer expedited service at premium pricing while processing significantly more volume – creating a revenue multiplier effect, not just a cost-savings play. This approach aligns with their incentive to drive top-line growth, improves turnaround time for clients, and can help reduce auditor workload or backlogs. Importantly, it also leverages these firms’ existing relationships with regulators, retailers, and manufacturers – giving startups a strong distribution wedge.
Selling Direct to Manufacturers
On the other side of the value chain, manufacturers are the ones who must gather and submit extensive documentation, often across multiple countries and standards. For them, the pain is real: teams waste hours compiling redundant paperwork for each SKU and market. By selling AI tooling directly to these companies, startups can offer significant efficiency gains, faster time to certification, and reduced risk of noncompliance. While selling into individual manufacturers requires more effort to scale, this route builds strong defensibility and an opportunity for recurring SaaS revenue tied to product launches or regulatory updates.
Some startups may choose to start with one wedge (e.g., helping manufacturers streamline documentation) and then expand to support certification firms or vice versa. This two-phase approach provides multiple paths to market penetration.
The Transformation is Inevitable
The TIC market may not make headlines, but it’s one of the most critical – and least modernized – steps in global commerce. As industries face growing regulatory complexity, sustainability pressures, and demands for speed to market, the need for smarter infrastructure is becoming inevitable. The next generation of tools won’t just make compliance faster – they’ll make it more transparent, scalable, and trustworthy. For startups and innovators, it’s an opportunity to reshape how global commerce ensures product safety.