The Fullstack AI Governance Opportunity: Why Daxa Should Acquire EnkryptAI

In this Combine & Conquer series in AI, we’re mapping the landscape of Indian and global AI/ML companies and identifying where strategic consolidation can create new category-defining platforms. Across hundreds of companies, our deal engine scores combinations based on complementarity, stack adjacency, defensibility, integration feasibility, and market timing.

Today’s pick - Deal Idea #2 - Daxa + EnkryptAI

Daxa acquiring EnkryptAI emerged as one of the strongest possible combinations in AI governance.

Why? Because, Daxa + EnkryptAI together would be the first to offer full-lifecycle governance, securing the data that goes into AI systems, to the agents and retrieval layers that power them, all the way to the model outputs that reach end-users.

1. The Market Situation - Why Full-Lifecycle AI Governance Is the Next Infrastructure Layer

Enterprise AI adoption has moved far beyond simple model deployment - today's systems span data pipelines, retrieval layers, AI agents, foundation models, and multi-surface outputs. But the governance stack has not kept pace with this complexity.

Most companies still operate with fragmented tools that cover only one surface of the lifecycle:

• Data-in governance (lineage, provenance, PII controls)
• Retrieval & agent governance (how agents act, what data they can query, what knowledge they can access)
• Model-output governance (hallucination detection, jailbreak prevention, harmful content, bias)
• Monitoring/MLOps (observability, metrics - but not policy enforcement)

The problem is simple but fundamental:

No specialised vendor today governs all layers - data, agents/retrieval, and model outputs - as a unified system.

• Data governance platforms (e.g., Immuta, OneTrust, Securiti.ai) go deep on lineage and access but offer no real output safety.
• LLM firewalls and guardrail tools (e.g., Lakera, Guardrails AI, Giskard) excel at output safety but have no data governance or agent oversight.
• MLOps/LLMOps tools track metrics but do not enforce policy or govern behaviour.

Even the large enterprise suites (IBM Watsonx, Collibra, etc.) are broad and compliance-first platforms - not purpose-built for agent/retrieval governance or real-time output safety at inference time.

Meanwhile, enterprise AI systems increasingly depend on:

• Autonomous agents making decisions
• Retrieval-augmented generation pipelines hitting sensitive knowledge assets
• Multi-modal LLM outputs that must be safe, compliant, and traceable

And with regulation entering enforcement phases (EU AI Act, DPDP India, U.S. federal guidance), governance is shifting from "good to have" to infrastructure requirement. This creates a clear market imperative - enterprises need a fullstack governance solution - one unified platform that controls what goes into AI systems, how agents and retrieval layers behave, and what comes out of the models.That's the white-space.

2. Meet the Players

Daxa - Data, Retrieval & Agent Governance Infrastructure

(Funds Raised - USD 3.1mn, Key Investors - Arka Venture, IvyCap Ventures)

Daxa provides a comprehensive AI governance and security fabric for enterprises, with a strong footprint across -

• Data governance: lineage, access control, safe data usage
• AI agent governance: oversight for agent behaviour and retrieval workflows (Pebblo, Proxima)
• Knowledge engine and retrieval-layer governance: multi-cloud visibility, secure query access
• Compliance controls: DPDP, GDPR, enterprise policy enforcement

In short, Daxa governs the input data and knowledge base that is eventually used by AI tools - including agents, RAG systems, and retrieval layers.

EnkryptAI - Model-Output Safety, Guardrails, & Risk Intelligence

(Funds Raised - USD 2.4mn, Key Investors - Arka Venture, Boldcap)

EnkryptAI specialises in securing the model-output layer with:

• Real-time risk detection
• Hallucination and bias scoring
• Toxicity & jailbreak detection
• Multi-modal output scanning (text, image)
• LLM firewall + output guardrails
• Policy-compliant response enforcement

EnkryptAI governs what AI systems say and do once a model has been invoked i.e. governs the outputs of AI tools

3. The M&A Thesis: Building the Fullstack AI Governance Platform With A Self Improving Feedback Loop

Daxa + EnkryptAI combination will create the industry’s first fullstack AI Governance solution. What it means is that - Daxa and EnkryptAI's solutions laid end to end, tackle governance across all points in this value chain -

Input Data → Agents/Retrieval → Models → Outputs → Policy → Feedback.

But, that is just half the story, the real advantage that this combination unlocks looks like this -

1. Daxa upstreams context on the input data to EnkryptAI

• High-risk datasets → stricter output guardrails
• Sensitive knowledge sources → modified response policies
• Agent behaviour → dynamic prompt controls

2. EnkryptAI downstream safety signals to Daxa for governance:

• Hallucinations → investigate retrieval accuracy
• Toxic outputs → revise agent permissions
• Jailbreak attempts → modify data access policies

No standalone vendor does these today even as enterprises are in need for such a fullstack solution, given the rapid rise in AI deployments.

4. Synergies

Product Synergies

• First unified governance platform covering data-in, agents, RAG pipelines, and output safety
• Single policy engine for the entire AI lifecycle
• Unified risk dashboard across surfaces

Data Synergies

• Combine agent/retrieval logs with output-risk scoring for deeper intelligence
• Output signals guide upstream governance
• Better detection of root-cause risks across the AI stack

GTM Synergies

• EnkryptAI’s output-safety customers need data/agentrisk governance
• Daxa’s enterprise customers need real-time model-output guardrails
• Converts both companies from point solutions → platform vendor
• Appeals strongly to regulated industries

5. Why This Is a Winning Move Now

AI Agent Adoption is all the rage

• AI agents are proliferating across enterprises but concerns remain around unpredictability in performance and challenges in audit and governing agents
• No vendor governs agents + retrieval + data + outputs together

Regulation is entering enforcement phase

• EU AI Act enforcement starting
• DPDP enforcement tightening in India
• Governance consolidation is inevitable

Enterprise buyers want platformisation

• Procurement teams are moving away from fragmented point tools
• A unified vendor reduces risk, cost, and audit overhead

Daxa + EnkryptAI - An opportunity to pioneer fullstack AI governance

The enterprise AI governance market has parallels with the hyper-personalization market - enterprises are looking for an integrated governance stack that spans data, retrieval/agents, models, and outputs, all tied together with unified policy and auditability.

Daxa owns the upstream governance surfaces. EnkryptAI owns the downstream safety surfaces. They should come together and create the first credible solution to address this demand for fullstack AI governance.

Analysis conducted by The India Portfolio, an AI-powered deal discovery and advisory platform focused on VC/PE-backed companies in India. If you want, I can send this analysis to your email - just say the word