proSapient

Just back from a scintillating few days in sunny Orlando where I attended PEI's flagship event #Nexus2025 and heard today’s market views from heavy hitters in the highest echelons at private equity giants including Kenneth Caplan, Global Co-Chief Investment Officer at Blackstone, Brian Bernasek, Partner and Co-Head of Americas Private Equity at The Carlyle Group, David Sambur Co-Head of Equity at Apollo Global Management, Inc., Bill Ford, Chairman and Chief Executive Officer at General Atlantic, Stephen Ross, Founder and Chairman at Related Companies and Orlando Bravo, Founder and Managing Partner, Thoma Bravo, among others. What was front of mind for them? ·        Opportunistic possibilities in today’s tumultuous geopolitical and macroeconomic setting. Everyone riffed about investment implications from today’s trade warfare. History often serves as a prompt to consider the future and so it was at #Nexus with references to the post dot.com bubble and Global Financial Crisis eras as providing amazing deals. ·        Nonetheless, snapshotting today means accepting degrees of transactional paralysis as markets hate nothing more than uncertainty and few can predict how and when the dust on all the government saber-rattling will settle. Once it does, expect a flurry of deal activity as pent-up capital markets feel the release. Being an exception, lower-midmarket and emerging managers had a very active start to 2025. ·        Engage generative AI (GenAI) to progress business plans. GenAI tools geared to operational productivity gains and data synthesis are already pretty effective, but there is just not enough information on private companies according to the private equity leaders. Luckily proSapient can source this necessary information for them. The consensus at Nexus is that generative AI will create new markets and jobs. Naturally, proSapient believes that too. All in all, a captivating few days and plenty for me and the proSapient leadership team to mull. Thanks for having me PEI. #Nexus is a hotbed of thought leadership. I hope to return!

Some takeaways from this morning's Financial Times "Augmenting Private Equity Expertise with AI" webinar with Toby Popplewell (PwC), David Floyd (Permira), Alexander Fred-Ojala (EQT Ventures) and Eduardas Afanasjevas (TDR Capital). - Generative-AI is primarily viewed as a tool to improve efficiency in data analysis and process execution, supporting but not substituting for human judgment in investment decisions. David contributed that at Permira a self-reported survey indicated a 10-15% productivity improvement in investment professionals. - Maintaining human-in-the-loop approaches remains essential for ensuring accuracy, building trust in AI outputs, and mitigating potential biases. - The effectiveness of AI in PE/VC is heavily dependent on the quality and careful curation of input data. This falls within the first of 3 layers making up adoption: Data Input, Foundation Model, Software/UI - Improved data observability, facilitated by AI, has shifted attitudes at the investment committee level, where the expectation is that they can directly interrogate each data source that informs a decision. - Measuring the return on investment for AI in deal-making, particularly for qualitative outcomes, is challenging due to the lengthy feedback loop. So measures can be made on how productively investment professionals can conduct their work, but not on the overall impact on deal quality, yet. - AI integration in PE is still in its early phases, with substantial future development and strategic implementation required. This last point aligns with proprietary proSapient research that indicated less than 50% of PE firms are currently using Gen-AI tooling for research purposes, lagging behind the average of all segments we support with expert intelligence. This also aligns with research conducted by Allvue Systems that shows 58% of PE firms use AI to a very limited extent, with compliance issues and data quality concerns driving hesitancy. Even at this early stage of AI adoption, it is clear that solutions, like those from proSapient, are poised to reshape how PE conduct deal sourcing, evaluation, and execution, a point underscored by one panellist; "The purpose of due diligence is to understand what you do and do not understand well, about a deal or market. Due diligence is just a series of questions and answers which results in a decision of whether or not to invest, and if so, for how much. LLMs are just question & answer machines, so the logic is that they are perfectly suited for this work."