Abstract

The number of private equity (PE) firms that have started to use artificial intelligence (AI) in investment decisions has risen rapidly over the past 10 years. This article provides a detailed account that can serve as a template for others in the industry who wish to make better investment decisions using AI. The news is both good and bad. The increased use of AI in PE and venture capital will greatly increase operational efficiency and transform the ways in which partners perform their work. It will allow for the entry of new firms but will also lead to a technological arms race and is predicted to cause an eventual industry shakeout. TOPICS:Private equity, big data/machine learning, performance measurement Key Findings ▪ The number of private equity firms that have started to use AI is rising rapidly. ▪ Use of AI will greatly transform the deal-making process. ▪ By increasing efficiency, AI will likely cause an industry shakeout.

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