Artificial intelligence (AI) is rapidly transforming the private capital industry, driving a new era of data-driven decision-making, operational efficiency and value creation. For investment firms, AI adoption is no longer just a competitive advantage – it is becoming existential.

AI now permeates every layer of the private markets value chain, from deal sourcing and due diligence to portfolio management, value creation and exit planning. In today’s fiercely competitive, velocity-driven sector, keeping pace with technological change is the bare minimum. At EQT, we believe our competitive edge relies on staying 18 to 24 months ahead of our main competitors.

Recent years have seen a dramatic acceleration in AI adoption across the sector. By the end of 2024, 82 percent of private equity and venture capital firms reported using AI in some capacity, up from just 47 percent a year earlier, according to Allvue research.

Arguably, the more startling observation here is that 18 percent of the firms were not using AI. Among adopters, however, the technology remains underutilized, with 58 percent of firms reporting only minimal use.

Finding value in hidden signals

AI enables the use of both structured data (e.g. a financial report, general ledgers, payroll data) and unstructured data (e.g. video, social media, news articles and emails) in deal sourcing and due diligence. It helps focus attention early in the sourcing process, effectively driving value by enabling humans to concentrate on the data signals that really matter, rather than getting distracted by all the noise.

While AI-driven media and social media monitoring and sentiment analysis are now standard, the real value lies in uncovering hidden signals. Such signals could be, for example, a dramatic increase in a firm’s job listings compared to its main competitors, which may indicate bullishness about the future and prompt timely investment decisions.

Beyond deal sourcing, AI is transforming value creation within portfolio companies, drawing on productivity uplifts (e.g. full- or semi-automation) and customer-facing innovation. At EQT, we proactively support our portfolio companies to ensure that they capture the ample opportunities AI adds, particularly those that help drive revenue growth.

Generative AI is used broadly, for example, at EQT portfolio company Vistra, a global leader in fund administration and corporate services. Vistra’s customer portal features an AI Compliance Advisory solution called Geni, which can provide legal and regulatory support while agentically carrying out certain compliance actions like updating registered addresses and changes of shareholders.

Other EQT portfolio companies, including SK Shieldus and Avetta, use AI tools to predict future costs and to identify customers at risk of leaving. At pet-care specialist IVC Evidensia, AI helps arrange staff schedules.

In the early stages of the holding period, EQT and the portfolio company management routinely carry out a systematic assessment of infrastructure, processes, talent and data to understand AI readiness and digital maturity.

Building competitive advantage

In sectors such as manufacturing, transportation or healthcare provision, we are looking at hard-to-replace physical processes. Here, AI is typically a pure productivity booster. On the other hand, in sectors such as professional services, media and software, we are dealing with fully digitizable processes and products. Here, AI can be much more impactful.

For example, a research report that once took several consultants days to produce can now be generated by AI in a few minutes. Unsurprisingly, there is growing private capital interest in accountancy and consultancy firms.

Data is the lifeblood of AI, so it is essential that private market firms maximize the value of their data. EQT’s vast data resources help provide a competitive advantage over smaller rivals. By aggregating financial, commercial, and operational data from across the portfolio and beyond, we can enable richer analysis and faster decision-making.

EQT is committed to developing its proprietary internal AI infrastructure while also deepening strategic relationships with leading innovators including OpenAI, Anthropic, Google, AWS and Microsoft, as well as top consultants and advisors.

Importance of AI literacy

At EQT, AI is already embedded in much of our infrastructure; yet, product analytics show that a minority, 20 percent, of investment professional users represent the lion share of AI-connected prompts during Q1 2025.

This KPI, usage concentration, indicates that only a relatively small cohort has fully climbed the learning curve to master AI. Improving AI literacy and changing habits is an ongoing process, one that will continue throughout our careers as AI rapidly evolves. After all, tools like ChatGPT are vastly superior today than they were only six or 12 months ago.

To address this, EQT has developed a roadmap requiring AI literacy across our team of investment professionals. Incumbents, such as EQT, have no choice but to adapt as the landscape shifts.

We start by developing a house view of AI’s impact by sector, which means continuously updating investment strategies to reflect technological disruptions and opportunities. This informs our deal selection, identifying the best opportunities in technology, services, healthcare, industrial tech and infrastructure. We must constantly assess whether these are the best sectors and subsectors or if there’s a need for change.

AI tools and architecture play a crucial role throughout the investment life cycle, including deal sourcing, due diligence, value creation and exit. EQT integrates off-the-shelf tools with its own approach, such as automated due diligence and modeling.

Over the past three to four years, several dozen companies have entered the market with bespoke offerings for the alternative investment industry. EQT aims to be the best in the world at assessing such companies and the tools they offer and to ensure speedy adoption if merited.

Despite all the data and AI tools, it’s still unlikely that machines will fully automate investment decisions or replace human judgment. Humans will continue to have a fundamental role. We have our “superpowers” but are still learning how to use them effectively. Ultimately, it’s all about people, not technology – people with AI literacy.