AI and Private Capital

AI is perhaps the largest disruptor ever in changing how businesses work, with its impact felt in every industry across the globe. In a very short space of time, every business has had to understand and decide how it can and will be implementing AI into its own business models.

Our industry is no different. From our members we see AI being used for a variety of purposes, from deal sourcing and due diligence to streamlining administrative tasks, at investment committee level, portfolio monitoring, investor reporting and the administration of funds.

As the adoption of AI accelerates, many businesses, including private capital firms, are seeking actionable guidance with which they can understand how they can adopt AI confidently and manage the risks appropriately.

Private capital firms are well placed to implement and encourage AI adoption internally and in their portfolio companies, and back the innovative AI businesses which could help the UK meet the Government’s target of the UK becoming the fastest adopter in the G7.

That’s why we’ve launched our Artificial Intelligence in Private Capital Framework, key resources with governance principles for AI adoption which are applicable and scalable for any firm.
 

Helping firms understand how to use AI

Consisting of a series of materials, the Framework is not meant to be a one-size fits all approach. Every firms' usage and implementation of AI is different. Rather, it gives every firm the same governance framework from which its AI policy can be derived, adapting and adopting to fit a firm’s size, accountability and appetite for risk. Alongside this is a guide on data governance, because data underpins every stage of LP reporting and the investment lifecycle. A structured data governance framework enables firms to treat data as a strategic asset through creating a single, trusted source of truth across funds.

We’ve also produced an accompanying glossary of terms more often used when discussing AI. This will help equip the industry with a shared vocabulary, making communication easier when it comes to this still evolving area. This is by no means an exhaustive list, and it will continue to be updated as the technologies themselves evolve.

Finally, our draft AI use policy template allows firms to tailor the policy to their own needs, setting out clearly their approaches to governance including confidentiality, risk management and human ownership of AI usage within their organisation.

Good governance helps reduce uncertainty, giving firms the guidance through which they can adopt this new technology confidently while managing the risks appropriately.

Firms which establish clear governance, robust controls and appropriate safeguards are better placed to innovate with confidence and realise the full benefits of AI. These technologies are transformative and powerful, and the responsibility and accountability of their use must remain within the hands of the firms which use them.
 

From principles into practice

Our guidelines, glossary and AI policy template are freely available to download and use. As the industry body for private capital, curating and sharing best practice resources are an important part of our role.

In addition to these guidelines, we offer a range of extensive training resources for practitioners on how to both use and harness AI across their firms.

AI is a continually developing technology, and our guidelines will evolve with them. By offering a base from which to develop, we aim to enable firms to effectively fold AI into their value creation plans. By embracing AI, and harnessing it properly, our industry can deliver real economic growth, while ensuring their portfolios keep pace with this rapid technological change.

AI’s influence on our industry will be a key topic at our upcoming LP-GP Summit in September, where we’ll discuss in more detail its impact and how it can be harnessed effectively. Places at Summit are still available and GPs and LPs can obtain complimentary places. I look forward to seeing you all there.
 

Authored by Leon de Bono, 
Managing Director, Industry Development, UK Private Capital
 

View the new AI Framework

Key resources to guide firms of all sizes in adopting AI responsibly and effectively.

Find out more