Private capital firms drive widespread adoption of AI in portfolio companies
- Nine in ten private capital firms are encouraging the use of AI across their portfolio companies.
- Companies are most likely to be encouraged to use AI to support administrative tasks, data analysis and product development.
- Firms typically support adoption of AI through knowledge sharing between companies, identifying use cases and helping development of AI roadmaps.
- Private capital firms are also using AI to streamline their own business activities, including deal sourcing, investment analysis and administrative support.
A new survey of private equity and venture capital firms from UK Private Capital has found that the vast majority of private capital firms are encouraging adoption of AI in a range of business activities across their portfolio companies.
The research, based on a survey of 76 private capital investors, finds that firms were encouraging adoption of AI across a wide range of business activity including product development, data analysis and business intelligence and administrative functions. By contrast, the use of AI in compliance, legal and risk management functions was less widespread, reflecting the greater regulatory and governance considerations associated with these activities.
|
Business activity |
Encourage AI use |
May encourage in future |
No plans to encourage |
|
|---|---|---|---|---|
|
Administrative and back-office tasks |
93% |
4% |
3% |
|
|
Data analysis and business intelligence |
92% |
5% |
3% |
|
|
Product development |
91% |
7% |
3% |
|
|
Customer service and support |
88% |
8% |
4% |
|
|
Sales, pricing and customer acquisition |
86% |
11% |
4% |
|
|
Communications and marketing content creation |
84% |
8% |
5% |
|
|
Financial reporting and forecasting |
79% |
16% |
5% |
|
|
Compliance, legal and risk management |
71% |
22% |
7% |
Private capital firms are leveraging their depth of experience and resources in a variety of ways to support their portfolio companies in adopting this technology effectively. This includes sharing knowledge and expertise, supporting the development of adoption plans and bringing in external AI specialists.
|
Support measure |
Percentage using |
|
|---|---|---|
|
Facilitating knowledge-sharing and best-practice exchange across portfolio companies |
72% |
|
|
Identifying high-value AI use cases and opportunities |
63% |
|
|
Helping portfolio companies develop AI strategies and roadmaps |
61% |
|
|
Providing education and awareness for management teams |
50% |
|
|
Bringing in external AI specialists, advisers or technology partners |
50% |
|
|
Providing guidance on AI governance, risk and compliance |
45% |
|
|
Supporting the recruitment or development of AI and data talent |
45% |
|
|
Supporting pilot projects, testing and proof-of-concept initiatives |
33% |
|
|
Helping integrate AI into business processes and operations |
32% |
|
|
Providing access to AI tools, platforms or infrastructure |
32% |
|
|
Providing funding or dedicated resources for AI adoption initiatives |
20% |
The research also finds that within private capital firms themselves, AI adoption is now widespread across investment and operational functions.
The most common uses include deal sourcing and market mapping, conducting due diligence and document review, investment analysis, portfolio monitoring, and communications and marketing.
|
Business activity |
Use AI |
Plan to use AI |
No plans to use AI |
|||
|---|---|---|---|---|---|---|
|
Due diligence and document review |
92% |
7% |
1% |
|||
|
Investment analysis and decision support |
87% |
8% |
5% |
|||
|
Deal sourcing and market mapping |
84% |
15% |
1% |
|||
|
Administrative and back-office tasks |
84% |
16% |
0% |
|||
|
Portfolio monitoring, performance analysis and investor reporting |
78% |
21% |
0% |
|||
|
Communications, marketing and content creation |
76% |
17% |
5% |
|||
|
Financial modelling and forecasting |
75% |
24% |
0% |
The impact of this adoption is significant, with private capital backing 13,000 businesses across the UK and generating 7% of GDP. This is supported by analysis of published research carried out by Public First which found that private equity ownership has a long-term positive impact on business productivity, compared to non-private equity backed businesses.
The research is part of UK Private Capital’s broader work on AI adoption, which includes its recent AI Adoption Guide. Informed by industry AI experts from across the industry, the guide helps companies integrate and use AI effectively in their operations.
Commenting, UK Private Capital Chief Executive Michael Moore said:
“Our research shows that private capital firms are at the forefront of encouraging adoption of AI in the real economy.
“By combining capital, expertise and long-term support, private capital firms are playing a critical role in helping companies identify practical uses for AI, build the right capabilities and manage adoption effectively.”
AI Minister Kanishka Narayan said:
“Our ambition is for the UK to be the fastest adopter of AI in the G7, helping businesses across the country become more productive and grow.
“These findings show the important role private capital firms are playing in supporting AI adoption, helping the businesses they back identify practical uses for the technology and put them into practice.
“That kind of support will be vital to ensuring more businesses can make the most of AI and the opportunities it offers.”
Notes to Editors:
For further information, please contact:
UK Private Capital Press Office
Email: [email protected]
About the Private Capital Pulse survey
UK Private Capital surveyed 76 senior decision makers in private equity and venture capital firms. Percentages have been rounded to the nearest whole number. Survey respondents invest across the whole of the UK and at all stages of the private capital investment lifecycle - ranging from seed stage venture capital investors up to large private equity firms. Respondents included investment firm founders / partners, investment directors, finance teams and investor relations professionals.
About UK Private Capital
UK Private Capital is the industry body and public policy advocate for the private equity (PE), venture capital (VC) and private credit ecosystem in the UK. With a membership of 600 firms, we represent UK-based private capital firms, as well as their professional advisers and a large base of UK and global investors. The private equity, venture capital and private credit industry has a vital role to play in driving national and regional growth. Currently over 13,000 companies, employing more than 2.5 million people, are backed by private capital investment in the UK.
