AI in Private Markets: From automation to accountability
Artificial Intelligence is rapidly reshaping the landscape of private investing and fund operations. A recent panel of industry experts explored how General Partners (GPs), Limited Partners (LPs), and fund operators are leveraging AI, dispelling common misconceptions, and balancing the critical relationship between innovation and risk.
Key Ways to Leverage AI
AI is more than a buzzword—it’s a tool for practical efficiency, primarily by tackling two significant challenges: manual work and data overload.
AI now handles tasks once done manually, such as reviewing thousands of reports and legal agreements. Firms build custom chat agents and use tools like Microsoft Co-Pilot to extract data and standardize report formats.
Total automation is not yet the goal. The most effective approach is a hybrid workflow, where AI extracts the data from documents, such as quarterly reports, and human teams verify information and apply judgment, particularly in sensitive areas like due diligence.
AI is improving transparency and speed in the short term. Tools like custom Co-Pilots are used as a “writing coach” to ensure a consistent, professional, and personalised voice in external communications, and to aggregate and provide tailored data responses to investors quickly.
Debunking Common AI Misconceptions
Despite the rapid adoption, the panel highlighted several persistent misconceptions:
Myth: AI is replacing human judgment.
Reality: Experts agree that AI is an enhancement tool, not a replacement. Human decision-making and judgment remain essential for complex investment decisions.
Myth: AI is reserved for the tech savvy.
Reality: AI is becoming increasingly democratised. Tools are widely available, and you don’t need a massive in-house data science team to start. The focus should be on finding accessible tools and getting started on a small scale.
Myth: All AI is the same.
Reality: Much of what is referred to as “AI” is actually advanced automation. It’s about eliminating inefficient processes, which leads to the next critical point.
Navigating Risk: Policy, Prompts, and Personal Responsibility
Using AI without clear rules risks compliance and reputation. The panel outlined steps to manage these risks:
- Set a clear AI policy before any use. Define which information is restricted, and approve only specific tools (like enterprise Co-Pilot) to prevent IP leaks.
- Master prompt engineering. Vague requests get poor results. Train users to write detailed, context-rich prompts for reliable output.
- Users are responsible for AI outputs. If AI-generated reports have errors, blame falls on the users, not the machine. This rule reinforces accountability and reduces risks.
- Start with small, non-core business experiments to prove value before full rollout. Involve compliance teams early for full documentation and alignment.
The future of AI in private investing depends on a strong data environment. A single, intelligent interface should connect to all internal documents, live data, and market sources. Success requires the right technology, policies, and careful human oversight.
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About Canoe Intelligence
Canoe Intelligence (“Canoe”) is the platform for smarter alts management. We redefine alternative investment intelligence with AI-driven software that directly addresses the core challenges of private markets. Our technology empowers institutions, LPs, and wealth managers to future-proof their alts infrastructure, modernizing systems and providing a scalable foundation for long-term growth and compliance. By automating manual data processing with AI-native precision, Canoe helps clients reduce operational costs and risks, significantly lowering overhead and mitigating errors. Ultimately, our timely, accurate, and comprehensive data enables investment teams to drive superior investment outcomes through deeper insights and more profitable allocation strategies. With Canoe, it’s all about making Alts, smarter. Learn more at www.canoeintelligence.com.
MEDIA CONTACT:
Betsy Miller Daitch
Canoe Intelligence
+1 443-690-6200
bdaitch@canoeintelligence.com
