In November 2022, when public Artificial Intelligence platforms (such as ChatGPT or AI image generators) were made widely available, they were met with confusion and fascination. The general public wasn’t sure what to make of this new technology that could seemingly do anything with the click of a few buttons, and neither was the business world.
However, what was initially viewed as a fad or temporary oddity quickly cemented as a dominant factor in modern culture, thanks to widespread implementation.
Upon realizing the vast potential for applicabilities in the world of business that the technology held, such as being able to complete vastly more significant quantities of work in far less time and for far less money than a human worker ever could, industries, the world over began to test out how utilizing the technology might work in their respective sectors.
Nowhere was the application of AI technology more transformative than in private equity sectors, as the incorporation of cutting-edge generators revolutionized strategies seemingly overnight. Suddenly, AI-driven automation could enhance the scalability of B2B SaaS companies in profound and measurable ways.
AI in Private Equity: A New Frontier
Monotonous, routine, mundane paperwork was the bane of a human worker’s existence. Especially in financial business fields, no one wanted to get stuck filling out extensive logistical models or spreadsheets. And now, thanks to the implementation of AI, no human worker ever had to again. By leveraging AI in a vast array of different methods, private equity firms are in the middle of redefining their workflows, actively reducing costs, and enhancing product offerings.
What AI has been able to do for the sector is far more than merely eliminate a few undesirable human positions and accelerate the pace of work; its predictive analytics have also charted a bold new course for the industry’s future.
With its unparalleled capabilities in consuming, parsing, analyzing, and ultimately regurgitating data and numbers, AI has proven invaluable prognostication tool for numerous businesses worldwide. These predictive analytics have paired with widespread automation to create better, more efficient, scalable business models.
Case in Point: AI’s Impact on Investment Models
Savant Growth is a private equity firm focused on B2B SaaS companies leveraging AI and predictive analytics. The company has separate funds from US and European investors, wherein they prioritize capital-efficient companies with strong product-market fit.
Additionally, the company offers founder liquidity upfront and operational support to scale, aiming for universal portfolio success by evaluating the market size, sales, and capital efficiency, and AI-driven automation, the company’s team partners with Latin American developers to enhance innovation and cost-effectiveness by assessing market size, sales and capital efficiency, and AI-driven automation.
As Javier Rojas, the founder of Savant Growth explains, “We help on working with their AI thesis and where to create that value and how to capture that when they go to exit.”
Amidst the rapidly paced advancement of AI, portfolio companies need to adapt and integrate AI capabilities into their products and workflows quickly. Rojas emphasizes the importance of “CEO-led AI initiatives to drive the necessary changes and capture the economic benefits” and how Savant Growth suits these needs.
The Future of AI and Private Equity
Implementing AI differs from traditional private equity in several ways. For example, it buys some founder equity upfront to provide liquidity, focuses on capital-efficient companies with strong product-market fit, and provides operational support and executive talent to help the companies scale. It aims to have every portfolio company succeed rather than just a few big winners.
AI is evolving at an extremely rapid rate. It took only a handful of years for the technology to go from being a niche fascination to one of the driving forces of the modern workforce. AI can potentially transform the private equity sector drastically and further democratize widespread accessibility to cutting-edge tools to enhance business scalability.
