Vista Equity Partners, the private equity giant that's known for its tech investing, doesn't want its analysts using generative AI for due diligence. It's a departure from other investment firms that want to use AI to automate time-intensive work for analysts, like scanning through hundreds of datasets for nuggets of information or summarizing 300-page legal documents.
"One of the things we're debating is do we allow all of our analysts and associates and VPs to outsource a bunch of the due diligence that they do to an AI agent, whether that's OpenAI or whatever it is, and do we trust what we get back," Monti Saroya, a senior managing director at Vista Equity Partners said onstage at the Milken Institute Global Conference Monday.
"The reality of where we sit, at least in today's world — and this may be different in five years — we don't exactly trust what the results that are going to come back," said Saroya, who is cohead of Vista Equity Partners' Flagship Fund, the portfolio encompassing some of the PE firm's biggest tech investments. "And we do want our humans to actually go and read the stuff that's important that's going to make billion-dollar decisions in the diligence side."
Due diligence is an essential part of private equity investing that involves analyzing a target company and its environment for potential risks. Other private equity firms, like the Swedish giant EQT, have introduced generative AI to the due diligence process, BI previously reported. For example, if an EQT investor was interested in acquiring a consumer business in Asia, they could ask the AI platform to pull data from similar companies to better understand dynamics around pricing power, customer sentiment, and willingness to pay.
That's not to say Vista is bucking generative AI entirely.
Vista Equity Partners, which is in the business of buying companies, improving them, and selling them for a profit, employs people whose sole job is to transform operations of portfolio companies and help them scale, Saroya said.
"We turned that engine towards the genAI movement," he said. He added that the firm created a reference guide for its portfolio companies, including the data, cloud, and other software providers needed to be successful, and partnered with those companies for the portfolio companies to use, where appropriate.
"We're going to automate a bunch of workflows, but the reality of like, we own one of the largest insurance underwriters in the world, is that going to be done by an AI agent tomorrow from a clean sheet of paper? It's unlikely," Saroya said.
