Leveraging AI to attract private equity investment

Leveraging AI to attract private equity investment

In this fast-paced technological landscape, artificial intelligence (AI) has emerged as a critical factor for companies seeking to attract private equity investment. A well-developed and implemented AI strategy not only showcases innovation but also demonstrates a company’s commitment to staying ahead in terms of scalability, efficiency, and market competitiveness. Here’s how an AI strategy can make a difference in attracting PE capital and some recent examples from the UK market.

Competitive Advantage

A robust AI strategy can provide you with a significant competitive edge, allowing companies to innovate and stay ahead of industry trends. This is particularly appealing to private equity firms looking for businesses that can lead and transform their sectors.

Enhancing Operational Efficiency

Investors are always on the lookout for efficiencies that can scale operations without proportionately increasing costs. AI can automate routine tasks, optimise logistics, and improve decision-making processes. Companies that leverage AI for these purposes can often achieve higher margins and faster growth, making them more attractive to investors.

Data-Driven Decision Making

AI’s ability to analyse vast amounts of data in real-time enables businesses to make informed decisions swiftly. This capability is particularly appealing to private equity investors who strongly value data-driven strategies to identify market opportunities, optimise product offerings, and personalise customer experiences.

Recent private equity backed AI deals in the UK

• Darktrace: US private equity firm Thoma Bravo has agreed to take UK cyber security company Darktrace private in a transaction valuing the company at £4.3bn, which represents a valuation of c. 7.3x ARR (as of 31 March 2024)

The Darktrace platform uses machine learning and AI algorithms to neutralise cyber threats across diverse digital estates, including the cloud and networks, IoT and industrial control systems.

• Luminance: AI platform for lawyers, which sells software to automate the contracts process for legal teams raised $40 million in a new funding round led by Santa Monica-based venture firm March Capital
• FYLD: An AI-powered field work execution platform secures £12M funding round to take their platform global, led by Ontario Teachers’ Pension Plan (Ontario Teachers’). revolutionise the safety and efficiency of field teams

Conclusion

Developing and implementing an AI strategy not only enhances a company’s operational efficiency and competitive advantage but also signals to private equity investors a forward-thinking, innovative approach. As seen in the UK with companies like Graphcore, BenevolentAI, and Darktrace, AI is a compelling factor for investment, capable of driving growth and offering a clear pathway to scaling operations in various sectors.

If you wish to understand how the impact of AI affects the value of your business, and the investment or exit options available to you, please submit your details below.