PitchBook News - Why PE isn't all-in on AI

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The Weekend Pitch

February 23, 2025

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

(Chloe Ladwig/PitchBook News)

AI is rapidly changing how private equity managers do deals. It is determining which firms will be most competitive, altering the day-to-day jobs of junior staffers and freeing up time for all employees to do more meaningful work.

But at less-established firms, some find the juice is not worth the squeeze.

I'm Madeline Shi, and this is The Weekend Pitch. You can reach me at madeline.shi@pitchbook.com or on X @Madelin94615831.

Many firms are embracing the technology to support their work across the investment cycle, from scouring data rooms to do due diligence to leveraging financial data and meeting notes in order to identify acquisition targets. AI can also streamline fund formation and simplify legal work in fundraising.

Early adopters praise the technology, won over by its prowess and the head start it gives them over rivals. They recognize its value in freeing up labor for new challenges.

“Firms that do not invest in these capabilities might find themselves disintermediated by those using it to their advantage, either to make better investment decisions or to be a better value-added partner to their portfolio companies,” said Tim Osnabrug, an investment partner with Investcorp’s Strategic Capital Group (ISCG).

“Whatever it is, you gotta get involved now.”

Trivia

On Feb. 20, KKR announced that it had agreed to buy Japanese IT company Fuji Soft in a $4.1 billion take-private deal. The deal ends a long saga between KKR and Bain Capital. When did KKR submit its initial offer for Fuji Soft?

A) January 2024
B) August 2024
C) December 2024
D) January 2025

Find your answer at the bottom of The Weekend Pitch!

Supply chain tech's
Q4 success story

(Mr. Cole Photographer/Getty Images)

Waymo's outsized $5.6 billion round propelled a spike in deal value in the supply chain tech industry in Q4. But the sector held its own even without the Alphabet-owned company's largest funding yet.

VC dealmaking in the space hit $3.5 billion even without Waymo, the highest quarterly haul since 2022, according to our recent Emerging Tech Research. The report also covers segments including last-mile delivery, warehousing tech and supply chain management, which all held stable or grew at the end of 2024.

get the report

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Stock index replicates
PE buyout portfolios

Morningstar and PitchBook launched a new tool to replicate PE returns using publicly traded stocks: the Buyout Replication Index.

A neural network powered by PitchBook's buyout fund and deal data identifies public companies that exhibit similar characteristics to PE take-private targets. This model-based portfolio is then adjusted for leverage and sector exposures to better replicate PE buyout strategies.

Our backtest spanning the past decade suggests the index would have outperformed the Morningstar US Small Cap Extended Index by about 6 percentage points on an annualized basis.

The index is being used to power a fund managed by Third Wire Asset Management. LPs can also leverage the index as a better way to benchmark buyout funds.

read the launch note

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Quote/Unquote

(Jenna O'Malley/PitchBook News)

“What has happened as pre-seed became so large, it’s lost its original relevance. More and more founders are essentially calling their initial capital raise a ‘pre-seed,’ [but] they have revenue, they’re not experimenting with ideas. … It’s created a lot more options, but it’s also created more confusion.”

—Anamitra Banerji, Managing Partner at Afore Capital. Read about Afore’s latest fund and the redefining of pre-seed VC rounds here.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q4 2024 Industrial: Aerospace & Defense Report
Q4 2024 Medtech Report
2024 Annual VC Emerging Opportunities
2024 Annual US VC Valuations Report
Analyst Note: Gaming SaaS VC Activity
Analyst Note: Q4 2024 UK Snapshot

Trivia

Answer: B

KKR submitted its initial tender offer for Fuji Soft in August 2024, but Bain Capital soon came in with a higher bid. The two PE firms have gone back and forth over the company since then. Read more about take-private deals in Japan here.

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This edition of The Weekend Pitch was written by Madeline Shi and Nadine Manske. It was edited by Heather West and Ron Prichard.

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PitchBook News - Why PE isn't all-in on AI

Trivia

Supply chain tech's
Q4 success story

Stock index replicates
PE buyout portfolios

Quote/Unquote

Stay tuned

Trivia

Sign up for our newsletter

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PitchBook News - Why PE isn't all-in on AI

Trivia

Supply chain tech's Q4 success story

Stock index replicates PE buyout portfolios

Quote/Unquote

Stay tuned

Trivia

Sign up for our newsletter

Older messages

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Supply chain tech's
Q4 success story

Stock index replicates
PE buyout portfolios