Following their panel discussions at Real Deals’ Tech Innovation Conference 2023, we chat to Suzanne Pike, Partner and Head of Origination, and Ash Patel, Head of Cyber, to share their views on how tech and cyber are evolving in the world of private equity.
Suzanne, you joined the panel discussion on the role of technology in deal sourcing, execution and exit. How do you think incorporating AI/Machine learning is evolving in origination?
It’s something that’s really transforming the way that firms can originate. Our proprietary AI platform, Amplifind™, is the tech backbone of our origination processes, from sourcing to converting deal flow.
On the lead sourcing side, it is constantly retraining itself on our own Salesforce data, helping us to surface the right leads. Origination has a natural tension, where if you don’t look at smaller fast-growth businesses, you will not get early access to really exciting businesses. On the other hand, if you broaden out your range, it throws out a huge number of companies, which no human has the time to trawl through.
For us, Amplifind™ has solved for that conflict by automating prioritisation, serving up leads with the highest potential to become ECI deals. That has led to an eight-fold improvement in conversion from leads reviewed to opportunities.
The platform is key to us throughout the pipeline process. For any company in our universe, we’ve leveraged OpenAi to generate an automated profile with detailed financials and rich business descriptions. That has not only cut the time it takes for us to review leads, but it also helps inform deal team thinking, as they have a fantastic overview of any company at the tip of their fingers.
As all investors look to meet firms earlier, this is a very powerful way to compete.
How can firms make the most of this technology?
Firstly, the vision should be maximising automation to free up time for our greatest asset, our people. Tools like Amplifind™ are fantastic precisely because they free up humans to do the things that humans are good at. That means relationship building, deal judgement- the really important things that make a difference to a partnership.
Secondly, it’s important to remember the tools are incredibly powerful, but AI/ML is only of value if its pointed or trained on well managed data. You have to get the basics right as a springboard for the quick and powerful wins AI can offer.
And lastly, it is easy to get distracted by the newest technology, but it’s more important that what you’re doing is aligned to business strategy. To make a success of it, it should be truly embedded in every stage of proprietary processes.
Ash, you joined the panel on cybersecurity and how PE firms are protecting themselves and their portfolio against emerging cyber threats. At both, how do you think awareness of cyber risk has changed?
I think now, Boards are much more aware of the risk, it’s no longer just a focus of IT teams. The awareness of cyber as a risk to reputation and the bottom line has meant it’s now higher on the board agenda. No one wants to be reactive to a cyber event, so increasingly that means looking to put an information security program in place and having a good assessment of cyber resilience ahead of time.
How does that translate to helping portfolio companies?
We often have good insight in a company’s cyber resilience prior to investment, whether that’s as part of Tech DD, or at a high level we might use external tools like Security Score Card to get an idea of any potential weaknesses. When we’re invested, we see it as part of our duty and good governance to make sure we can help them to monitor cyber risk and provide real support for portfolio companies to fix any potential issues.
We benchmark ECI and our portfolio to ensure a certain level of compliance on an annual basis, and then I support them with a cyber gap analysis to help them identify areas which need to be mitigated. I think having that external sounding board is really helpful, and as we’ve helped other companies progress on certain frameworks, we can share those lessons that we’ve learned.