AI Revolutionizes Investment Industry, But Human Insight Remains Key

Investment firm executives discussed the transformative impact of Artificial Intelligence (AI) on the industry at the Israel Private Markets Summit. Nicolas Chaouplé of Veritas Capital stated that as AI models become more accessible, competitive advantage will shift from the models themselves to the unique data and value extraction capabilities of investment firms. He noted that while AI "beta" offers general benefits, "alpha" comes from proprietary information.

Chaouplé predicted that AI technology will become a "commodity product" over time, with true value residing in the unique data held by portfolio companies. Hana Dolgin of Vista Equity Partners echoed this, emphasizing that AI models provide general intelligence, but access to context, trust, and scale are the real differentiators. She cited Duck Creek, an insurance underwriting solutions provider in Vista's portfolio, as an example of a company with unique professional data not shared with general AI models.

The discussion also addressed the gap between rapid technological advancement and organizational adoption. Chaouplé, who previously identified AI "hallucinations" as a major issue, now sees the primary barrier as internal company processes, "what's missing right now is actually us," referring to workflows, willingness to adopt, and data organization. Dolgin expressed surprise at the speed of change, noting that technological shifts typically took longer to impact business models in her 25 years at Vista.

Cécile Meyer-Lévy of Tikehau Capital shared that AI is already altering credit risk assessments, becoming part of the underwriting process. However, she cautioned that implementation doesn't guarantee efficiency or cost savings, citing a large insurance company that stopped using Copilot after seeing no improvement. Meyer-Lévy stressed that AI's economic value lies in freeing employees from repetitive tasks, distinguishing automation from job replacement.

Chaouplé provided an example from Veritas Capital's portfolio in the industrial sector, where AI transformed production, cutting new product launch times from two years to six months and increasing output by up to 30%. While AI's impact on costs is becoming clear, translating it into revenue growth remains a challenge. Dolgin confirmed that all Vista portfolio companies are pursuing AI-driven cost savings and sees growth opportunities in software companies expanding into areas where organizations spend on labor, through AI agents. Vista operates an "agent factory" to help portfolio companies develop and implement AI solutions.

Chaouplé remained cautious about revenue growth, noting that while firms with unique data assets grow faster, it's hard to isolate AI's contribution. The future of junior employees was also discussed, as AI can now perform tasks like preparing presentations and data processing. Meyer-Lévy believes the era of junior staff spending long hours on presentations is ending. Chaouplé views this as an opportunity for junior employees to engage earlier in management meetings and decision-making processes. The executives concluded by reiterating the importance of human involvement, with Dolgin highlighting the probabilistic nature of AI outputs and Chaouplé advising the use of AI as a critical tool to challenge assumptions and analyze past mistakes, cautioning against blind reliance.