New Approach: Backing the AI-Forward GPs: A New Selection Criterion

Section II: Opportunities for LPs · from The State of Private Equity, Part 2B: Challenges and Opportunities for LPs.

AI capability is emerging as a real point of differentiation among GPs, and a criterion LPs can underwrite today. According to McKinsey, only 6% of GPs currently say AI is delivering high impact in their own internal operations and investment processes. However, 70% expect high impact within three to five years, implying a rapid buildout is coming.²⁸

Chart in the full report — source: McKinsey²⁸

For LPs, that gap between today's modest AI adoption and tomorrow's expectations is the opportunity: identifying and backing the cohort of GPs already investing in AI capability now, ahead of the broader buildout, may offer a durable edge similar to the specialist premium.

The firms worth watching are the ones already embedding AI into underwriting and value creation rather than treating it as a side initiative. Bain notes that leading GPs are using AI to drive down costs at the firm level, exploring how the technology can transform deal sourcing, due diligence, and value creation.²⁹

For LPs conducting manager due diligence, concrete questions, such as how a GP is using AI in diligence today, and how it plans to embed AI into portfolio companies, are becoming as relevant to manager selection as track record and sector focus.