Driven by AI, Private Funds’ Use of Alternative Data Continues to Grow, Survey Finds

Lowenstein Sandler recently issued its fourth annual alternative data survey, which took the pulse of more than 100 PE firms, venture capital firms and hedge funds. “The use of alternative data is here to stay; it continues to strongly influence the decision-making of investment professionals across all areas of the investment management industry,” Lowenstein Sandler partner Scott H. Moss told the Private Equity Law Report. “The emergence of generative artificial intelligence (AI), with its potential to help firms process enormous quantities of information, is one of the most significant factors driving this continued use.” The survey covered the industry’s use of alternative data; data sources; alternative data budgets; key concerns over alternative data; use of AI; and use of alternative data in connection with the incorporation of environmental, social and governance factors in the investment process. This article distills the survey results, with additional commentary from Moss. See “PE Industry in 2024: Navigating an Uncertain Examination and Regulatory Environment (Part One of Two)” (Jan. 11, 2024); and “SEC’s Proposed Conflicts Rules for AI Erode Primacy of Disclosure and Investor Consent Principles” (Sep. 7, 2023).

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