Private equity companies are cautiously deploying homegrown AI solutions as PE emerges as a major financing option for maturing companies looking for money beyond venture capital. 

The share of PE firms partnering with external AI providers dropped to 52% in 2025, down from 76% in 2024, according to a Dec. 8 Citizens survey. Citizens surveyed 153 leaders at PE firms with a fund size of less than $1.5 billion between Oct. 3 and Oct. 13. 

“There’s a clear trend toward building AI expertise internally,” Mark Lehmann, vice chair of Citizens Financial Group subsidiary Citizens Commercial Bank, told FinAi News.

“While the survey doesn’t show a direct correlation, data security likely plays a role,” Mark Lehmann, vice chair of Citizens Financial Group subsidiary Citizens Commercial Bank said. 

PE firms ranked privacy violations as the top AI-related risk businesses need to be mindful of and are cautious when deploying tech that can compromise data, he said. 

“We also have to be very cautious about where sensitive deal data is processed,” Charles Corpening, chief investment officer at West Lane Partners, told FinAi News, adding that data security is a significant roadblock in mass deployment of AI tech within private equity.  

“Confidentiality is paramount, and it can be compromised by running information through unsecured systems,” he said. West Lane is evaluating developing its own AI models and working with mature AI companies to use it safely. 

Use of AI in PE 

While the firms Citizens surveyed remain cautious about security, they are deploying AI within their own operations. 

• 70% were doing so for investment analysis; 

• 62% for fraud detection; 

• 58% for improved decision making; 

• 55% for automation of financial processes; 

• 55% for data analysis; and 

• 54% for customer service. 

AI is being deployed for due diligence, deal sources, financial data analytics and benchmarking at West Lane, Corpening said. 

“One of the real strengths of AI is benchmarking,” he said. “It enables us to rapidly compare a target to hundreds of peer companies, which gives us a clearer view into whether we’re looking at a bargain, a premium or an anomaly.” 

Using AI for investment analysis shows the power of AI in a core PE function, Lehmann said.  

“When we say firms are prioritizing AI in deal evaluation, we also mean they’re increasingly interested in investing in AI-enabled businesses,” he said. “In fact, 97% said that a successful AI strategy is an attractive trait in potential portfolio companies.” 

PE intertwined with AI 

PE firms are not only using AI to drive efficiency and save money, but they see the tech sector as a potential high-growth segment of the economy, Lehmann said. 

Investment in AI and AI infrastructure is accelerating rapidly, with private equity playing a growing role, he said. 

 “While many of these investments are still in early stages, sentiment is highly positive,” Lehman said. 

PE companies committed big dollars to the AI industry in 2025. Notable deals include: 

• Blackstone announced an undisclosed majority growth investment in AI company NetBrain in July, valuing the company at $750 million; 

• Blackstone made a $50 million investment in Norm Ai in November, valuing the company at $1.5 billion; 

• Vista Equity Partners’ majority investment in Nexthink in October, values the company at $3 billion. 

Even banks are trying to get a slice of the PE world’s investment in AI and are slowly creating their own PE arms to invest in new ventures, Andrew Bateman, executive vice president at Finastra’s lending business unit, told FinAi News. 

“Banks will sort of moe into that sort of … what I would say, more complex, bespoke type lending,” Bateman said. “You’ve seen … that sort of quasi-private credit, where it’s very structured lending.” 

In an era where rates are high and the IPO window has been slow to revive, companies are looking toward private markets to find better deals, Dan Goerlich, U.S. banking and capital markets deals leader at PwC, told FinAi News. 

With major data center buildouts, private markets are expected to play a big role in funding those infrastructure projects in 2026, Bateman said. 

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