Smart automation in entrepreneurial finance: the use of AI in private markets

Artificial Intelligence (AI) has been used in the last decade across several sectors and industries. Finance is not the exception, and public markets have been highly impacted by firms leveraging machine learning to identify better investment opportunities. Private markets however remain still behind, and the use of intelligent systems has gained ground only recently. This chapter examines the use of AI in private equity and venture capital, showing how these systems are built and implemented today within venture funds. We present several factors that prior studies found beneficial to the success of a company, and how venture capitalists use those insights to identify high-potential start-ups. We finish the chapter with a discussion about a few players in the industry and implications of the use of AI in private markets for policy makers.