How AI will transform Private Capital in 2025

By: Frederik Muelke

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AI is rapidly becoming essential for private equity and real estate investment firms (GPs) to maintain competitiveness, with adoption expected to become standard practice within 2-3 years. The technology's benefits are increasingly recognized across the alternatives industry, extending beyond just tech-forward managers.

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What’s the business case for AI ?

One key advantage is accelerated deal processing. Specific elements of document review can now happen 90% faster – even 98% faster in one Robin use case at Cambridge University - meaning you can now reduce contract review time by 30% or more, overall. 

In the highly competitive real estate market Institutional investors, private equity, private credit, and even family offices are often looking at the same list of deals: every form of competitive advantage matters. Speed is crucial, and AI provides a significant edge in this aspect.

Due diligence processes have seen remarkable improvements through AI implementation. Users of Robin Reports, for example, report completing due diligence 80-98% faster than traditional methods. This efficiency allows for quicker capital deployment, particularly beneficial for real estate vehicles with defined exit periods, enabling GPs to handle more deals within their timeframes.

AI also enhances business development by freeing up time for relationship management. GPs can focus more on maintaining LP relationships and proactively addressing legal issues rather than reactive problem-solving. This shift can improve capital raising prospects and stakeholder communication.

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AI + human expertise is the right balance to work smarter 

The current best practice employs a "human-in-the-loop" approach, combining AI efficiency with human expertise. For instance, in real estate portfolio due diligence, where numerous contracts need review under tight deadlines and complex financing conditions, AI can quickly generate initial due diligence reports. Human experts then verify the AI's findings using embedded citations, transforming what was previously a weeks-long process into one that takes days or hours, without sacrificing accuracy.

This transformation allows GPs to redirect their time toward higher-value activities, whether that's improving work-life balance or strengthening regulatory compliance. By automating routine legal workflows, firms can unlock new efficiencies while maintaining high standards of accuracy and risk management.​​​​​​​​​​​​​​​​

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AI will elevate how legal teams are viewed in  their businesses

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Legal professionals are often seen as a cost center in any organization: the ones who hold things up to tick some boxes before the business folks can get their deals done. 

But today, AI makes it much easier for legal professionals to credibly signal to their business that by using this technology, that no longer needs to be the case. Streamlining legal workflows will unblock deal-making and position legal teams at the center of growth driven by operational efficiency. This is a big win for all legal professionals globally, and it gives individual lawyers new ways to advance their own careers, which is one of the reasons we’re so excited about what we’re doing here at Robin AI.

About

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Frederik Muelke is a former Clifford Chance and Simpson Thacher private equity lawyer turned founder and experienced technology executive. As Head of Alternative Assets, he leads growth and thought leadership across Robin AI’s largest vertical, enabling global private markets leaders in their transition to AI-powered operations and ideas.

This article originally appeared in Real Estate Q3 2024: Preqin Quarterly.

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