Key Takeaways

  • Private equity firms, including those partnering with OpenAI and Anthropic, are moving beyond AI proof-of-concepts, integrating tools for investment and value creation efficiency.
  • The core tension: Will AI act as a powerful equalizer, giving small players an "army of consultants," or will its true benefits accrue mostly to larger firms who can scale its deployment?
  • While AI offers immediate gains in efficiency for anyone, the ability to integrate and scale AI across a large portfolio, as Emilio Domingo suggests, will remain a very important factor.
  • The private equity industry is seen as inherently innovative and likely to stay at the forefront of AI adoption, setting a precedent for other sectors.

The Disagreement

Ross Butler and Emilio Domingo wrestle with AI's dual nature: Is it the ultimate democratizer, or does it just amplify existing advantages? Butler, speaking from experience as a small business owner, sees AI as an “unbelievable” power for leveling up. It feels like an "army of consultants" at your fingertips, allowing smaller players to compete with much larger businesses.

Domingo agrees that AI is rapidly transforming how private investors approach everything from deal sourcing to value creation. He notes, “we are seeing sophisticated investors investing deeply and thinking very deeply on how automation, LLM capabilities, AI more broadly is going to be a tool that it's increasing the efficiency, increasing the performance.” The immediate gains are undeniable for any firm, regardless of size.

Yet, Butler also looks to history. He sees the current excitement as the “early fruits of AI,” but warns that “it's the people that can really capture this stuff at scale… that are going to be the winners.” Domingo echoes this, stating that while AI increases the ability of managers to generate better investment decisions and create more value, you will “also see… a scale being a very important factor.” This suggests a tension: a quick win for the small player, but a long-term advantage for the giant.

Who's Right (and When They're Wrong)

Both Butler and Domingo are right, but in different timeframes and contexts. In the short term, AI is absolutely a leveler. A small team with a subscription to a powerful LLM can generate market research summaries, draft compelling outreach, and automate basic analytics at a speed and quality that was impossible just a few years ago without a dedicated team. This immediate boost in efficiency and capability feels like an army of consultants, allowing founders to punch above their weight on output.

However, the history of technology shows that early democratizing tools often lead to later consolidation and scale advantage. The long-term winners in AI will likely be firms that can integrate these tools deeply, leveraging proprietary data, building custom models, and embedding AI into every process across an entire portfolio. This requires significant capital, engineering talent, and a strategic vision that smaller firms often lack.

For a founder, the mistake is assuming the initial leveling effect lasts indefinitely. While you can out-execute a larger, slower competitor using smart AI, you won't out-resource them on building bespoke AI infrastructure. The “winner-takes-all” scenario isn't about simply using AI, but about owning the ecosystem of AI deployment and data application.