|
Talk of AI adoption is pervasive in PE, but would you trust the technology enough to let it manage your own firm? Ethos Capital is testing these limits.
The Boston-based PE firm spent around five years building Private Equity Transformation Research Agent—or Petra—an AI assistant trained on more than 50,000 data sources, including decks outlining every deal the firm has taken or passed on, as well as public information ranging from regulatory filings to news and video.
Today, Petra is woven into nearly every aspect of Ethos’ business, from filtering pitch decks, running initial diligence and monitoring portfolio companies to managing investor relationships. Ethos even uses AI to track its own employees’ work, according to Fadi Chehadé, co-founder and managing partner at the $7 billion investment firm.
Launched by Chehadé and Erik Brooks, two Abry Partners alumni, in 2019, Ethos targets middle-market companies with an enterprise value of $200 million to $2 billion, focusing on supply chain and logistics, insurance and financial services and digital platforms.
The firm manages a $512 million closed-end fund, co-investment capital and a multi-billion-dollar continuation fund recently raised to house Identity Digital, a portfolio company it backed in 2021. The CV has brought in new commitments from big-name managers, including Accel-KKR, TPG, Neuberger Berman, CVC Capital Partners and Coller Capital.
Ethos’ AI tool runs the first pass on every pitch that crosses the deal team’s desk, scoring a target against a set of preferred metrics, identifying strengths and risks, conducting market analysis and rating the management team. What once took two to four weeks is now compressed to about half an hour, Chehadé said.
Petra also has visibility into the firm’s inner workings. It produces a digital footprint of every employee, which helps managing partners like Chehadé to stay on top of what they are doing. It sees every piece of correspondence: every email, every calendar invite and every Slack message and directs the information to the people it determines need it.
“When I log into Petra, it knows me, and it talks to me,” Chehadé said. “If I ask it what’s happening on a deal, it reads every email, every calendar invite and every note in the entire company and comes back to me with a digest based on who I am.” |
