External Data and AI Are Making Each Other More Valuable

In private equity and venture capital, firms have invested in using external data sources often referred to as “alternative data,” a broad term used to describe information sourced from outside a company’s internal systems, including social media chatter, news feeds, government reports, industry databases, anonymized credit card transactions, and satellite imagery. For private investors eager to stay on the cutting edge, there are significant opportunities: from identifying potential investment opportunities and conducting due diligence, to adding value post-investment. While these approaches have been honed by investors, they also offer models for how companies across industries can use alternative data.