Artificial intelligence is already embedded in the daily work of private equity and venture capital managers, but a growing number of firms in North America expect restrictions on its use as concerns about governance rise. New research commissioned by Ocorian, a global provider of asset servicing, shows that more than half of mid-market private equity and venture capital firms in the United States and Canada believe their use of AI will be curtailed within the next 12 to 18 months. Fewer than one in five expect adoption to expand.
The study, which surveyed senior executives managing assets worth more than $335 billion, underlines a paradox. AI is now almost universally in play across investment decision-making, yet formal rules to govern its use remain patchy.
The survey found that 95 per cent of firms use AI in some form. Nearly two-thirds rely on it for due diligence and data analysis, while six in ten apply it to portfolio monitoring and performance analytics. Around one in three are deploying it for deal sourcing and screening, and more than a third are piloting or testing new tools in live investment processes.
Despite this rapid uptake, governance frameworks are uneven. One in three firms has no formal AI policy in place for compliance, decision-making or operations. Around two-thirds report having policies for investment decisions, and just over half say they have guidelines for regulatory compliance. A further fifth plan to introduce AI policies within the year.
This policy gap is emerging as the main fault line. The research suggests that while AI is embedded in workflows, there is little consistency in how firms monitor its risks. Investors and regulators are expected to scrutinise this inconsistency more closely in the coming years.
Governance pressures on the horizon
Concerns about governance are not abstract. Executives say they expect AI to have the biggest impact in the near term through integration with internal data, enabling faster decisions. Investor communications and reporting are also identified as likely to be reshaped by AI tools.
At the same time, the risks are mounting. Respondents ranked job displacement as the greatest barrier to wider technology adoption, ahead of resistance to change tied to entrenched reliance on Excel, legacy systems and bespoke data platforms. Cybersecurity and regulatory uncertainty were cited as the third most significant barrier.
Recent regulatory signals from Washington have only sharpened the debate. Although the Securities and Exchange Commission withdrew several proposals on AI and cybersecurity, including one on conflicts of interest, the expectation is that scrutiny will return through other channels. State-level privacy laws, global divergence in regulatory approaches and heightened investor demands for oversight mean governance will remain a central issue.
According to Ocorian’s regulatory consultants, the absence of formal policies carries its own risks. Without proportionate guardrails, firms run the danger of operational mistakes, reputational damage and renewed scrutiny. In practice, this means governance is no longer optional: investors will increasingly expect managers to demonstrate that innovation is being matched with accountability.
Balancing innovation with oversight
The findings show that the question facing North American private equity and venture capital is not whether to adopt AI, but how to align its use with governance structures that satisfy both regulators and investors. Firms already deploying AI across sourcing, analysis and monitoring risk undermining those gains if they cannot show how the systems are being controlled.
AI has the potential to transform dealmaking and portfolio management, but the way it is governed may prove just as decisive as the technology itself. For private equity and venture capital managers, the competitive advantage will lie not only in faster insights, but in convincing stakeholders that those insights are reached responsibly.
