Private equity firms are increasingly hiring data science experts to support their portfolio companies by incorporating machine learning and data analytics into their investment processes.
Private equity firms are increasingly hiring data science experts to support their portfolio companies by incorporating machine learning and data analytics into their investment processes.
Advances in artificial intelligence are increasing the industry’s appetite for data science expertise, investors and executive recruiters say.
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Advances in artificial intelligence are increasing the industry’s appetite for data science expertise, investors and executive recruiters say.
“If you are someone who is good at data science and dealspeak, you are special and your market value is increasing,” says executive recruiter Korn Ferry Private Markets. says practice leader Joseph Healy.
Small to medium-sized companies such as Access Holdings Management and Frazier Healthcare Partners are adding data science experts to their ranks, while large and early-stage companies such as EQT, Partners Group, and Two Sigma Investments are building large teams. Building. Since launching the Motherbrain data analytics and machine learning platform in 2016, EQT has built his 40-plus team at Motherbrain and shifted the division’s focus from supporting the company’s venture platform to private capital, infrastructure and other businesses. strategy has been expanded. The same goes for its recently acquired Asian investment unit BPEA EQT, the company said.
These companies and others want to find data science professionals with the ability to interpret and translate data for non-experts, and whose communication skills align with technical expertise. I think it’s just as valuable.
“Ultimately, the deals are done by private equity investors,” said Drew Conway, managing director and head of private investment data science at Two Sigma Investments. Get in front of a senior partner in a private equity business and explain what you did and how you think the results will be used. ”
Since Mr. Conway joined Two Sigma in 2019, the private investment data science team has expanded to more than 30 professionals and focuses on strategies across real estate, venture capital, and impact investing. Prior to joining the company, Mr. Conway founded and led a data computing technology startup that he acquired in 2019.
Recruiters say many companies are recruiting talent not only from consulting firms with established data consulting practices like McKinsey & Company, but also from large consumer goods and technology companies and even academic institutions. It is said that they are pulling it out. Before joining Boston-based Berkshire He Partners in 2020 as vice president of data and analytics, Adam Nahari worked as a research scientist in the Predictive Medicine Group at Harvard Medical School.
“Diversity is a big thing,” Nahari said of the appeal of a career in private equity. “Being able to work with different companies in different industries and help them grow and improve. Different companies. I work at a company that deals with many different types of problems and questions that we’re trying to answer.That diversity is not just about the type of research we’re doing or the types of questions we’re trying to answer, but also the types of data we’re working on. There’s also one. We’re working together.”
Ryan Balkoski, executive recruiter and partner at Heidrick & Struggles International, believes that variety of experience and the possibility of someday sharing in the profits of a portfolio is what private equity firms attract to top data science talent. He said it could be useful.
“Private equity typically represents an open door that almost every chief analytics officer is willing to walk through.” [through] Someday,” Burkoski said.
Barkoski says that while not many companies offer a profit share (often called carried interest) to data professionals, it can be a powerful recruiting tool for attracting senior talent, especially for smaller businesses. That’s what it means.
Private equity firms will have to pay a lot of money to attract top talent. Median cash compensation, including base salary and bonuses, for data, analytics, and artificial intelligence roles in the U.S. financial services sector was $551,000 in 2021, higher than the median compensation across all industries of $526,000. However, the compensation was not comparable to similar roles in the healthcare field. The consumer sector is no different, according to a report published last year by Heidrick & Struggles. The Wall Street Journal previously reported that some companies, such as Netflix, are offering much higher pay for certain artificial intelligence roles as demand for such skills continues to rise. Ta.
“Over time, the supply and demand for talent will come into balance, but for now, given how important this capability is to the future of private equity, There continues to be a shortage of human resources.”
This challenge is particularly acute for smaller companies, which often lack the resources of their larger buyout peers, although some are still able to build expertise. Access Holdings Management, a lower midmarket company with approximately $2.7 billion in assets under management, has at least four full-time employees on its ratings development team, including chief data officer Matt Joll and George Shipley, who joined in 2021. added data experts to the team. They are Managing Director of the Value Creation Team, who joined the company in the same year, and Nick Kapauan, Principal of the Value Creation Team, who joined the company last year.
“we, [assets under management]Because we believe in that power,” Kapauan said.
Kapauan said Access strengthens the team’s capabilities in part by partnering with graduate students and research interns from academic institutions such as Carnegie Mellon University and the University of Chicago on specific data science projects. Rahil Reddy, a quantitative analyst on the company’s value creation team, joined Access last year after working with the company on one such project while earning a master’s degree at Carnegie Mellon University.
As more companies leverage data science and artificial intelligence technologies to better compete in the marketplace, the pressure on talent at both large and small companies is not likely to ease anytime soon.
“Over time, companies are going to have to have these capabilities,” said Berkshire’s Nahari. “In five or 10 years, this will be a bet.”
Email Laura Kreutzer at laura.kreutzer@wsj.com.
