How AI is transforming private fund management

What trends do you see with respect to private equity deals and funds?

Two key trends stand out: the sheer increase in contract volume and complexity, and the rising demands of LPs. The volume and length of contracts to review, negotiate, and track have exploded.

Twenty years ago, only a handful of large LPs requested side letters, making MFN processes more manageable. Today, nearly every institutional investor requires a side letter. This impact is compounded by a shift in the GP-LP dynamic, with LPs having more power to demand preferred terms. GPs are increasingly agreeing to investor requests, leading to more complex side letters.

Ontra’s proprietary data underscores this rapid increase in complexity. In the past five years, the average length of side letters has increased by 28%. Since 2019, the average number of MFN clauses in side letters managed per firm has grown by 62%.

The challenge of managing complex side letters is amplified by the larger number of funds overall, as they’ve expanded across geographies and asset classes. Our data reveals that the average number of funds handled by each firm has more than doubled since 2016. These trends highlight a big administrative burden that significantly impacts a firm’s operations.

How do firms move beyond manual management and tracking of fund documents?

The traditional way of relying on a massive spreadsheet compendium, Ctrl+F, and someone’s memory to handle fund documents is no longer sustainable. Yet, according to an Ontra survey, 52% of private market firms still use a mix of email, calendars, and shared drives to manage their critical obligations. Our customers tell us that outdated processes and technology cause many headaches, from managing obligations with 300-page PDF charts to manual responses to SEC exams that can take weeks to finish. These administrative bottlenecks are hindering firms’ ability to scale.

Instead of searching for information across disconnected systems, firms can leverage AI solutions to unlock meaningful efficiency gains. Ontra’s software includes AI-enabled abstraction and search capabilities, helping private fund managers understand their agreements, track upcoming deliverables, and meet commitments to investors.

What is the right way to leverage AI to automate and streamline workflows?

AI is already improving how innovative firms work. Our customers have reduced MFN completion time by 50% and demonstrated side letter compliance in seconds – a task that previously took days. Before firms commit to AI, however, they should first consider data security practices. Find a trusted, reliable AI solutions provider that ensures customer data is never shared with third-party LLMs to train models and is never retained by LLM providers.

Next, look for industry expertise. Generic AI tools lack an understanding of our industry, often leading to inaccurate outputs and time-consuming workarounds. A solution designed for private markets can automate complex compliance workflows and digitize fund documents with the level of accuracy needed in a highly demanding and regulated environment. Finally, prioritize finding a long-term partner who understands the whole problem and will work with firms to build solutions that take on more of their operational burden.

About
Troy Pospisil is the Founder and CEO of Ontra, a leader in AI-powered solutions for private markets. Ontra’s AI platform automates critical private market workflows across the fund lifecycle.

_{This is a sponsored opinion by Ontra. The views expressed are provided as of October 2025, do not constitute an endorsement, recommendation, or any other advice, and are subject to change. The following content does not necessarily reflect the views of BlackRock, Preqin, or any of its affiliates. Ontra is not affiliated with Preqin. Preqin received compensation from Ontra in exchange for publishing this content.}