Why we invested in Capsa AI

This funding will accelerate Capsa’s mission to transform PE workflows through AI-powered innovation.

At Outward, one of our key focus areas is specialised AI solutions for data-rich industries like legal and finance. We’ve seen firsthand how tailored AI platforms, leveraging foundational models fine-tuned with industry-specific data, can provide superior outcomes including expert-level insights and automation of complex tasks.

Capsa exemplifies this approach in PE. By revolutionising the due diligence process, Capsa gives PE funds a competitive edge in an industry ripe for AI-driven transformation. As AI adoption accelerates, Capsa’s solution enables faster, more informed decision-making, which has the potential to reshape deal flow and investment outcomes in an increasingly data-driven financial landscape.

Whilst the private capital industry has experienced robust growth over the last five years (10% CAGR in the number of PE funds and 17% in AUM – source), the industry has historically lagged in terms of technological innovation. The times are changing and here’s why:

1. Rapid AI adoption: Despite historically relying on outdated tools, 33% of PE firms implemented AI solutions last year, with projections reaching c.63% by 2026. This surge indicates a pressing need for innovative technologies.
2. Untapped data potential: Vast amounts of underutilised data offer prime opportunities for AI-powered solutions, promising to unlock new insights and efficiencies.
3. Competitive pressure: The need for speed and accuracy in deal-making makes AI a crucial differentiator in an increasingly competitive landscape.

Capsa is looking to spearhead this change starting with unlocking inefficiencies in the due diligence process. Currently, PE teams spend 25% of their time on repetitive due diligence tasks, costing on average £50k annually per professional and affecting all levels from analysts to partners.

Given the multi trillion-pound size of the industry, even a fraction of savings in initial due diligence costs alone presents a potential market exceeding £10 billion.

Capsa AI assists PE funds in aggregating and structuring the data used for their investment decisions, enabling them to leverage top-tier commercial, open-source, and proprietary AI models from Capsa AI within their operations.

Currently serving PE funds with an aggregate AUM of >£30bn across the UK and Germany, Capsa has demonstrated impressive results since launching only 8 months ago. Early users already reported 20% due diligence time saving, with the platform becoming ingrained in their regular workflows.

Looking ahead, Capsa plans to expand along the PE operations value chain, covering deal sourcing, closing, and portfolio management. This strategic expansion, coupled with collaborative features and security certifications (SOC2), positions Capsa to become the go-to platform for comprehensive analysis and reporting across the PE lifecycle. Unlike competitors focused solely on knowledge management, Capsa’s deep integration into PE workflows sets it apart. Its ability to learn from a wide range of deals across the entire PE lifecycle creates a unique value proposition. As the platform processes more transactions, it has the potential to create a virtuous cycle of enhancement and adoption, offering a growing advantage in the competitive M&A market.

Co-founders Danyal (CEO) and Callum (CTO) exemplify the ideal combination of industry insight and technical expertise required to tackle this problem. Danyal’s firsthand PE experience drives Capsa’s focused development, while Callum translates complex AI into user-friendly solutions. What truly sets them apart is their relentless customer focus and extraordinary execution speed. In just months since launching, they’ve transformed deep PE knowledge into a product delivering measurable value to clients.

These are founders that live and breathe their business. They are exceptionally passionate, dedicated and hardworking. It’s why we are so excited to work with them, why they have attracted top talent to join them, and why they have entrusted early clients to adopt them. We look forward to many more nights and weekends receiving WhatsApp updates on the latest Capsa wins – something we became accustomed to in our due diligence process!

This seed round will propel Capsa to the forefront of AI adoption in private equity, setting new standards for due diligence and beyond. As private markets boom, we believe Capsa will become indispensable for managing private assets.

In an industry where information is power, Capsa isn’t just offering an advantage – it’s becoming a necessity. Without it, PE firms risk falling behind in an increasingly competitive, data-driven market.

We’re backing Danyal and Callum not just for what they’ve built, but for their potential to lead Capsa through future growth and innovation in this dynamic market.