Digital Transformation in the Hedge Fund and Private Equity Industry

Lex Research Topics in Corporate Law & Economics Working Paper No. 2020-1

European Corporate Governance Institute - Law Working Paper No. 504/2020

48 Pages Posted: 26 Feb 2020 Last revised: 12 Mar 2020

See all articles by Omololu Bajulaiye

Omololu Bajulaiye

Tilburg University - Department of Business Law

Mark Fenwick

Kyushu University - Graduate School of Law

Ivona Skultetyova

Tilburg Law School

Erik P. M. Vermeulen

Tilburg University - Department of Business Law; Signify (formerly known as Philips Lighting) - Legal Department; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI); Kyushu University - Graduate School of Law

Date Written: January 30, 2020

Abstract

The digital transformation is disrupting the financial sector. Venture capital, private equity and hedge funds are also affected. We see more and more firms implement emerging technologies in their investment process. There are several common trends. Big Data analytics and the use of artificial intelligence in the initial stages of the investment process significantly reduce the information asymmetries and even offer more accurate predictions of the probability of success than human analysts. At the same time, emerging technologies help democratize investment decisions. Consider the ability of emerging technologies to close the expertise gap and create a level playing field for all types of investors. Moreover, technology has the potential to make the hedge fund, private equity, and venture capital industries accessible to retail investors. Crypto markets emerged only recently, but their instantaneous success highlights the demand for alternative investment assets and opportunities across different investor groups.

Keywords: artificial intelligence, big data, blockchain, crypto, hedge funds, investors, limited partnership, private equity, smart contracts, venture capital.

JEL Classification: D22, G20, G24, G30, G41, K22, L26, O16

Suggested Citation

Bajulaiye, Omololu and Fenwick, Mark and Skultetyova, Ivona and Vermeulen, Erik P.M., Digital Transformation in the Hedge Fund and Private Equity Industry (January 30, 2020). Lex Research Topics in Corporate Law & Economics Working Paper No. 2020-1, European Corporate Governance Institute - Law Working Paper No. 504/2020, Available at SSRN: https://ssrn.com/abstract=3528068 or http://dx.doi.org/10.2139/ssrn.3528068

Omololu Bajulaiye

Tilburg University - Department of Business Law ( email )

Warandelaan 2,
PO Box 90153
Tilburg, 5000LE
Netherlands

Mark Fenwick

Kyushu University - Graduate School of Law ( email )

744 Motooka, Nishi-ku,
Fukuoka, Fukuoka 819-0395
Japan

Ivona Skultetyova

Tilburg Law School ( email )

Tilburg, 5000 LE
Netherlands

Erik P.M. Vermeulen (Contact Author)

Tilburg University - Department of Business Law ( email )

Signify (formerly known as Philips Lighting) - Legal Department ( email )

Amstelplein 2
Amsterdam
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Kyushu University - Graduate School of Law ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

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