Private Capital
Unlock valuations through AI strength and value creation potential in B2B businesses
13 Oct 2025
AI has become a core business driver, making AI-focused due diligence essential for investors to assess readiness, value creation potential, risk, and future growth opportunities.
Assessing
AI as a growth enabler
In the new era of businesses, AI serves as a powerful engine for growth, fundamentally reshaping how companies operate. By leveraging AI, businesses can move beyond manual processes and intuition to make more data-driven decisions. The integration of AI also allows for hyper-personalization, moving away from mass marketing to create one-to-one communications that strengthen customer relationships and engagement. This isn't just theory; it's being implemented across sectors. In a recent case study involving an AgriTech company, a PE firm leveraged Praxis Global Alliance's tech due diligence expertise to validate the target's AI as a core business enabler. The company's AI systems, such as its in-house-developed grain quality scanner and satellite-based farm monitoring platform, serve not only as internal operational tools but also as platforms for new, monetizable services. Beyond internal efficiencies, AI-driven insights became a commercial product in themselves, creating a new revenue stream by being sold to external clients like agri lenders. By monetizing its internal AI projects, the company generated an additional 5–10% revenue, demonstrating tangible business value. These examples highlight how AI can be a strategic asset that can be woven into the fabric of a business to create a significant competitive advantage.
Mitigating
AI-related risks
While the strategic benefits of AI are clear, they come with a distinct set of risks that must be addressed, particularly during a tech due diligence. Beyond the typical security concerns, AI introduces new challenges related to data integrity, bias, and a lack of transparency. A critical risk is the potential for data security breaches, which could expose sensitive information if AI models are not properly secured. The Praxis Data & Network security assessment framework provides a structured approach to evaluating a company's readiness to mitigate these risks. The framework assesses a company's data storage, backup, and encryption protocols, as well as its incident response capabilities.
Productivity
gains and operating leverage A key value driver for investors is a company's ability to achieve significant productivity gains and, consequently, operating leverage. AI plays a transformative role here by automating repetitive, time-consuming tasks, which can free up employees to focus on higher-value, strategic work. AI-enabled SaaS workflows enhanced customer efficiency, delivering productivity gains of 20-25%, showing how streamlining routine tasks allows teams to focus on strategic priorities while boosting operational performance. However, investors must recognize that these gains are not immediate. A study on AI adoption in U.S. manufacturing firms found that initial productivity may decline temporarily before long-term gains are realized. This is often due to the time and investment required for staff training, data infrastructure, and workflow redesign. The most successful firms are often those that were already digitally mature prior to AI adoption.
Organizational
readiness for AI
The successful integration of AI hinges on the organization's readiness and its people. Technology alone is not enough; it's the synergy between people and systems that creates true value. An AI transformation is as much a cultural evolution as it is a technological one. It requires leaders to redefine roles and reskill their workforce to work alongside AI, not against it. This means training employees to excel at uniquely human tasks like critical thinking, creativity, and communication, while AI handles the data-intensive, repetitive work. A Praxis framework, the Product & tech team assessment, provides a clear roadmap for evaluating a team's capabilities, including their education, professional excellence, and vision for the product roadmap. It also assesses the team's ability to adapt to changes in the technology landscape. In the AgriTech due diligence, the company was found to have a well-structured, cross-functional team with a strong mix of mid-to-senior expertise. This reflects a culture aligned with innovation and scale, a crucial indicator of its ability to execute on an AI-first roadmap.
Product & tech team assessment framework: Set of key indicators for successful technology teams
Weaving AI to create new service lines and monetize
better
AI enables businesses to go beyond internal efficiencies and create entirely new revenue streams by monetizing their AI capabilities as a service. This represents a significant opportunity for companies to turn their data and technology into a profit engine. AI transforms software from a tool that simply enables work into a platform that actively performs and orchestrates it. This shift allows companies to align their business model with the value their AI generates, often through consumption-based pricing or hybrid models that combine subscriptions with usage-based fees. A company might, for instance, maintain its legacy subscription model but monetize its new, differentiating AI features on a consumption basis. This approach creates a more scalable model that aligns with incremental value. The AgriTech case study, in particular, illustrates this strategic approach by monetizing its AI-driven insights on farm health to external clients, demonstrating a clear path to creating new revenue streams from its core technology.
Conclusion
AI is reshaping the economic landscape, but its full potential is only realized when technology, strategy, and people are in perfect alignment. For investors, conducting a comprehensive, AI-focused due diligence is essential to uncover hidden value and mitigate significant risks. Ultimately, the winners will be those who see AI not as a cost center but as a foundational pillar for building a more resilient, efficient, and valuable enterprise for the future.