As the integration of alternative data with artificial intelligence (AI) systems accelerates, investment firms are experiencing both expanded opportunity and heightened responsibility.
AI is proving highly beneficial in surfacing new signals, streamlining research, and unlocking new sources of
alpha from complex, high‑velocity datasets. At the same time, its use is heightening firms’ exposure to model risk, governance gaps, and evolving data rights—requiring firms to implement disciplined controls, auditable decisioning, and a clear data provenance strategy to effectively translate innovation into durable performance.
These conclusions are based on Lowenstein Sandler’s latest survey of investment advisers at private fund managers (private equity firms, hedge fund managers, and venture capital firms). Since 2019, the firm has conducted an annual survey (except in 2020) to understand the role of alternative data in the investment community. Now a global market estimated at over $15 billion, alternative data includes forms of information not contained in company filings, press releases, analyst reports, or other traditional sources, such as credit card transactions, satellite imagery, and mobile device data.
Results from the latest survey suggest the popularity of alternative data continues to grow. The percentage of respondents currently using alternative data reached 90 percent, up from 67 percent last year and 62 percent in 2023. Only 4 percent of respondents indicated that private fund managers do not expect to use alternative data in the future. Moreover, over two-thirds of respondents reported having alternative data budgets exceeding $1 million.
Access Alternative Data’s Integration into AI Fuels New Opportunities and Challenges.
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