Private market technology investing has always been a demanding choice. For much of its history, success depended on disciplined underwriting, rigorous due diligence, and experienced partners well versed in operating with scant information and extensive feedback loops. This meant participation was limited to those who understood that outcomes are shaped as much by process as they are by opportunity.

In today’s environment, the interest in private market technology has expanded across private banks, multi-family offices, and ultra-high-net-worth investors who previously focused on public markets or more traditional investments. Requests for access have been driven by the emergence of artificial intelligence. Capital has followed quickly, and usually faster than the frameworks that are needed to deploy it.

What is less visible is how this influx of capital has coincided with a meaningful change in how investors approach it. Many new participants are entering private markets without the experience, capability or partnerships that used to define successful outcomes – a fact that skews the risk of participation.

AI adoption is here, and its impact on productivity, business models, and competitive dynamics is seen across sectors. Institutions and leading academic bodies consistently identify advanced technologies, including AI, as drivers of long-term economic growth.

The issue here is not about whether AI matters, but how it has changed investor behaviour, particularly in relation to private markets. By compressing decision timelines and amplifying the information around this, AI has now altered how risk is perceived and when capital is released, which has made private market investing feel more familiar and seamless than it actually is.

In recent years a handful of AI-related companies have delivered extraordinary outcomes within a small period of time. However, they were dependent on a specific set of conditions that are unlikely to be repeated at scale.

Strong outcomes have a way of distorting behaviour. Investors may start to apply this thinking across whole markets, assuming it will be repeated elsewhere. Familiarity with success stories then replaces the need to understand any underlying risks. As access to private markets expands, they can begin to resemble momentum-driven environments.

This trait is most pronounced among inexperienced investors. Frameworks developed for public equities or real assets are often applied instinctively, but private-market technology violates many core or long-held assumptions. The result is a widening gap between capital deployment and genuine capability.

Unlike public markets, private markets are environments that offer no continuous price discovery along with scant immediate feedback. Information is selectively disclosed, governance rights vary and liquidity is uncertain in timing and magnitude.

Most importantly, outcomes are highly dispersed. Within the past decade, venture capital has exhibited the widest gap between top-and-bottom-quartile returns of any major asset class. A small number of investments account for a disproportionate share of value creation, while many companies underperform or fail entirely.

For experienced investors, this can be addressed through pacing, selectivity and due diligence. For new entrants, it’s a process that is often underestimated, particularly when recent performance has masked how unforgiving the structure truly is.

AI has intensified these events rather than diminished their occurrence. Deal processes now move faster, competition is heightened, and information trickles in before any kind of resilience has been demonstrated. Valuations commonly reflect some grand expectations of future dominance rather than any trusted durability.

Information and data in private markets are not benchmarked or standardised, and performance metrics are difficult to verify in real time. This means that any access to insight depends on the relationships and experience investors have surrounding them. In periods of enthusiasm, the gaps between all of these factors dilate. Swift reactions are rewarded, scepticism is reframed as hesitation and decisions are driven by connection and coherence rather than any verified fundamentals.

In these situations, governance and operational risks tend to surface slowly. Early and growth-stage technology companies prioritise pace above structure, which is rational if you’re a founder, but introduces material risks for investors.

These issues rarely appear in flashy pitch materials, but emerge through due diligence, primary research, and engagement with customers, competitors and industry experts. Powerful technology does not compensate for weak governance. In many cases, it accelerates downsides by enabling companies to scale before controls are in place.

The most concerning development in private market tech lies in the belief that participation has become straightforward. This has been reinforced by the recent gains from tech investments, simplified access and compelling technological stories and events.

In public markets, such false confidence is often corrected through liquidity and price feedback. In private markets this feedback is delayed, and by the time reality bites, the capital is already committed. It is this delay that makes the current financial and technological environment particularly hazardous for new and inexperienced investors.

Experienced investors move deliberately, are selective rather than comprehensive, and spend more time stress-testing assumptions. For them, saying “no” is an integral part of risk management.

They also understand that private markets can’t be navigated casually. Whether capability is built internally or accessed via a partnership, it is the due diligence, governance oversight and alignment that matter most, especially when information is scarce, and feedback is so languid. This has always held true in private market technology, and recent conditions have simply made it more apparent.

AI will continue to reshape industries and create long-term opportunities for many, just as capital will continue to seek exposure, and innovation will consistently attract attention. The challenge for investors today is not whether to participate, but in what capacity.

Recent successes have distorted the expectations and lowered perceived barriers in an asset class that does not reward superficial interactions. Moving quickly without a framework or guardrails in place is not a neutral decision, and access in itself does not equal understanding.

Private market technology, and the investment process that goes with it, favours patience and humility, rewarding those who possess experience and perspicacity. A sound and measured approach, with the support of seasoned partners, won’t make a difference out of choice – it the most crucial requirement imposed by conditions of the asset class itself.