“Every PE firm should have a CTO” - Jolt Capital

The need for private equity firms to have a chief technology officer is becoming increasingly crucial.

Speaking at yesterday's Real Deals' and The Drawdown's Tech Innovation 2022 conference, Jolt Capital's Jean Schmitt said: "It [the CTO role] will be key to survival," especially as the industry increasingly looks to invest more deeply in the tech sector.

He continued: "If you think about a normal business, you would expect them to have a CTO. A private equity firm is no different — the only reason they don't, is to save on costs. However, it will become increasingly apparent, going forward, who has a CTO and who doesn't."

This also comes as more buyout houses want to grow their tech capabilities in-house, and are also increasingly thinking about building their own propriety technology.

Catherine Cutts, KKR Capstone, believes it would be a serious drain on resources to grow a team of software engineers, but the need to "hire one of two key tech people" is becoming increasingly crucial.

With the average salary of a CTO on the rise, however, it is becoming increasingly expensive to make hires in this field, especially as demand surges. "This is big concern for a lot of PE firms," said Hugh Stacey, IQEQ. "For many, outsourcing tech providers can be a more effective strategy," he adds.

Others argued a CTO is still vital in order for technology to be represented at board level. Jeremy Hocter, Holland Mountain, said only then can businesses gain proper learnings to integrate tech and generate value.

This story was originally published on our sister title, Real Deals.