Many recent headlines have indicated private credit is in trouble.
Here's what the practitioners are saying:
The pressure is real.. the cause is complicated. Redemptions are up - but it's not as simple as loans failing.
The real story right now is relative portfolio exposure.
Investors, including many big LPs, are seeing "software exposure" in their portfolios and have justifiably wanted to reduce it, given AI uncertainty around business models.
Whether the underlying loans justify that fear is still an open question.
What isn't debatable: the redemption pressure is real, and the market infrastructure to absorb it doesn't exist yet.
John Markell is Managing Partner at Armentum Partners, one of the most active growth credit lenders in the technology market, with fifteen years of performance data on software lending that much of the industry hasn’t seen.
Matt Schwartz is Head of U.S. Finance at DLA Piper.
The two are back on the show to break down what's actually happening on the ground.
Here's what's actually under the hood:
By John's data, software credit has been the best-performing segment of private credit over the past five years.
BDC portfolios carry roughly 24% software exposure. Extrapolated across a $2 trillion market, that's around $600 billion in software-related loans.
Back-leverage providers are tightening advance rates, adding pressure one step further removed from the actual loans. And not all software loans are equal: PE-backed at 2x ARR leverage is a fundamentally different risk than minority-owned at 0.5x. The market is treating them identically.
The other side of this story: some firms have been highly concentrated in software and are now reducing that exposure.
But many large asset managers have little or no software credit exposure - and they've been watching this sector closely…
In this episode of the Modern Capital Podcast, John, Matt and Marc cover:
Why software credit has been the best-performing segment of private credit over the past five years and why that track record isn't cutting through the current noise
The PE-backed vs. minority-owned distinction the market is missing: 2x ARR leverage versus 0.5x is a fundamentally different credit risk - the market is pricing them identically
Why back-leverage providers tightening advance rates is adding pressure one step further removed from the actual loans
Why software loans can't be sold the way conforming loans can and what lenders under liquidity pressure are discovering too late
Fear compresses entry prices: who the sophisticated buyers are, why they're watching closely right now and why secondaries are their entry point
Why the secondary market infrastructure to connect buyers and sellers is forming fast
"Right now, software's being shoved in with other conforming loans, and people are going, wait, I see it there, I don't want it. So there has to be another way to do it."
John and Matt are two of the most grounded and deeply informed voices in private credit. This one is worth your time.
Listen to the full conversation here, on Spotify or Apple Podcasts.
John Markell is speaking at The 2026 Silicon Valley Private Credit Summit on May 7 in San Francisco, produced by the Private Markets Forum and sponsored by DLA Piper.
If the state of private credit for technology companies is relevant to your work, this is the room to be in.
