There’s been no shortage of negative headlines about private credit lately — end of the “golden age” of private credit, redemption caps, gating, loan losses, and broad anxiety about what AI means for software companies and the funds that lend to them. Rather than add to the noise, we’ll answer the question we’ve been hearing most: what does this mean for Vistara, and are we pulling back or leaning in?
The short answer is we’re leaning in. But context matters, so here’s how we’re seeing things.
What’s Actually Going On
Private credit has grown into a roughly $2 trillion industry, and with that growth came predictable dynamics: more capital, more competition, and more pressure to deploy at the expense of discipline. The stress that’s surfacing today — redemptions, gating, and loan losses at some of the larger funds — appears concentrated where those groups could write large checks: leveraged buyout financing to private equity backed companies. Over time, leverage got high, pricing got low, covenants got thin and governance lacking. The big question is: will this translate to meaningful loan losses once the dust settles?
In some strategies, the answer is a resounding yes – there will be blood. In other cases, not even a scratch. Not all private credit is the same, and this moment is drawing that distinction into sharp relief. f
The AI Question
The other major narrative driving concern is AI — specifically, the fear that it poses an existential threat to enterprise software businesses. We take this seriously, and have a framework to evaluate it systematically across our portfolio and every new investment we consider.
Here’s what we’ve actually found.
Enterprise AI adoption, for all the headlines, is still in early stages when it comes to in-production applications. While adoption will increase, the value in enterprise software was never really the code. Think of it as an iceberg: the visible layer — the interface, the features, the user experience — is often mistaken for the moat. The real value sits below the waterline: proprietary data, security, deep workflow integrations, regulatory compliance, ecosystem depth, and years of institutional trust built through long sales cycles and genuine customer relationships. The average enterprise runs between 200 and 400 software applications.
That doesn’t mean every software business is equally protected. There are categories — basic workflow automation, commoditized data products, tools with limited integration depth — where Vistara has always been cautious. And there are others where AI is less a threat than a genuine tailwind, accelerating growth and expanding addressable markets in ways that simply weren’t possible a few years ago.
The framework we apply scores every company on two dimensions: AI defensibility — how durable are the revenues and margins in an AI-accelerated world — and AI velocity — is AI driving real, measurable acceleration for this business, or is it just narrative. Defensibility always comes first. We need confidence in the durability of a business before we invest. But we’re also enthusiastic backers of companies with strong AI momentum, because we’ve seen how quickly the right team with the right product can move when the technology is genuinely on their side.
Where Vistara Sits
We’ve always operated in what we consider a distinct part of the market — not start-ups but growth-stage B2B software and tech-enabled services companies, where we do our own direct and exhaustive underwriting on every deal. We’re not in the large-scale LBO market. We don’t buy other people’s paper, we manage each of our loans with a hands-on approach, and our fund structure means we’re never in a position where investor redemption pressure forces our hand on portfolio decisions.
While we pride ourselves on creativity we underwrite conservatively, structure our deals with meaningful protections, and stay close to our companies throughout the life of the loan. These aren’t just features — they reflect how we think about our responsibility to the companies we back and the investors who trust us with their capital. Vistara’s lending levels have consistently landed in the 10% to 30% loan-to-value range — typically less than 1x annual recurring revenue (“ARR”) when many of the LBOs were greater than 2x debt. Our well-honed approach has produced a zero-loss track record over ten years across nearly 50 investments. Zero losses is not a marketing line. It’s a philosophy and the lens through which every investment decision gets made.
What This Means for Founders
The broad concern about AI’s impact on SaaS and ongoing bad press targeting private debt is not simply “noise” but has real consequences for founders and their CFOs who are trying to plan ahead. Some previously active bank and private lenders have or will very soon go quiet. Worse, as the lenders who are pulling back “de-risk” or need liquidity to satisfy redemption requests, they will force loan refinancing even if company performance is strong.
If you’re running a strong B2B technology company, we want to hear from you. We evaluate every opportunity on its own merits — the quality of the business, the durability of the revenue, the strength of the team — not on where market sentiment sits in any given week. We’ve consistently funded companies through health and regional banking crises, all rate and market cycles, and during uncertain moments in the global economy, and our approach hasn’t changed.
At Vistara we are an active participant with our portfolio companies, not just a line item on your balance sheet. We thoughtfully engage with our executive teams in a balanced and constructive manner in areas we have expertise in, such as business strategy, capitalization planning and M&A. And sometimes it’s about just being a sounding board for the CEO or CFO with a different perspective. Our approach seems to be working. Over the 2022 – 2025 cycle where most funds struggled to deliver capital back to investors, we’ve had a record number of exits. Growth companies who operate with discipline always have options and never go out of style.
The Opportunity Ahead
We’re genuinely excited about what the current environment makes possible for Vistara. A significant maturity wall is approaching — a large volume of loans underwritten during the high-activity years of 2020 to 2022 are coming due. A large number of high quality companies will find themselves in need of a new growth oriented lending partner. And with a number of banks and private lenders distracted or pulling back, we’re seeing deal flow and deal quality that we find encouraging. Vistara is and will continue to be in a healthy capital position and will remain active in the market. We are leaning in.
If you’re a founder, finance leader or part of a team building a defensible B2B technology business and looking for a patient, flexible capital partner — or an investor who wants to understand how we’re thinking about this environment — we’d welcome the conversation.
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