Scoring the Best and Worst Private Credit Software Portfolios

What's New

A recent analysis from PRISM scored the ten largest BDC software lenders using its Velcro Credit Quality framework and found a 20 point gap between the strongest and weakest portfolios. Goldman Sachs Private Credit scored 82, anchored by infrastructure layer positions like Jeppesen, Entrust, and Netsmart, while Blackstone Secured Lending scored 62, with over a third of its software book carrying mid market or equity like risk despite the secured lending label.

The Velcro Score Framework

The Velcro Score measures how tightly a software company grips its customers' operations — and therefore how predictable its cash flows are when those customers come under pressure. It classifies every software borrower across three axes:

• Stack Depth: How deeply the product is embedded, from infrastructure platforms like core banking and ERP (hardest to replace) down to point solutions like survey tools and website builders (easiest to swap).

• End Industry Budget: Whether the buyer's spending is regulatory driven and recession resistant (financial services, healthcare, government) or discretionary and cycle exposed (early stage tech, SMB, direct to consumer).

• User Function: Which executive controls the renewal decision, from CFO and compliance (last budget cut) to HR and internal comms (first budget cut).

Those three inputs produce four credit archetypes ranked from stickiest to most vulnerable:

• Utility Software: Near zero churn, budget inelastic, replacement measured in years. Comparable to investment grade utility bonds.

• Operational Backbone: High switching costs, mild cyclicality, durable through moderate stress. Comparable to high grade leveraged credit.

• Growth Dependent: Performs well in expansion but faces seat count and budget pressure in contraction. Comparable to mid market leveraged loans.

• Discretionary Tool: Substitutable, vulnerable to cost cuts and AI displacement, with ARR deterioration that lags 6 to 12 months behind economic stress. Carries equity like downside risk.

Why It Matters

Standard reporting treats all software exposure as one sector allocation, making it impossible for LPs and allocators to distinguish between a fund loaded with sticky infrastructure software and one concentrated in substitutable tools. A 20 point credit quality gap across top tier BDCs is not a rounding error — it represents fundamentally different downside profiles that only become visible when you classify by how hard each software company is to rip out in a downturn.

Big Picture Drivers

• Utility concentration varies wildly: Goldman Sachs PC holds 46% of its software book in Utility Software with zero Discretionary exposure, while Blackstone Secured Lending holds just 20% Utility and 10.5% Discretionary.

• Operational Backbone is the consensus trade: Most of the ten largest lenders cluster between 40% and 54% in Operational Backbone software, making it the default allocation rather than a differentiated bet.

• Growth Dependent exposure separates the pack: Funds scoring between 65 and 72 tend to carry 22% to 26% in Growth Dependent credits, where seat count and budget exposure create contraction vulnerability.

• Named positions reveal the gap: Blackstone PC's largest low Velcro positions include Zendesk, Medallia, Dropbox, Sitecore, and Squarespace — companies with meaningful substitution risk that Goldman Sachs avoids entirely.

• Book size does not equal book quality: Blackstone PC runs the largest software book at roughly $25 billion, but its Velcro score of 65 sits 17 points below Goldman Sachs, which runs a smaller but far stickier portfolio.

By The Numbers

• 82 Velcro Credit Quality Score for Goldman Sachs PC, the highest among the ten largest BDC software lenders.

• 62 score for Blackstone Secured Lending, the lowest, with more than a third of its software book in Growth Dependent or Discretionary categories.

• 20 points the gap between the top and bottom scoring funds, a divergence invisible in any standard sector reporting.

• 46.2% Goldman Sachs PC's allocation to Utility Software, the highest concentration in infrastructure layer credits among peers.

• 10.5% Blackstone Secured Lending's allocation to Discretionary Tools, the highest exposure to substitutable, cycle exposed software among the group.

Key Trends to Watch

• LP diligence evolution: Allocators will increasingly demand archetype level breakdowns of software exposure rather than accepting a single sector allocation number.

• Scoring as competitive positioning: Funds with high Velcro scores will begin marketing their software book quality as a differentiator in fundraising, creating pressure on lower scoring peers to disclose or restructure.

• Convergence pressure: Lower scoring funds face a choice between accepting tighter spreads on Utility Software to improve their mix or continuing to collect marginally higher yields on credits with equity like downside.

• Stress test visibility: The next downturn will produce empirically observable performance divergence between high and low Velcro portfolios, validating or challenging the framework in real time.

The Wrap

Not all software books are built the same, and for the first time there is a scoring framework that makes the differences visible. LPs evaluating BDC software exposure should be asking not just how much software a fund owns, but what kind — because the 20 point gap between the best and worst positioned lenders will matter most precisely when it matters most.