The article discusses how private credit investors, including firms like Ares and Man Group, are navigating the challenges posed by AI in the software industry. Ares co-president Blair Jacobsen noted that the conversation around AI's influence has evolved since earlier fears of a 'SaaSpocalypse'—a term used to describe potential widespread failures in software companies due to AI advancements.
Instead of a complete collapse, Jacobsen suggests that the market will see a division between companies that can adapt to AI and those that cannot. He emphasized that Ares continues to find opportunities in software companies that provide essential services, where the cost of failure is high, thus offering some protection against disruption.
Kevin Marchetti from Man Group echoed this sentiment, stating that AI represents a significant test for private credit investments in software, and he is focusing on traditional businesses where AI can enhance operations rather than disrupt them. John Toomey, CEO of HarbourVest Partners, added that while some companies will face challenges, others will leverage AI to improve their services.
He believes the software sector will experience a 'K-shaped' outcome, where some businesses thrive while others struggle, underscoring the critical role of adaptability in the evolving landscape