By Ian Fairclough, Director of Debt Finance, OakNorth 

AI comes up in almost every tech deal conversation I have these days. Not as a buzzword – as a genuine factor in how we think about a business. 

And that’s not surprising. the sponsors and founders I work with are already deep in this. They’re assessing AI exposure across their portfolios, reassessing valuations, and in some cases restructuring how they think about exits. The question I get asked more often now isn’t “will you lend against this business” – it’s “how do you think about AI risk in this sector.” 

Here’s what we’ve been noticing in the software and tech lending space recently. 

How we’re thinking about AI on deals 

The core question we ask on software and technology businesses is simple: is AI a tailwind or a headwind? The answer shapes everything – structure, leverage, tenor, and whether we’re the right partner at all. 

When we backed Hypha’s acquisition of Pass with a £5m loan, the AI dimension was positive from the outset. Pass is an AI-powered EdTech platform using the technology to deliver better outcomes for learners and institutions. That’s a business aligned with where the market is going. 

A legacy software business is a different story. If an AI-native startup can replicate the core product at lower cost, that risk shows up at the next contract renewal – and it changes how we think about structure, or whether we proceed at all. 

Opus Safety, which we supported alongside BGF, is another good example – a tech-enabled business with proprietary software and strong retention, where the technology strengthens the business over time rather than weakening it. That’s where the opportunity is. 

The deals I find most interesting are the ones where the management team or sponsor has already stress-tested this themselves. They know which revenue streams are defensible, they’ve thought about what an AI-native competitor would look like in their market, and they have a clear view on why their moat holds. That preparation makes the deal process faster and the outcome better for everyone. 

AI is also changing how we work 

AI tools are now part of our teams’ daily workflows. The analytical groundwork that used to take days is getting done faster, which means we’re spending more time on the conversations that actually move deals forward: getting in front of sponsors earlier, spending more time with management teams, being present at the moments that matter in a process. 

What hasn’t changed is the relationship side of what we do. It matters more than ever. If anything, AI gives us more time to build the connections that no tool replaces. 

What’s next 

If you’re planning a debt raise in the next 12 to 18 months and your business has a technology component, it’s worth working through a few things before lender conversations start. 

Where does AI create opportunity in your market, and how is your business positioned to capture it? Which parts of your revenue are locked in versus renewing, and what does that renewal dynamic look like? What’s your competitive moat? Proprietary technology, deep customer relationships, switching costs, something else? 

Borrowers who come to these conversations with a clear narrative, and not just on the numbers, but on where the business sits in its market, tend to move faster and get better outcomes. Lenders who are thinking carefully about AI want to back businesses that are too.