Why intelligent hardware needs a different framework.
Intelligent hardware is physical equipment whose productive value depends not only on the asset itself, but also on software, connectivity, hosted services or data. Hardware, software, and capital run on different clocks, what we call the Three Clocks. The physical platform, the software stack and the financing each change at different speeds. A technical assessment performed once at origination can become stale well before the debt matures.
Hardware Clock
Design → Build → Deploy → Degrade. Physical assets age on their own timeline. Reliability data accumulates slowly. Novel hardware has no established secondary market, lenders cannot rely on liquidation-based recovery.
Software Clock
Update → Patch → Deprecate → Migrate. Code evolves faster than escrow can follow. Third-party APIs change without notice. In default, escrowed code cannot reproduce the production environment.
Capital Clock
Draw → Deploy → Revenue → Service. Capital draws immediately. Revenue ramps gradually. Seasonal patterns create DSCR stress. Revenue models often assume hardware uptime that hasn't been validated.
Seven dimensions. 125 scored factors.
The SOMA framework assesses operational risk across seven dimensions, each comprising a defined set of scored factors evaluated through structured evidence review.
Hardware & Manufacturing
- Manufacturing readiness
- Supply chain integrity
- Residual value assessment
Software & Architecture
- Code quality and architecture
- Third-party API risk
- Escrow completeness and currency
Deployment & Field Operations
- Operational deployment capability
- Servicing infrastructure
- Maintenance capacity vs. deployment pace
Contractual & Commercial
- Contract financeability
- Customer concentration
- Revenue model sustainability
Escrow & Continuity
- Escrow completeness and reproducibility
- Backup servicing plans
- Key person dependencies
Financial & Operational
- Financial performance metrics
- DSCR sensitivity
- Covenant design appropriateness
Collateral Integrity & Verification
- Unit verification: telemetry against the asset register
- Lien and double-pledge searches
- Cash collection control
Six instruments. Each producing specific credit outputs.
Each SOMA instrument targets a distinct aspect of the hardware-software-capital risk profile and produces a defined output for the credit team.
Integration Risk Map
Scored assessment mapping the integration risk profile of the facility. Identifies where hardware and software dependencies create credit risk.
Technical Continuity Score
Composite credit metric, the primary scored output. Maps to six rating bands, A through F. The band sets the advance rate ceiling; the recommended rate is solved from stressed facility cash flows underneath it. Designed to sit alongside financial credit metrics in an IC paper.
Contract Financeability Score
Per-contract eligibility assessment. Evaluates whether the contractual structure supports the financing, revenue model, service terms, termination provisions.
Manufacturing & Deployment Readiness Assessment
Gate-based assessment covering hardware manufacturing readiness, supply chain integrity, physical asset verification, and operational deployment capability.
Operational Telemetry Triggers & Monitoring
Multi-factor, multi-severity monitoring framework with compound trigger detection. Includes verification metrics that reconcile telemetry against the reported borrowing base. Designed to surface operational stress 30–90 days before it appears in financial statements.
Continuity & Step-In Playbook
Scenario-based protocols defining who maintains hardware and software operations in a default, workout, or key-person loss event. Activated by OTTM triggers.
TCS ratings map directly to advance rate guidance.
The Technical Continuity Score is the primary output of a SOMA assessment. It provides the investment committee with a scored, grade-based risk assessment across six bands. The band sets the ceiling; the recommended advance rate is solved from stressed facility cash flows underneath it.
| Rating | Description | Advance Rate Implication | Monitoring Tier |
|---|---|---|---|
| A | Exceptional operational continuity and integration rigour | Highest advance ceiling | Standard |
| B | Strong fundamentals with identified and manageable risks | High advance ceiling | Standard |
| C | Adequate with conditions, specific mitigants required | Reduced ceiling, mitigants required | Enhanced |
| D | Material operational risk, significant conditions or restructuring needed | Materially reduced ceiling | Intensive |
| E | Distressed operational profile; facility re-evaluation required | Suspend or restructure | Intensive, re-evaluate |
| F | Unacceptable operational risk profile at current structure | Decline | N/A |
Two assessment scopes. Both credit-committee grade.
SOMA is structured to move at the pace your deal requires. The MVP applies 69 of the 125 factors with no reduction in Clock Synchronisation rigour, and typically delivers a full credit-committee-grade report in 3–5 business days. The full assessment runs 2–3 weeks. Both scopes are fixed-fee, and where a deal moves faster, we structure the engagement around that.
Request the methodology overview.
A 2–3 page methodology summary is available on request. It covers the framework architecture, instrument descriptions, and sample output structure.
Request methodology overviewMethodology last reviewed October 2026