Neocloud Due Diligence

What to check before you fund.

What it covers

A neocloud loan fails in one of four ways: the offtaker stops paying, the collateral falls below the loan, the cluster starts late, or nobody can run it. Diligence is checking each before funding.

What you should check for

The operator	Clusters run before	GPUs, location, dates and uptime for each prior deployment. A first cluster is not disqualifying; an unnamed operations lead is.
	Equity through a delay	Cash to carry interest, rent and power through a delay case, because covenants bar loan proceeds from non-hardware costs.
	Recourse	Company or founder guarantee, or a non-recourse SPV. Non-recourse is very hard to get.
The revenue	Take-or-pay contract	Committed amount, term, start date, payment terms and security: deposit, prepayment, letter of credit, guarantee or escrow.
	Offtaker credit	Funding raised, investors and financials of the customer, since one customer usually carries most of the revenue.
	Rental rate vs breakeven	Market rate for the SKU against the borrower's cost per GPU-hour. H100 rentals ran above $8 an hour in 2023 and short-term auctions cleared at $1-2 by August 2024.
The exit	Residual on technology age	Residuals booked from when the GPU generation first shipped, and a plan to re-contract or sell if the offtaker walks.
	Backup operator	A firm that can run the cluster within 30 days, with access rights in the colo contract.

Sources: GPU Lenders (American Compute), American Compute.

How neocloud credits go wrong

No GPU-backed loan has been publicly foreclosed and auctioned as of October 2026. The closest test is the 2022 bitcoin-mining bust: lenders who took the machines back recovered a fraction of par; lenders who kept the borrower, the site and the contract alive recovered most of it.

Schedule is the quiet killer. NVIDIA ships a new flagship about every year, a B300 falls from about 80% of list price to 52-64% in its first year, and costs run for months before the first dollar of revenue: about $232,000 a month of interest on a 576-GPU B200 cluster at 70% LTV and 15%, in our illustration.

The site is the third party in every deal. If the facility fails, most colo contracts cap what it owes at three months of fees; if the borrower stops paying, some let the facility sell the servers.

Red flags

Offtaker short on runway	Offtaker cash under 12 months of commitments, a founder exit, a down round or an acqui-hire.
Host failure	Marathon wrote off $55.7M of deposits and notes when its host, Compute North, filed in September 2022.
Collateral pledged twice	First Brands (Chapter 11, September 2025) allegedly double- and triple-pledged collateral; match serials to the UCC-1 schedule.
Residual booked on purchase date	An H200 bought new in 2026 is already more than two years into its technology life.

Discuss a transaction

Send us the equipment list and the loan or lease you have in mind. We will come back with an indication and the questions we would need answered.

Prefer email? hello@amcompute.com