News

In this engaging ION Influencers Fireside Chat, Trent Hickman, Co-Managing Partner at VSS Capital Partners, shared valuable insights on structured capital solutions, investment trends, and the evolving private equity landscape. The discussion covered VSS’s unique approach to hybrid debt-equity investments, founder-friendly strategies, and market opportunities.

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Topics Discussed in the Fireside Chat

1. Introduction to VSS and Structured Capital Strategy

VSS specializes in tech-enabled business services, healthcare, and education. Their structured capital approach combines debt and equity to balance risk and reward. Focus on supporting founders who want to retain significant ownership while scaling their businesses.

2. Why Hybrid Solutions Are Gaining Popularity

Market conditions: Lower M&A valuations make structured capital attractive. Alignment with entrepreneurs: Founders maintain control while accessing growth capital. Value-add approach: VSS helps with management team expansion, M&A, and sales strategy.

3. Convincing Founders & Advisors on Hybrid Capital

Less upfront cash but greater long-term equity upside for founders. Tax efficiency and compounding growth make structured solutions appealing. Advisors benefit from similar fee structures compared to traditional M&A.

4. Evolution of VSS’s Sourcing Strategy

Increased deal flow from 650-750 opportunities/year(up from 200-250 a decade ago). Business development team focuses on intermediary relationships and thesis-driven investing. Proactive outreach via cold calls, industry conferences, and networking.

5. Sector Specialization vs. Generalist Funds

VSS remains industry-focused (tech-enabled services, healthcare, education). Market is fragmented, allowing multiple players to thrive. Lower middle market is underserved by structured capital providers.

6. Investor Appeal of Hybrid Solutions

Private equity-like returns with lower volatility due to downside protection. 80% of VSS’s capital is in debt/preferred equity, ensuring stability. Primary investors include pensions, endowments, and insurance companies (private wealth channel growing but not yet a focus).

Final Thoughts

Trent Hickman’s insights highlight how structured capital solutions offer a win-win for founders and investors. By blending debt security with equity upside, VSS provides a compelling alternative to traditional buyouts. As market dynamics shift, hybrid strategies are becoming increasingly relevant—especially for growth-focused entrepreneurs wanting to retain control while scaling their businesses.