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.

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.

Key timestamps:

00:07 Introduction to the Fireside Chat
01:50 Evolution of VSS’s Investment Focus
02:47 Understanding Structured Capital
04:54 Current Trends in Hybrid Solutions
07:56 Assessing Entrepreneurial Risk Appetite
15:51 Growth in Sourcing Opportunities
20:57 Market Positioning and Competition
22:37 Benefits of Hybrid Solutions for Investors
25:24 Conclusion and Closing Remarks