Technology continues to be a focal point for PE investing. As the strategy becomes more omnipresent, some firms are diving even deeper into narrowly focused niche markets.
VSS Capital Partners, a private investment firm targeting the healthcare, education and technology-enabled business services industries, has realized its investment in GreenSlate Holdings, a cloud-based provider of payroll, production accounting, tax incentives and health benefits for the entertainment industry. The firm additionally re-invested in the firm alongside GreenSlate’s new minority investor, Francisco Partners.
GreenSlate is an application that combines production accounting software and payroll software for the entertainment industry. The firm differentiates itself with an all-in-one software platform combined with its customer service.
“The primary growth strategy is to continue to develop the software and continue to build out the team to support that growth and the customers,” Trent Hickman, managing director at VSS, recently told Mergers & Acquisitions. “We feel like the company is on an excellent trajectory. And then increasingly we’re seeing the word get out about the quality of performance of the software and service.”
In looking at the market for technology-enabled services as a whole, Hickman says, “The market is becoming more discriminating in the sense that the distinction in terms of valuation between a B company versus an A company has gotten quite a bit wider over the last year than it was from late 2020 to late 2021 or early 2022.”
He says niche firms like GreenSlate are more attractive than comparative firms that are not as strong in their sectors. GreenSlate only holds a single-digit percentage of market share and competes with the likes of Cast & Crew and Entertainment Partners which hold somewhere in the range of 40 percent market share.
However, Hickman says his firm is bullish on its investment and believes that there is an enormous opportunity to gain both market share from traditional competitors and to continue to develop what the firm believes is industry-leading software.