Jun 12, 2025 · 55m · capital-allocators
Josh Koplewicz – Flexible Capital and Creative Structures at Thayer Street (EP.451)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Josh Koplewicz, founder and managing partner of Thayer Street Partners, exploring his journey from Goldman Sachs to building a boutique private equity firm that provides flexible, downside-protected growth capital to lower middle-market companies.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 11.5% of the talking time here. How this is scored →
Ted as informed peer 3.6 Guest teaching 3.6 Guest disagreement 0.1 Ted pushing back 0.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 24:30 Debunking direct lending market coverage
Josh challenges the prevailing narrative that the $5T private credit boom serves the entire non-bank lending market, emphasizing that 80% is controlled by mega-funds ignoring small checks.
Hardest push from Ted ▶ 31:59 Pushing on downside protection without cash yieldTed presses Josh on how he ensures true downside protection when structuring positions that forgo regular cash coupon payments.
Biggest teaching moment ▶ 24:05 Explaining the lower middle-market debt voidJosh educates the host on how regional bank retrenchment coupled with direct lending fund consolidation creates a distinct financing vacuum between $5M and $50M.
Ted holds their own ▶ 46:46 Formulating the strategy pre-mortem questionTed demonstrates keen allocator acumen by framing a classic pre-mortem question around macro and correlated risks in structured growth equity.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Event Announcement: Capital Allocators University | 0 | 0 | 0 | 0 | Ted opens with event announcements and house business before prompting Josh to discuss his early background and interest in finance. | |
| Early Career at Goldman Sachs and Trial by Fire | 3 | 3 | 0 | 0 | Ted asks how Josh connected real estate and finance at Goldman Sachs. Josh shares anecdotes of trial-by-fire deals in the Special Situations Group. | |
| Risk Management and Lessons from the Global Financial Crisis | 4 | 4 | 0 | 0 | Ted asks about lessons learned during the Global Financial Crisis. Josh explains the downside-first mentality and the risks of relying on cheap bank leverage. | |
| Founding Thayer Street: Transitioning from Goldman to Entrepreneurship | 4 | 3 | 0 | 0 | Ted notes the long line of Goldman alumni founding funds and asks about Josh's journey. Josh details his scrappy startup approach and operating out of a Staples print center. | |
| Scrappy Deal-by-Deal Sourcing and Relationship Building | 3 | 4 | 0 | 0 | Ted inquires about the early deal-by-deal phase and sourcing. Josh outlines his bespoke solutions-oriented structuring and family office syndicate backing. | |
| Team Building and Transitioning to Institutional Funds | 3 | 3 | 0 | 0 | Ted asks about assembling the team and transitioning from SPVs to an institutional commingled fund, which Josh explains closed in 2019. | |
| Core Investment Strategy: Flexible Capital in the Lower Middle Market | 4 | 4 | 0 | 0 | Ted asks Josh to describe Thayer Street's core strategy. Josh explains their preferred equity focus on non-correlated recurring revenue businesses. | |
| Market Landscape: The Void in Lower Middle-Market Credit | 4 | 5 | 1 | 0 | Josh breaks down the macro setup, pointing out that private credit mega-funds ignore the $5M-$50M check size, leaving a void for flexible capital providers. | |
| Proactive Diligence Process and Relationship Cultivation | 3 | 4 | 0 | 0 | Ted asks about diligence steps once an opportunity is found. Josh explains that 80% of diligence occurs beforehand via multi-year sector tracking. | |
| Deal Structuring and Downside Protection Framework | 5 | 4 | 0 | 0 | Ted probes on structuring downside protection without requiring regular cash coupons. Josh explains accrued minimum returns and board governance rights. | |
| Case Study: Structuring a Real Estate Payments Investment | 4 | 4 | 0 | 0 | Josh walks through a case study in property management payments where structured equity offered non-dilutive capital and downside protection. | |
| Case Study: Supporting Non-Dilutive M&A and Growth | 3 | 4 | 0 | 0 | Josh shares a second case study of backing an entrepreneur who avoided senior leverage to execute programmatic add-on acquisitions. | |
| Addressing Scaling Challenges and Underperformance | 4 | 4 | 0 | 0 | Ted asks what occurs when investments encounter friction. Josh details operational bottlenecks during growth and navigating early strategic sales. | |
| Operational Value Creation and Operating Partner Model | 4 | 4 | 0 | 0 | Ted asks how Thayer Street actively assists management teams. Josh outlines the operating partner model and functional support across HR and M&A integration. | |
| Competitive Positioning and Value Proposition | 5 | 4 | 0 | 0 | Ted questions Josh on portfolio construction and potential correlated risks. Josh breaks down target attachment points and liquidity sensitivity. | |
| Future Vision and Scaling a Boutique Private Equity Firm | 4 | 3 | 0 | 0 | Ted inquires about firm scaling challenges over the next six years. Josh discusses retention, synthetic carry, and closing reflective questions. |
Statements from this episode (23)
Goldman's Special Situations Group Levered Its Balance Sheet 8 to 15 Times
“And our capital was using the firm's balance sheet. So firm would allocate some amount of dollars. It would get levered. Eight to 15 times, and then we put it into companies.”
Sub-$200M Businesses Reliant on Cheap Bank Debt Risk Rapid Insolvency
“Having a business that is entirely reliant on dirt cheap, consistent debt financing from a bank is really risky and particularly risky if you are sub two hundred million dollar market cap. So a small gust of wind, a small hiccup, and we saw this with SVB and F…”
Post-GFC Bureaucracy at Goldman Sachs Made Small Deals Difficult
“Mine was a few years after the GFC. It just became really tough to do small deals. Number of committees had grown. There was more pressure to write checks that were larger, that were worth the Time and effort to justify the incremental bureaucracy and addition…”
Cold Outreach Never Worked for Deal Sourcing at Thayer Street
“Finding warm connections for introductions, cold emails never worked for me, meeting people at conferences, meetups, referrals from larger Funds where they thought they saw an interesting deal, but it was too small for them to invest in. So they referred it to…”
Thayer Street Does Not Do Buyouts and Never Attends Auctions
“We're really not doing any buyouts. We've never been at an auction.”
Thayer Street Structures Most Investments as Preferred Equity
“Most of the securities that we're investing in are some form of preferred equity, so structured equity, senior preferred, convertible preferred, participating preferreds.”
Private Credit Mega-Funds Leave $20M to $40M Borrowers Underserved
“So you have this massive growth and at the same time consolidation of non-bank private credit. Trillions of dollars being managed by a small number of firms, and in many ways, the growth of those firms is phenomenal, but it's leaving companies behind that need…”
Thayer Street Structures Deals Without Back Leverage or Current Amortization
“Oftentimes, while our capital is a little more structured and a little more tailored, we don't invest with back leverage. We don't require current coupons or current amortization. We're focused on the long-term cap gains event. Alongside management.”
Top 20% of Private Credit Firms Dominate 80% of the Market
“80% of private credit is dominated by 20% of the players. They are investing out of very large funds. That market continues to consolidate. And the focus of most folks in direct lending and private credit is on opportunities that are larger than fifty million …”
Individual Owners Hold 90% of the Fragmented Property Management Market
“Property management is 90% fragmented and owned by individual owners.”
Baby Boomers Own Nearly 50% of US Small Businesses
“70 plus million baby boomers own shy of 50% of the small businesses, and a lot of them are retiring and don't have a succession plan.”
Thayer Street Completes 80% of Diligence Before Striking Deals
“Usually when we've struck a deal with someone or found a company that's ready to go, 80% of our diligence is done.”
Thayer Street Structures a 1.5x Minimum Return Across Its Portfolio
“So across our portfolio today, we have just shy of a 1.5 X minimum return.”
Thayer Street Engineers 10% to 14% IRRs Even With Zero Growth
“We're trying to create this base layer where if none of the companies grow, they just stay stable, which is rare. You know, we're already engineering, call it a 10, 12, 14% IOR.”
Preferred Equity Allows Faster Downside Intervention Than Traditional Bank Lending
“And in fact, we're going to have A more efficient and faster means to protect against adverse scenarios than a lender might who can't be on the board and can't have certain consents around the table and can't step in and help when things go awry because they'r…”
Thayer Street Payments Portfolio Company Grew GPV 5x in Four Years
“So that company grew probably four X in terms of top line revenue and another closer to five or six X in terms of Gross processing volume over a four-ish year period.”
Conventional Buyouts Typically Leave Founders With Only 10% to 20% Upside
“The win for the seller or entrepreneur is we can be a little more flexible on valuation and they can preserve more ownership versus doing a conventional buyout deal where they may only retain another 10, 20% of the upside on the go forward.”
Scaling From 30 to 100 Employees Drives Most Operational Breakdowns
“The thing that happens most consistently when things go wrong is companies scaling nicely. The company goes from 30 employees to a hundred, and there is a new set of management issues. Layers of the org chart. An executive that's used to having control or bein…”
90% Recurring Revenue Enables Strategic Exits Even if Operational Scaling Fails
“The good news is usually there's 10, 20, 30 other players, many of whom are larger, that want these customers. And the customer relationships are so sticky. These are businesses recurring it with 90 plus percent recurrence. We can still generate a lot of value…”
Thayer Street Caps Fund Positions at 10% Across 10 to 12 Deals
“When we think about our funds, they are, call it plus or -10 positions, historically, maybe even closer to 12. Maybe we only have 10 or less outstanding at a given time. We have a high degree of recycling in our approach. So the way we think about it is, Plus …”
Thayer Street Targets 60% to 80% LTV With 3x to 4x Upside
“When you blend those all together, we want something where in a downside case, you have a structured return that'll be meaningful. It could generate in and of itself A low to mid teens return where our risk exposure looks and feels like attaching at 10 to 20% …”
Every Thayer Street Employee Receives Carry or Synthetic Carry
“Employees up and down our team are participants in carry or synthetic carry. Every single person in our team.”
Koplewicz Worked as a Levi Strauss Marketing Consultant at Age 11
“My first paid job was actually being a style and marketing consultant for Levi Strauss when I was 11. A stranger heard me talking and recruited me to do this job, and for about two years I got assignments from Levi Strauss company to basically give them my opi…”