Romi Mahajan President Pepper
Pulak Sinha CEO Pepper

Well, that’s why we build warning systems and endow people with the intelligence to act on them. And that’s why we have regulations and ask organizations to comply. It is worthwhile pausing for a moment to consider what’s at stake. When we look at the Asset Management industry as a whole, we see that it manages in excess of $120 trillion world-wide. Such sums are staggering and remind us of the famous, though apocryphal Willie Sutton story- “that’s where the money is.” The largest individual firms manage $3+ trillion. Put simply, even small failures in this industry have cross-sectoral, and fundamental effects on the economy as a whole and, ultimately, lives. We cannot afford that. Ever.

This industry cannot afford to meet the challenges of complexity, growth, regulation, compliance, and risk management with technologies that are built for other industries and ported to Asset Management after-the-fact. This industry cannot afford to meet these challenges as a technology laggard, as one so occupied with costs that it loses sight of the big picture.

Whatever the difficulties and stresses of day-to-day life in the industry, we must reject the idea that “it’s good enough.” Firms that manage hundreds of billions of dollars and dazzle investors with talk of AI, modernity, and innovation that they turn around and manage assets, dollars, and decisions on Excel are on the precipice. It is not a matter of if but when. Even the most venerable names have their “Kodak” moments when they stop paying attention to systems and cultivate a culture of dismissal.

It’s not simply a matter of efficiency, security, error management, or expedience. It’s not simply a matter of maximizing ROI by a basis point or two. What’s at stake here are “company extinction” events.

Modern business and technology have converged into a singularity. The stakes to get it right are high. Therefore it is high-time the Asset Management industry faces reality squarely.

Let’s be smart. Don’t settle for “good enough” because one day it will fail. Invest in the right systems and don’t run your business on Excel. Think of reporting requirements not as onerous but as good gut-checks. Together, united, we can build a culture of success.

Second in our “AssetTech” Series

By Romi Mahajan President Pepper
and Pulak Sinha, CEO Pepper

The Financial Services sector is every-changing and frenetic. As conditions change, markets change, as consumer behavior changes, markets change, and as new paths for ROI are created, markets change. That’s the name of the game in FinServ.

Couple this rapidity of change with the sheer size of the market and the results are epochal. One sliver of the market- the world of professional Asset Management- breaks the tape at $120 trillion AUM world-wide, a staggering number that exceeds global GDP. With a $120 trillion river running its course, even tributaries can be huge and powerful.

Enter the world of “private credit,” a fast-growing marketplace that now exceeds $1.5 trillion in investment with annualized deal-size in excess of $35 billion. As companies and other entities seek new sources of funding and as investors seek new forms of ROI generation and liquidity, the private credit market has burgeoned. New funds are minted daily.

For all investment types and asset classes, data is central to the story, but even more so with regard to non-public assets. Here, data and its connection to proprietary methodologies, valuation methods, and calculation is paramount. Further, ensuring that all parts of the organization are using the same data and the same methods to evaluate, value, invest, track, and report on deals is key to success. The lack of the proper platforms and controls is a sure-fire way to create internal friction and to slip-up in the marketplace. In private credit, data is the watchword.

As we mentioned before, private credit is a huge asset class, but very few companies build technology platforms and solutions specifically for this –and adjacent- industries. This is a huge miss in the technology industry as a whole. The private credit industry deserves better.

The data opportunity in this space is enormous. Even industry-watchers would have been challenged to notice the space even two years ago. Now it has emerged as a colossus. That’s why “AssetTech” – technology platforms that are innately and natively responsive to the needs of Asset Management- matters; the size and importance of the marketplace is unmatched.

The private credit data opportunity is real. We are eager to discuss it with you.

Part One in a Three-Part Series on “AssetTech”

by Romi Mahajan- President, Pepper

Business coins portmanteau words liberally.  As an example, combine “Finance” and “Technology” and you get “FinTech.”  Similarly if you combine “Assets” with “Technology,” you get “AssetTech.”  While the first is part of the everyday vocabulary in the industry, the latter is hardly understood.

This is curious, given the sheer size and importance of the industry.

World-wide, formal Asset Managers have over $120 trillion in” Assets under Management (AUM).”  This number is staggering- it exceeds World GDP.  The larger firms in the space themselves manage amounts measured in the trillions.  It is not uncommon for the tallies of “deals” –even just in the US economy-exceeding $250 billion in a month.  Again, these numbers suggest the importance of the industry as a whole.

Importance implies both opportunity and complexity.  With the rise in numbers and valences of asset classes and the intermingling of private and public assets- and that too across geographies- the opportunities to generate ROI where it was “invisible” before have increased substantially.  With this increase, the attendant increase in compliance, data, security, and governance needs come part-n-parcel.  In addition, investors are calling for transparency, where opacity ruled the day before.

Practitioners understand that the best tool-set to manage the forests of data and to derive insights and actions is Artificial Intelligence.  AI cuts across data, knowledge, decision-making, and pattern recognition.  AI is by its very nature dynamic, just like the markets being harnessed and understood.

Investors and Asset Managers have yet another convergence of interests with regard to AI. Both are looking for a step-up in a competitive game and both are looking for potential ROI being converted into kinetic.

For this reason, AI has to be native in AssetTech.  An AI-powered chassis is necessary for meaningful AssetTech platforms.

Here, distinguishing between rhetorical AI and real AI is key.  Kicking the tires is essential.  Furthermore, AI has to be at play at any entry point into the platform, from whatever workload you begin with.

Because of this, Marketing Darwinism and Pepper are together opening an industry dialogue and issuing an industry challenge.

Doesn’t Asset Management deserve its own technology and doesn’t that technology have to be the best we can offer?  Isn’t it time we go get it?

AssetTech Pioneer Pepper Names Romi Mahajan as President

To read the full release go here

Q: We just saw the announcement. Congratulations on joining Pepper as President.

A: Thanks Paul. I am thrilled to have the trust and faith reposed in me by the Founding team at Pepper, specifically CEO Pulak Sinha. Pepper is an important part of the AssetTech ecosystem, and has in fact been a pioneer in the space so I don’t take this mantle lightly.

Q: Tell us a bit more about Pepper’s plans- how is 2023 shaping up?

A: Pepper has been commercially active for a short time only- just a few years. The platform was developed to de-risk customers, partners, and investors. CTO Jaskaran Singh is a world-class architect and technologist and CEO Pulak Sinha knows more about the industry than I will ever. They tailor made the platform for Asset Managers, especially in Alts, Secondaries, Private Markets, and so on. They built it in conjunction with some large customers and now we’ve unleashed the Kraken. So 2023 looks, well, very buoyant.

Well we are super excited to see where you take Pepper from here!

Boulder, CO  Oct 18, 2022 – PropTech innovator Rook Capital partners with Keller Williams Northern Colorado and First Bank to expand home ownership and solve the home affordability problem. Leveraging the power of its Shared Value Investment™, Rook Capital brings together homebuyers and community-based investors to accelerate home ownership and build communities.

“The last decade has seen a consistent upward trend in house prices. Combine that with higher interest rates and you get a really difficult situation for first time homebuyers and young families looking to establish community and generate wealth. Rook Capital has tailor-made a solution for this scenario and we are grateful to partner with Keller Williams Northern Colorado and First Bank to bring it to market and get families in homes,” said Rook Capital CEO Ed Messman.

Rook Capital’s Shared Value Investment™ creates a partnership between homebuyers and community-based investors to purchase a house with shared equity, shared risk and shared reward. The Shared Value Investment™ combines the power and protection of traditional home financing to offer homebuyers the ability to get into the right house with lower payments.

“We are proud to work alongside great partners to help get people in the right homes and build community,” said Messman. Keller Williams Northern Colorado’s David Rusaw added, “We have many prospective customers who just need a little help to be able to buy a house. Rook’s solution helps us expand the footprint of people we are able to help. It’s truly a winning partnership.”

John Ricotta of First Bank added, “One of our primary charters is to give back to the community that supports us. The housing situation in cities like Boulder, Colorado and other hotspots in the country are dire for young families. In partnership with Rook, we are opening new vistas of possibility for these prospective home buyers who are looking to live their American Dream.”

In this scenario, First Bank provides the 1st mortgage on the house while Rook brings up to 25% to help homeowners purchase and close. The homeowner makes no payments on Rook’s portion and can thus save or re-invest the money saved.

Rook leverages advanced data-science and modeling to identify locales and properties that offer the best prospects for return.

Rook is an innovative PropTech company focused on widening home ownership and solving home affordability. Rook’s Shared Value Investment brings homebuyers, investors, and the housing ecosystem into partnership with full life-cycle alignment. Rook is backed by a diverse set of investors, including LL Funds, First Mile Ventures, Kickstart Fund, Service Provider Capital, and Tango Ventures.

Keller Williams Northern Colorado is a leading brokerage and real estate firm serving the vibrant communities in Colorado. Keller Williams, the world’s largest real estate franchise by agent count, has more than 1,100 offices and 200,000 associates. They are also No. 1 in units and sales volume in the United States.

FirstBank began providing banking services in 1963. Today, it’s known as an industry leader in digital banking and has grown to be one of the largest privately held banks in the United States, maintaining more than $25 billion in assets and 110 branch locations across Colorado, Arizona and California. FirstBank has been recognized as a top corporate philanthropist, contributing nearly $75 million and thousands of volunteer hours to charitable organizations. MEMBER FDIC

Contact: Romi Mahajan | KKM Group | [email protected]

Boulder, CO  Sept 18, 2022- PropTech innovator Rook announced a $4.1 million capital raise and access to a warehouse credit facility as it looks to grow its “Shared Value Investment” program, helping prospective homebuyers purchase the right home in return for a portion of the equity upside.  In an environment of high house prices and rising interest rates, Rook offers homebuyers the ability to get into the right house, while sharing risk and reward with community-focused investors.  A diverse set of investors provided the capital including LL Funds, First Mile Ventures, Kickstart Fund, Service Provider Capital, and Tango Ventures.  LL Funds participated in the equity and is also providing the warehouse credit facility.

The last decade has seen sharp increases in house prices. Even with the recent slowdown, prices are near historical highs; in some desirable metros, prices are upwards of 10 times the “median income,” rendering homeownership an impossibility.  Seventy percent of Millennials when polled suggest that homeownership is just a dream.  At the same time, rents are increasing across the country at upwards of 50% in some areas, delivering a one-two punch for prospective home-buyers.

“There is a large portion of the population that is entering their prime home ownership years and are facing the daunting reality of buying a home with high-prices and rising interest rates; still, they desire homeownership, the ability to establish community and don’t want to be perma-renters,” said Ed Messman, Rook Co-Founder and CEO.

According to Jim Morrissey, partner at LL Funds,  “Rook offers an exciting, new financing construct for prospective homeowners to buy houses in a shared equity model.  Bringing investors and homebuyers into a symbiotic partnership with shared risk and reward and full life-cycle alignment is the quantum leap we wanted to support.”

Rook’s platform thoughtfully integrates web3 features that seek to engage a new demographic in helping to solve home affordability.  Rook Co-founder and CTO Kevin Cawley said, “We are leveraging the opportunities of Decentralized Finance and applying them to the world’s largest asset class – housing.”

Serene Papenfuss, Principal at Kickstart Fund says, “We’re incredibly excited to partner with Rook because of its clear value proposition to all market participants: it brings diversification to home owners and investors, increases home ownership affordability, and plays to the DeFi ethos.  In a time of soaring house prices and what we believe are sharing economy tailwinds, Rook is needed more than ever.”

Aaron Stachel, partner at First Mile Ventures added, “Home affordability is one of those problems that hits you in the face every day while reading headlines, and it’s only getting worse as mortgage rates rise.  The Rook team has developed an elegant solution to get the next generation of homebuyers into homes they can afford while providing a way for investors to access residential real estate without becoming a landlord.”

Rook will use the proceeds to continue building out its partnerships, expand into new and compelling geographies, and to build an ecosystem of community-focused investors who match the needs of homebuyers.

Rook is an innovative PropTech company focused on widening home ownership and solving home affordability.  Rook’s Shared Value Investment brings homebuyers, investors, and the housing ecosystem into partnership with full life-cycle alignment.

FirstMile Ventures is a seed-stage venture capital firm who commits early in a company’s life and helps them set the pace for future success.  Kickstart Fund is a venture capital fund for early-stage startups in Utah, Colorado, and the Mountain West and we back the most visionary entrepreneurs with capital, community, and expertise for the journey.  LL Funds is focused on investing in specialty consumer finance companies who rely on the Asset Backed Securities marketplace for growth and success.  Their private equity funds provide growth equity to specialty finance companies; their lending funds provide warehouse lines to such companies; and their public market funds invest in ABS securities of all types.

1. Angela you have a storied career in Asset Management. What are the biggest opportunities in that space now?

There is more interest now than anytime I have seen to make an impact through investing. It is relatively easy to deploy capital into impact strategies that are tied to specific firms and funds. For example, it is fairly straightforward to find an S&P500 impact fund that is designed around specific metrics such as net-zero carbon.. The real opportunity, however, is in direct investing in specific impact assets. There is a very real demand for capital in global infrastructure assets that are needed for real environment and social improvement.

2. Similarly, what are the biggest challenges?

The biggest challenge I think is to be creative and more long-term focused on asset management. It is very difficult to get stakeholders and shareholders alike to show the patience and effort needed to deploy capital in meaningful ways, likely forgoing current returns in order to make a much bigger long-term return and impact.

3. Data. How does data play a role in producing ROI in Asset and Investment Management and is the industry adept at harnessing data? What are the learnings here?

Data has the ability to play a significant role in producing ROI because it can really help inform trends for long-term returns. The industry is incredibly adept at harnessing data and making short term determinations. I think they are much more challenged at looking longer term, looking for directional trends and seeing past short term impacts. Finally, understanding the data can highlight underlying risks that impact returns which in turn allows a manager to more actively hedge against those risks, adding to ROI.

4. You have recently joined Pepper as an Advisory Board member. Can you help us with the value proposition there and how it fits into the future of Asset Management.

The platform Pepper has built fills a huge gap in the asset management space. As owners and managers of alternative asset portfolios, data comes from all different sources and systems. Often these different data sources, whether an electronic feed or a PDF document, need to have data loaded manually into a customized system that is not integrated with other risk and portfolio management systems. Pepper provides a platform that allows managers to analyze comprehensive data and gain an understanding of where risk exposures lie and inform any gaps in a portfolio, giving the manager the space and information to invest anew. This information absolutely increases the value of the portfolio as a manager can lean into the risk measures, de-risk where one needs to without necessarily giving up return.

5. Alternatives and Secondaries are burgeoning areas within Asset Management. What are the unique opportunities there in the next five years?

Alternatives and secondaries have changed so much in recent years. When I started with Alaska in 2015, the idea of evaluating the portfolio, selling certain assets and pivoting the alternatives allocation was the exception not the rule. Since then, the idea has gained traction and more asset owners are using the secondaries tool to more actively manage their portfolios. Over the next 5 years, especially if you see asset owners struggling with liquidity and total fund overweights due to down public markets, secondaries are going to be a key to staying invested in alternatives. Lower valuations will allow for many opportunities to those that have cash and asset allocation to invest.

6. Can you comment on the industry as a whole and its relationship to technology? Is Asset and Investment Management tech forward or a laggard?

I think overall asset and investment management is tech laggard. Asset & investment management is still a relationship business and we tend to adopt new tech reluctantly. I continue to see many opportunities for tech to significantly reduce transaction friction and increase price transparency – especially in the alternative, private space.

7. Pls share some parting thoughts with us.

The sheer volume of data today can be overwhelming and difficult to use and interpret with regard to investing. I think those managers that are going to be successful, impactful investors are the ones that are willing to be creative in their data usage, e.g. looking at nontraditional data points to inform potential future performance of an asset, but will only be as good as their data sets.