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.

We caught up with Min Alexander, CEO of PunchListUSA.

Marketing Darwinism: Min, you are the CEO and Co-Founder of PunchListUSA. Tell us more about your mission there.

Min Alexander: We have a mission to make homeownership possible for as many as possible and to empower homeowners to maximize the value of their investment throughout the home-owning life-cycle. For us, the inspection report is a font of knowledge, from which we can derive a lot of information not only about the house in its current state but also in its future state. Helping homeowners understand this and, further, provide a tailored roadmap of ownership– for proper maintenance, repairs and improvements is our mission.

Marketing Darwinism: So for you the inspection is the pivot point for homeowners?

Min Alexander: Yes, it is. It’s almost like a “23 and Me” for a House. We utilize the current condition of the home, materials used for construction and ages of the major systems, among 400+ other data points to help homeowners to better understand, plan and manage the requirements to preserve and grow equity.

Marketing Darwinism: How does this fit into the crisis of home affordability in the US?

Min Alexander: Home affordability is a multi-pronged problem. Part of it is of course wrapped up in rising house prices, rising interest rates, and the need for high down payments. But part of it is also the ongoing cost of maintenance, which is roughly $4,000 each year for an average home. These routine costs do not include emergency repairs and replacement of major systems like HVAC and water heaters. We are here to help homeowners manage and plan for the full needs of their home. This solves part of the problem to ensure that homeownership is sustainable.

Marketing Darwinism: For our Marketing audience, how do you think about Marketing in general as you develop PLUSA’s plans?

Min Alexander: We very much believe in Marketing and it is a core competency for our retail business– as an emerging home services marketplace. First of all, our reputation and brand management are paramount. We are a technology in the business of repairing and improving people’s homes. This is a personal experience built on trust. Second, our omni-channel marketing strategies reflect both digital and analog components of our business. Sourcing, acquisition and ordering are online with field marketing and delivery at a local level. Third, personalized journeys and customized content based on the needs of each home will continue to be our focus. We are constantly learning and adding services and we need to stay in the circles of influence to test, refine, and excite.

Marketing Darwinism: What is your prognosis for the Housing Market?

Min Alexander: We’ve had years of unprecedented gain. Even with a slowdown, economic conditions and market conditions make it hard for many people to manage. Housing is a key industry and has to be figured into regulatory planning. We also need to help people find financial pathways to homeownership.

Marketing Darwinism: Any parting thoughts?

Min Alexander: Homeownership is simple to dream but complex to manage without stress. We love and invite feedback on our technology and offering for continuous improvement. Let us know what you think

A Manifesto for a New Category:
Pulak Sinha and Ann Eberle Thomas, Co-Founders of Pepper

The portmanteau word “Fintech” has come to be associated with a variety of companies spread across the world of financial services that use digital products, services, and techniques to transact, pay, amass capital, and connect with customers.  Fintech is witnessing a boom, as measured by venture dollars, unicorn creation, brand awareness, and customer traction.  It makes sense since “that’s where the money is,” but it is also curious in one crucial way:  Financial Services companies have always been technology plays so Fintech is one part innovative and one part old wine in new bottles.

When you break Fintech into separate fields and foci, however, you start seeing the power of its innovative side.  Take, for instance, the area of “Payments”—the innovations over the last 5 years have literally changed how people make and receive payments.  In the area of consumer-investment, the barriers to entry have been reduced to almost zero.  And in the buoyant area of Crypto, it doesn’t take too vivid an imagination to understand what a sea-change this has wrought with regard to traditional finance.

We believe that AssetTech is just such an area- one that will see a renaissance in innovation and importance.

AssetTech can be defined simply as all technologies and platforms that help Asset Managers successfully use data to allocate capital.  While the definition can be seen as academic, in fact a visit through the data makes it very real.  The numbers are staggering:  World-wide, $120 trillion of assets are managed by professional managers.  The number exceeds the world’s GDP.  Within the $120 trillion, emerging areas like “Secondaries” are becoming multi-trillion dollar categories.  The complexities that face Asset Managers are increasing:  diversification of asset class, regulation, globalization, security, risk management, and changing investor profiles.  Managing such large flows of capital and generating ROI for investors requires a judicious combination of data, intuition, and systems through which to act on both of them.

That is the essence of AssetTech.

Societies have been made or broken by the modes in which they allocate capital.  Capital allocation is the hero when times are booming and the culprit when we face crashes like we did in 2008.  Great AssetTech is key to navigating the shoals, to steering the ship through the narrow passage dividing boom and bust.

AssetTech’s time is upon us.

In an earlier article, Marketing Darwinism spoke to Pulak Sinha, Founder and CEO of Pepper.  Since we spoke with Pulak, the company has done some incredible things.  We enjoy watching the evolution and growth of those we’ve covered before.  

Marketing Darwinism:  Pulak, some amazing things are going on.  Tell us a bit about developments.

Pulak Sinha:  Thanks Paul.  There are many things to say but I’ll restrict it to three.  First of all, we couldn’t be happier with our customers.  They are amazing “partners” in the business and tell us that they are realizing real value very quickly from the Pepper platform.  As they take on new workloads, they are able to do so seamlessly and get to ROI in record time.  Nothing makes us happier.  Second, we are happy to announce that as of January 2022, we have over $6 billion on the platform, which is testament to the efforts of our team and the intense partnerships I referred to above.  Finally, we are happy to be able to announce our “Pepper Inside” campaign with you.  Please look for our ads on LinkedIn and elsewhere and check out our website for our benefits statement- how Asset Management and related companies can benefit from “Pepper Inside.”

Marketing Darwinism: Superb updates. Congrats on the $6 Billion.  What’s next?

Pulak Sinha: We are focused like a laser now.  We want to get more companies on our platform but also to deepen our footprint/partnerships with existing customers.  We built a platform for a reason- not to just offer one point solution and then be done.  We are talking full life-cycle, cross-workload stuff- truly a platform.  2022 is the year of the platform and “Pepper Inside.”

Marketing Darwinism: You’ve helped coin the term “AssetTech” as a sub-area of FinTech.  Tell us more.

Pulak Sinha: Paul, the numbers are just staggering.  PwC estimates that approximately $120 trillion is managed world-wide by Asset Managers.  $120 trillion!  This area dwarves so many others that get more “respect” and focus.  We want to change that. We want to help steward a new era of technology and trust in the world of Asset Management, an area of enormous importance.  Thus, the term “AssetTech.”

Marketing Darwinism: How do you see 2022 as compared to 2021?

Pulak Sinha: 2021 was a strange year.  People went through a lot.   Death and health issues were everywhere. Commerce pulled up.  Investors focused on different things than usual.  Tumult was a constant.  Our team worked hard to stabilize, to be optimistic, and to serve customers.  We more than doubled the business in the year and are very proud of that.  But there is so much more to do- that’s 2022!

Marketing Darwinism: Tell us about “Pepper Inside”

Pulak Sinha:  We as a team conceived of this campaign after a realization:  When we are “inside” an organization –which is to say when Asset Managers run the Pepper platform, the level of stewardship – of money, data, assets- goes up and investors can rest assured that their money is going to be handled with an eye towards high ROI, risk management, and so on.  Trust.  Pepper Inside is about trust and results.  When we realized that, we knew we had to go big with this campaign.