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.

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 | romi@thekkmgroup.com

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.

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.

A guest post by: Pulak Sinha, CEO Pepper and Paras Shah, CEO LAMR Group

In the world of Business and Technology, two areas are drawing a great deal of attention- FinTech and Security.  It’s no surprise- they are deeply connected and causally related areas.  The connection between the two reminds us of the apocryphal story of Bank Robber Willie Sutton who when asked why he robbed banks, replied sheepishly, “Because that’s where the money is.”  So too with Fintech.

In our experiences- very different experiences that is—the issues of Security and Financial Services converge neatly and can be summed up with two core conditions:  Stewardship and Trust.  When the “product” being dealt with is peoples’ money or other core assets, the absence of trust is a death-knell; conversely, the existence of trust creates a bridge to success.  For the FinTech dealing with money, the role of stewardship is critical- they have to be dutiful stewards of both money and data related to that money.

Stewardship is of course not simply about intent.  It is also about having the systems in place- and the processes, culture, and personnel- that allow for the enactment of that stewardship.  Good intentions are wonderful, but insufficient.  Stewardship is not about a point in time, either.  It is about ongoing resiliency and an “always on” culture of proactive behaviors that ensure the proper handling of money, data, and other assets.

Financial Services as an industry has a mixed record here.  For the most part, things are good.  Most people interact with the industry on a daily basis and do so with ease.  Of course, when things are almost always good, we take them for granted.  As such, when a lapse or breach does take place, it becomes the defining characteristic, the Achilles heel of an otherwise useful and productive company.  In addition, since we are talking about money, data, and personal information, such lapses can have outsized impacts on peoples’ and companies’ lives.  It’s great to be good 99.9999% of the time.  But if that .0001 % possibility is an “extinction event,” then even that is not tolerable.

The responsibilities here are joint.  In the world of, for example, Asset Management, the AM company has to take the issue seriously and invest in the right systems and platforms to ensure that ROI doesn’t come at the cost of impossible risk or regulatory breach.  But the investors who entrust their money to the AM company also have to demand of its executives to invest in these systems, processes, and people.  The passive approach by any party is a non-starter.

Massive advances have been made in Security but just as they’ve been made, the attack vectors have multiplied exponentially.  The Security industry has done a fine job of elevating Security to a top business issue, but many companies still honor that notion only rhetorically.

We need a new paradigm.

Trust in Fintech is key.  So too is stewardship.  A flexible and powerful security stance helps get us to both.

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.