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!

This week we have an interview with Ed Messman and Kevin Cawley of Rook Capital – where traditional real estate finance meets DeFi. For more info please go to … www.rook.capital

Marketing Darwinism:  Ed /Kevin:  Tell us about Rook Capital. Where did the inspiration come from?

For Ed, the inspiration came from two personal real life use cases of having to sell homes prematurely because of lack of access to liquidity.  Then more recently watching the phenomenal rise in housing prices and thinking about the next generation of home buyers getting boxed out from home ownership.  The original idea however has been on Kevin’s mind for a few years.  How can we at once innovate on a mortgage idea without attempting to disrupt what works with mortgages, to provide liquidity to house-poor Americans, and to make real estate appreciation attainable to everyone—these are the questions we feel we’ve answered with Rook.

Marketing Darwinism:  What are the main issues in the Housing Market?

Home affordability (for everyone but particularly for the next generation that is newly entering the workforce and family stage of life).  Access to easy investing in the asset class and/or the simple ability to support a friend, family member or accommodate a unique situation with a home purchase.  Easier access to liquidity for all stakeholders if and when you need it for your largest asset – your home.  The asset class is huge- $45 trillion- but the riches don’t accrue to everyone in a fair manner.

Marketing Darwinism:  Where does innovation come in with regard to these issues?

To fix home affordability we either need to increase supply (which will take years and is multi-pronged in new builds, zoning, supply chain, etc.) or develop new creative financing mechanisms- like a Shared Value Mortgage.  Furthermore, how do we engage the broader community of people to rally around supporting this by giving them a way to help by co-investing together within a fractionalization framework that is easy to understand, trustworthy, and not onerous

Marketing Darwinism:  What is your plan for scale and market ownership?

We will leverage and partner with the existing and entrenched ecosystem of 1.5M real estate agents and 750K mortgage lenders to help them introduce a new option for homebuyers.  By working with the existing ecosystem we align incentives and achieve scale more naturally than trying to completely disrupt or taking a full DTC approach.  We believe very much in scaling through channels and partnerships.

Marketing Darwinism:  Tell us about your individual journeys and how you arrived here?

Ed: I spent the first half of my career in venture finance where I structured financial instruments for high growth tech companies.  I jumped onto the operating side in 2008 where I was involved in software, fintech and data analytics startups.  As a parent of 3 Gen Z kids, I’m watching a new generation embrace new behaviors and mindsets and also face a daunting path to homeownership — which they are redefining what that even means.  The collision of fintech, real estate price acceleration, and DeFI with the behaviors and wants of a new generation has sparked a new mission for us.

Marketing Darwinism:  Parting thoughts?

Owning a home is sacred.  It offers the space for raising a family, for fellowship, for rest and sanctuary.  The issue in front of us and our kids is daunting and will require new creative ways that embrace the new mindsets and behaviors that are already in place.  It will require resilience to innovate in the backdrop of a highly regulated environment.  It will require more than just us…but the community at large…including the brave new world of DeFi.  If there were ever a moment for DeFi to flex it’s might, it is now.

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. 

A guest post by Romi Mahajan
CMO Quantarium

In the financial world, a few themes have emerged of late that are worthy of note.  These themes connect strongly to both the risk and the opportunities available in the world of Finance and Fintech.  They should be of interest not only to CFOs and other people whose roles relate directly to Finance but also to anyone looking at the health and well-being of industry in general.

The emerging themes are:

1. Decentralized Finance (Defi)
2. Platformization
3. Data Management
4. Risk and Regulation

We say “emerging” not because all of these ideas are new but because the rate of change in these spaces is high-enough to warrant comment.

A sentence or two on each.

1. Defi:  With the advent of Block chain and Crypto on the one hand and increasingly enabled consumers on the other, Decentralized Finance has emerged not only as a huge market but also as the subject of a culture war between incumbent/infrastructure-like finance stalwarts and a new breed of Cloud-enabled startups.
2. Platformization:  In the world of technology, cycles are common.  We are now in the phase in which connected and interoperable applications built on flexible platforms are the order of the day.  Point solutions are being abandoned in favor of platforms and funding patterns are shifting in that direction as well.
3. Data Management:  With data growing exponentially and AI/ML emerging as mainstays in business, a new truism exists:  Those organizations that frame data as an asset and who make the requisite investments in data infrastructure emerge as winners in a competitive marketplace.
4. Risk and Regulation:  Stories abound of financial mismanagement, large-scale and structurally inherent risk, and massive failure not only because of fraud but also because “asleep at the wheel” is almost a natural state without the infrastructure to deal with data, differential and complex asset classes, and the slew of regulations that govern the world of finance.

Far-sighted organizations will understand these themes not as discrete and disconnected but as part of a holistic view of Finance and its futures.  Customers and investors alike need to think of these four factors as they acid-test vendors and any organizations that purport to offer “solutions” for the various needs and opportunities in FinServ in general.

Those whose charge is to make the right technology purchase decisions in Financial Services, need to understand these trends not simply as “flavors of the month” but, instead, as tectonic shifts in how businesses need to run in a modern economy.  Similarly, investors need to take into account elements of a firm’s technology and business model that provide for medium and long-term growth, not just “flash in the pan” results.

These two audiences need to converge on the four themes.  The Financial Services and Fintech markets are attracting billions of dollars in venture capital and account for hundreds of billions of dollars of tech-spend.

Which companies will become the resonant Finance brands of the future?  To answer that ask yourself how they connect with and engage with these four themes.