The Drawdown (TDD): What does Mercatus do, and who are your typical clients?
Chris Webb (CW): Mercatus is an investment lifecycle management platform. Our main clients are real asset fund managers and investors, within the infrastructure, power and renewables space and quickly expanding into real estate. To date, the broader real assets space has been our real sweet spot, but we also cover more standard PE asset classes like buyout, growth equity, and VC.
TDD: What were your main reasons for joining?
CW: The key attractions to making the move was the gap I saw in the market and Mercatus’ modern approach to closing that gap.
Real assets, especially renewables, are estimated to grow by 200-300% over the next four or five years based on Preqin research. When I look at the offerings available in the market today, most of the providers are coming out of the private equity space and trying to stretch into the real assets space, however, infrastructure and real assets are fundamentally different beasts.
The amount of data and granularity you need for these assets is very different to a buyout or VC portfolio company. Other providers in this space think it’s fine to use the portfolio company model. I think it’s a common misconception across software and service providers that private equity and real assets are fundamentally the same on the investment side – but that’s just not the case.
Also, in our industry, technology is largely dominated by legacy players with products that are ten, twenty years old. There may have been some face lifts over the years, but the underlying technology is still the same. To me, Mercatus just felt like a breath of fresh air in a fast-growing industry that hasn’t fundamentally changed its approach to investment management or the tools it uses in decades.
TDD: What are you most excited about in this new role?
CW: I firmly believe that we’re going to see a shift in the next one to three years where managers are deemed either ‘haves’ and ‘have-nots’ based on whether they’ve invested in proper investment and asset management technology or are still using Excel for everything.
With the growth of capital in this space, there’s too much competition in the market and people are paying more for assets, which of course eats into investment returns. The dominoes will fall when people realise that running their businesses through Excel and Outlook is no longer acceptable, and they will lose out because investors will work with the managers who have an edge and make better investment and asset management decisions in an environment of decreased risk.
As firms start to realise they are behind the curve and start to look at their digital strategy, many will go down the route of building a custom data warehouse with a business intelligence tool on top – we want people to know there’s a better way.
Another aspect of Mercatus that I’m excited about is our work in the ESG space. ESG is a massive topic in the industry right now – and one that isn’t going away. ESG is about dealing with data and risk at the asset level, which is where we live. Because of that, we’re able to track information and bring it together in a way that really doesn’t exist elsewhere.