Trusting the information in front of you and investing with confidence can be the difference in a portfolio that either booms or busts, Buchner says. And it is the kind of feeling – good or bad – that seeps from one part of an organization into another and then to clients, customers and limited partners.
The private market sector today is awash with streams of information which measure and monitor private investments in every way imaginable, but Buchner says there is an “underlying problem” with the way people in the industry “think about data holistically.”
“Most people in our industry have a natural skepticism about how much they trust information being presented to them,” he explains. Without context and an “aligned place” where people access information, the numbers representing how an asset is doing can hold vastly different meaning to a company’s accounting department, fundraising group, and management team.
“A lot of what is being presented comes from haphazard, bespoke or siloed sources,” Buchner says, and misinformation in data management always ends up as a cost.
That cost could be underwriting with inaccurate assumptions, or it could result in a regulatory penalty. But no matter what form it takes, acting on bad info will lead to low returns and the loss of trust from clients.
“You’re saying an investment is performing at a certain level, when in fact, it may actually be performing worse,” Buchner explains. “You’re increasing risk in your organization by making decisions without being fully or accurately informed.”
Mercatus, which develops a fully integrated data management platform for private market investors, has set out to provide investors with a “single source of truth” for intaking and analyzing data about their investments. The company “creates a delicate balance of confidence in reporting and connections between stakeholders and their portfolios,” Buchner says.
He cites a recent conversation with the Chief Technology Officer of an industry-leading private equity firm: “[Mercatus’] art is keeping its platform incredibly simple while at the same time providing depth for the people who need it.”
Another vote of confidence in the Mercatus platform comes from Paolo Martini, the Chief Executive Officer of renewable energy company BE Power. Buchner says Paolo recently described Mercatus’ offering as the “backbone” of BE Power, “an essential and core pillar” of the entire organization.
“You were effectively my source of truth in building the business,” Buchner recalls Paolo saying. “If I didn’t trust that source, or if I didn’t have a process built around a source of accurate information, I’d be in a lot of trouble.”
In May 2019, Paolo sold a majority stake in BE Power to an infrastructure-focused private equity firm called Zouk Capital. Without an integrated portfolio management system, Paolo says, “I would have absolutely not gotten the value of what I did when I sold the company.”
“More importantly,” he told Buchner, “[Mercatus] is now my gospel when I’m reporting to Zouk. Every bit of information, 100 percent, is coming from Mercatus, and there’s an entire ecosystem of people that rely on that result.”