Maybern, co-founded by Ashwin Raghu and Ross Mechanic in 2021, aims to tackle the complex accounting challenges faced by investment firms in the rapidly evolving private capital sector, which has grown substantially to encompass nearly $15 trillion in global investments. This sector, covering private equity, private credit, venture capital, and real estate funds, involves intricate custom calculations necessary for determining management fees and profit distributions among various stakeholders. Mechanic highlights the pervasive reliance on Excel for these calculations, which has led to numerous inefficiencies and errors, as well as a growing need for specialized software solutions that can streamline these processes and reduce reliance on manual calculations.
By mid-2024, Maybern successfully raised $14 million in funding, bringing its total investment to $26 million since inception. The urgency for tailored software solutions in the private capital market is driven by demographic changes, such as an increasing number of investments and a significant shortage of qualified accountants. While existing software tools offer some level of support, they have not kept pace with the burgeoning demands of the industry. Primary Ventures partner Emily Man noted that the technical infrastructure for private capital is outdated, which significantly hampers firms’ operations.
Ross Mechanic’s journey to founding Maybern stemmed from his experiences at Cadre, a fintech company specializing in real estate investments. He recognized serious inefficiencies in the accounting practices that heavily relied on Excel, where an entire team was tasked with verifying calculations and continually uncovering errors. The two co-founders, after two and a half years of development, launched Maybern’s software, which automates key calculations such as management fees, capital calls, and profit distributions, commonly referred to as waterfall calculations. This automation allows for better tracking of changes and improved quality control, which alleviates the challenges typically faced when multiple users collaborate on complex spreadsheets.
Gauge Capital, a private equity fund with $3.5 billion in assets, serves as one of Maybern’s early adopters. The firm faces unique complexities, as it has hundreds of investors, each with different negotiated agreements affecting management fees and profit allocations. The intricate nature of these contracts necessitates a customized approach to each capital call and payout calculation. Megan Clarke from Gauge emphasizes the importance of adhering to these agreements as part of compliance with legal standards, given the potential consequences of calculation errors, as demonstrated by the SEC’s recent actions against Insight Partners for mismanaged fees.
Maybern’s business model charges fees based on the assets managed through its software, with projections casting a potential annual revenue of $2 to $3 million as the platform grows. Currently, the company has onboarded seven clients, totaling approximately $17 billion in managed assets. Going forward, Mechanic aims to enhance the platform’s capabilities beyond automation towards enabling firms to run advanced analytical scenarios that can inform strategic decision-making related to asset sales and investor returns.
Despite its promising start, Maybern faces significant challenges as it operates within a niche market where investment firms historically have not leveraged specialized software for these detailed calculations. Competing firms have provided general ledger software, yet few have ventured into the intricate realm of managing complex calculations. Mechanic is aware of the need to find a balance between accommodating a broad array of client-specific requests and maintaining a streamlined software system that can cater to the common needs of investment firms. Ensuring that they do not become a bespoke consulting service while still addressing complex market demands is crucial for Maybern’s long-term success. A focused development strategy will be essential in navigating this balance and achieving their vision of enhancing efficiency and decision-making capabilities within the private capital landscape.