Many of the startups you tend to hear about in the fintech world are creating solutions for consumers and businesses. A startup that aims to develop technology to serve the biggest financial services users of them all — the big banks themselves and how they move money — is announcing a huge funding round to double down on that opportunity.
capitolis is creating new technology to address how money moves in the capital markets to speed up and also simplify the way banks transact with each other. Already raised 110 million dollars , in a Series D which, according to the US/Israeli company, values it at $1.600 billion. The total raised for the start-up is 280 million dollars.
capitolis it is already working with more than 100 large banks, and says it has transacted more than 60 billion “notional” from more than 30 investors and has optimized more than 13 trillion in operations through its “compression and novation engine” : All figures are up for the last year, when it last raised funds.
Your product works in a very opportune scenario: ad that its compression technology was being used by "a large network of global banks" to reduce their exposure to Russian rubles, a move related to the global move to sanction Russia and its financial institutions after his unprovoked attacks on Ukraine.
The creation of the tool to reduce exposure to the ruble was a first for the startup, and it was something that it built specifically after these banks were approached to do so.
"capitolis was able to reduce these large exposures and promote financial soundness and stability to the benefit of the entire capital markets system.
That urgent, high-profile aspect of capitolis underlines the startup's position in the market and points out why it is attracting funding of the caliber of investors such as Canapi Ventures, 9Yards Capital and SVB Capital (all prolific fintech investors) leading the rounds, with a16z, Index Ventures, Sequoia Capital, S Capital, Spark Capital, Citi, State Street, a name that has also been in the press a lot lately for the investigations it has been doing into Russian oligarchs and the slippery global movement of their money, and JP Morgan also involved .
In particular, with this funding, Jeffrey Goldstein, former US Under Secretary of the Treasury for Domestic Finance and Counselor to the Secretary of the Treasury; and George Osborne, former UK Chancellor of the Exchequer, also join the board of capitolis (Both are, respectively, Senior Advisor to Canapi and Founding Partner of 9Yards).
The example of the Russian ruble underlines the challenge capitolis has identified and been addressing, is endemic to any legacy financial service.
Capital markets focus on giant sums of money handled through foreign exchange, equity swaps and other major capital transactions typical of large banks; but at the end of the day, many of the systems that the big banks use to carry out these transactions are based on an old infrastructure, with the money moving through many transaction points that can create delays and, therefore, costs. .
In fact, the issue is significant enough that when disconnecting Russia from the SWIFT financial network was first discussed, many said it would not realistically be possible to do so quickly.
While that might be the case, the solution of capitolis highlights how you can take a new and different approach to start the process and speed it up. It describes its solution as one that “enables banks, investors, and institutional clients to expand their reach through a collaborative platform and gateway to connect opportunities with a democratized model of institutional capital, safely removing the barriers that otherwise otherwise they would restrict growth in the market.”
Democratize is the keyword and it is an interesting approach, given the other developments that have been seen in the world of decentralized finance. The solution of capitolis is based on proprietary algorithms that the company says allow institutions such as banks, hedge funds and asset managers to eliminate, move or create trading positions by collaborating on those positions with other financial institutions, which in turn means greater capital reserve and greater lines of credit.
“Now we are moving to the next phase of growth of capitolis as we grow exponentially year over year and bring greater innovation to the capital markets," said Gil Mandelzis, CEO of capitolis. “Years after launch, the capital market business has already seen more than $60.000 billion worth of transactions from more than 30 investors. Gil Mandelzis has optimized more than 13 billion dollars in operations through his compression and novation engine, serving more than 100 financial institutions. Our vision is becoming a reality and we look forward to driving our market in the coming months and years." Of note: Mandelzis co-founded the company with Tom Glocer (the former head of Thomson Reuters who is a director of Morgan Stanley and also invests in and co-founds other fintech startups).
“We are delighted to partner with Gil, Tom and the entire team at capitolis as they build the next generation of technology infrastructure to help support the safe and efficient growth of the capital markets,” said Dan Beldy of Canapi Ventures. “At Canapi Ventures, we focus on great leadership teams and category-defining innovations that help create a healthier, stronger and more inclusive financial ecosystem. We look forward to working with the team at capitolis as they continue to grow and create a company of great legacy and impact.”
Osborne added, in his own statement: “At 9Yards Capital we are impressed with capitolis and the innovation it brings to the task of making our financial system safer and our capital markets more efficient.”
