Fintech

Capitolis valued at $1.6B after raising $110M for new tech to update capital markets trading

Comment

Sea wave made of money
Image Credits: Viaframe (opens in a new window) / Getty Images

A lot of the startups you tend to hear about in the world of fintech are building solutions for consumers and businesses. Today, a startup that’s aiming to serve the biggest financial services users of them all — the big banks themselves and how they move money — is announcing a big round of funding to double down on that opportunity.

Capitolis, which is building new tech to address how money is moved around in the capital markets to speed up and simplify how banks transact with each other, has raised $110 million, a Series D that the U.S./Israeli company said values it at $1.6 billion. This latest round brings the total raised by the startup to $280 million.

Capitolis is already working with more than 100 big banks, and it says that it has transacted over $60 billion “notional” from over 30 investors and has optimized over $13 trillion in trades through its “compression and novation engine” — all numbers that are up over the last year, when it last raised funding.

More directly, its tech has been put to work in a very timely scenario: Last week, it announced that its compression technology was being used by “a large network of global banks” in order to reduce their exposure to Russian rubles — a move related to global sanctions on Russia and its financial institutions after its unprovoked attacks on Ukraine.

Building the tool to reduce ruble exposure was a first for the startup, and it was something that it built specifically after getting approached by these banks.

“Capitolis was able to reduce these large exposures and promote financial soundness and stability for the benefit of the whole capital markets system,” it said.

That high-profile, urgent aspect of Capitolis’ work underscores the startup’s position in the market and points to why it’s attracting the funding from the caliber of investors that it is.

Canapi Ventures, 9Yards Capital, and SVB Capital (all prolific fintech investors) are leading this round, with a16z, Index Ventures, Sequoia Capital, S Capital, Spark Capital, Citi, State Street — a name that’s also been in the press a lot lately for the investigations it’s been doing into Russian oligarchs and the elusive, global movement of their money — and J.P. Morgan also participating.

Notably, with this funding, Jeffrey Goldstein, who is the former U.S. Under Secretary of the Treasury for Domestic Finance and Counselor to the Secretary of the Treasury; and George Osborne, former U.K. Chancellor of the Exchequer, are also joining Capitolis’ board. (The two are respectively a senior adviser at Canapi and founding partner at 9Yards.)

The Russian ruble example underscores the challenge that Capitolis has identified and has been addressing, and it is one that is somewhat 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 big banks, but at the end of the day, a lot of the systems in place that big banks use to make these transactions are based on old infrastructure, with money moving through many transaction points that can create delays and, therefore, costs.

Indeed, the problem is significant enough that when Russia’s unplugging from the SWIFT financial network was first being discussed, many said that realistically it would not be possible to truly enact quickly.

While that might well be the case, the Capitolis solution underscores how you can take a different, new approach to begin the process and get it moving faster. It describes its solution as one that “enables banks, investors and institutional clients to expand their reach through a collaboration platform and gateway to connect opportunities with a democratized model of institutional capital, safely removing barriers that would otherwise restrict growth in the market.”

Democratizing is the key word here and it’s somewhat of an interesting approach, given the other developments we’ve seen in the world of decentralized finance. Capitolis’ solution is based around proprietary algorithms, which it says let institutions like banks, hedge funds and asset managers eliminate, move or create trading positions by collaborating on those positions with other financial institutions, which in turn means a larger pool of capital and bigger credit lines.

“We are now moving to the next phase of growth for Capitolis as we grow exponentially year after year and deliver increased innovation for capital markets,” Gil Mandelzis, Capitolis’s CEO, said in a statement. “Two years after launch, the capital marketplace business has already transacted $60B+ notional from over 30 investors. Capitolis has optimized over $13 trillion in trades through its compression & novation engine, serving over 100 financial institutions. Our vision is becoming a reality and we look forward to super-charging our marketplace in the months and years to follow.” To note: Mandelzis co-founded the company with Tom Glocer (the ex-head of Thomson Reuters who is a director at Morgan Stanley and also invests and co-founds other fintech startups).

“We are thrilled to be partnering with Gil, Tom and the entire Capitolis team as they build the next generation of technology infrastructure to help support the safe, efficient growth of the capital markets,” said Canapi Ventures’ Dan Beldy in a statement. “At Canapi Ventures we are focused on great leadership teams and category defining innovations that help create a healthier, more robust and more inclusive financial ecosystem. We look forward to working with the Capitolis team as they continue to grow and create a company of great legacy and impact.”

Osborne added, in his own statement: “At 9Yards Capital we’re impressed by Capitolis and the innovation it is bringing to the task of making our financial system more secure and our capital markets more efficient.”

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

9 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

11 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android