Israeli startup Capitolis developed a platform which encourages economic cooperation between various banks and financial institutions, and strives to become a sort of capital-market marketplace. The company recently secured a massive $90 million Series C, led by a16z - Andreessen Horowitz - a prominent Silicon Valley venture capitalist fund, which has previously invested in tech superstars like Facebook, Instagram, Slack, Box, Asana, Lyft, and Pinterest.
Over $8 trillion set free
Heavy regulation on conservative banking institutions tends to cause inefficiency to run wild, leading to losses of hundreds of billions of dollars. Capitolis’s network software enables financial institutions to optimize their balance sheets, and maximize financial gain on their assets.
Stock markets are composed of banks and hedge funds, often holding positions of trillions of dollars, against one another. Let’s say that Deutsche Bank is open, opposite Citi Bank, on a position to purchase $200 million in foreign currency, with the position expiring in a couple of weeks. As the process inches along, the money is frozen, and not active. This is where Capitolis enters the frame, identifying if Citi has open positions on Deutsche Bank, even if on a different commodity, and automatically offsets the position. Meaning, if side A promised to $200 million for X and side B pledged $200 million for Y, then instead of having $200 million frozen in the books - the system cancels each of the $200 million out, leaving the books showing zero. According to Capitolis, its automated optimization platform has helped release over $8 trillion in unnecessary positions from 75 financial institutions.
“We launched Capitolis four years ago to fundamentally re-imagine how the capital markets operate. Just as Airbnb has brought more capacity to the lodging industry, Capitolis is bringing meaningful additional balance sheet, capital and financing capacity to the market that is structurally and meaningfully constrained to create healthier, more vibrant and growing financial markets,” said Gil Mandelzis, CEO and founder of Capitolis.
Capitolis was founded in 2017 by Gil Mandelzis, who founded Traiana, which was acquired by ICAP in 2007 for $250 million; former Thomson Reuters CEO Tom Glocer, and Igor Teleshevsky. Currently, the company employs 90 people split between New York, London, and Tel Aviv offices. The Series C round was led by Andreessen Horowitz, with existing investors Index Ventures, Sequoia Capital, S Capital, Spark Capital, SVB Capital, Citi, J.P. Morgan and State Street also participated in the round. The recent round brings Capitolis’ total funding to date to $170 million.
“What sets Capitolis apart from other financial services players is the sheer scale of management’s ambition and the substantial talent, technology and capital milestones they have achieved in bringing their innovative services to market,” said Alex Rampell, partner at a16z.
