Israeli fintech startup Capitolis, which developed an automated platform that creates a technological connection between leading players in the financial realm, and optimizes their financial gain, announced an $11 million funding round led by big market banks like JP Morgan, Citi, and State Street Bank.
Economic sharing between banks
Despite being well-established entities, most banks still operate inefficiently, which translates to hundreds of millions of dollars wasted per day. Capitols technology enables banks and large financial institutions a platform for cooperation in order to maximize the financial efficiency of their stock market activity, as well as the returns they receive on their assets.
According to the company, stock markets, which are mostly comprised of big banks and hedge funds, which find themselves in a perpetual state of having trillions of dollars in various open positions, one against the other, waiting for the bell to ring. 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. Since it was established, the company was successful in erasing over $5 trillion in unnecessary open positions for over 50 financial organizations, resulting in that capital being free for growth.
Capitolis was founded in 2017 by Gil Mandelzis, who founded Traiana, which was acquired by ICAP in 2007 for $250 million, along with former Thomson Reuters CEO Tom Glocer and Igor Teleshevsky. Currently, the company employs 75 people split between New York, London, and Tel Aviv offices.
Regarding the funding round, Gil Mandelzis noted: “We are extremely honored that three of our most important clients decided to show their support by investing. The investment is a true vote of confidence in the company’s vision, business model, and in the unique solution that we provide.”