Fintech co Capitolis raises $40m

Gil Mandelzis / Photo: Eyal Tueg, ira prohorov

Capitolis's technology enables banks to cooperate to optimize their use of capital.

Fintech company Capitolis has announced the successful completion of its Series B round of $40 million, led by Spark Capital and SVB Capital. Existing investors, Index Ventures, Sequoia Capital and S Capital also participated in the round, which brings the total capital raised by the company to date to $70 million.

Capitolis was founded in 2016 by its CEO Gil Mandelzis, Tom Glocer, chairman, and Igor Teleshevsky, VP Engineering. Mandelzis founded Sequoia-backed fintech company Traiana, which was acquired by ICAP for $250 million. Glocer is a former CEO of Thomson Reuters. Capitolis currently has 55 employees in New York City, London and Tel Aviv.

Capitolis has developed a platform through which financial institutions are able to collaborate, reduce capital utilization, and find the most attractive sources of capital, resulting in higher returns on capital and greater liquidity in global markets.

Capitolis says that the current investment will support its next phase of rapid growth, including the expansion of its technology platform, functionality and product offering. It says that it now has over 50 financial institutions live on its system, that have recorded transaction volumes of $1.5 trillion notional, and that in 2019 notional transaction volumes have increased by 25 times since last year.

"The capital markets world was shaken by the financial crisis of 2008, and regulators therefore changed the business logic that defines a bank. Major banks now have to be safer, but for that they also need to be more efficient in allocating their capital," Mandelzis explained to "Globes". Capitolis facilitates more efficient management of capital, in two ways. "The bank has to maintain a certain level of capital against its activity with customers, but this burden either makes the deal more expensive for the customer, or else it prevents the bank from serving the customer in the first place. Trillions of dollars of unnecessary positions sit on the banks' books that could simply be made to disappear."

Mandelzis explains that Capitolis finds these opportunities in financial databases and automates the set-off process, including all the bureaucratic procedures involved. Up to now, he says, finding such opportunities, and carrying out the set-off itself, required the allocation of large resources, and was therefore done on a small scale. By automating the process, he says, it can be carried out widely and rapidly, finding and utilizing opportunities that otherwise would go begging.

The second way, Mandelzis says, is to find for financial bodies the best place to park a position after set-off, for a fee. "The banks do this on a small scale by hand, and only once in a while. Our vision is that in the future this optimization will take place between all the players in the world, for all financial products, all the time. For that you need technology and a large network," Mandelzis says, explaining the large fund-raising round.

Among Capitolis's customers are HSBC, Citibank, Deutsche Bank, Société Générale, Standard Chartered, and Nomura.

"It is very gratifying to us that some of the world’s most successful investors have chosen to back our vision for safer, more efficient and more profitable capital markets leveraging Capitolis technology," Glocer said in the company's announcement. "We now have the funding, the management team, and the core customer adoption to grow Capitolis into a major industry infrastructure and force."

Published by Globes, Israel business news - en.globes.co.il - on November 20, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Gil Mandelzis / Photo: Eyal Tueg, ira prohorov
Gil Mandelzis / Photo: Eyal Tueg, ira prohorov
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