Why Canapi is Co-Leading Capitolis’ $110M Series D Financing

The largest global banks have spent decades (in some cases, centuries!) building the relationships and infrastructure to reliably create, underwrite and distribute financial products. Capitolis’ platform enables banks to do more of what they do best without introducing additional systemic risk to the banking system. Capitolis combines technology, expertise, and a robust capital marketplace to develop solutions that enable financial institutions to optimize their balance sheets, identify ideal trading partners, and meet excess demand for key products and services.

The Wake of Crisis

The Great Financial Crisis of 2008 left a devastating trail of foreclosed homes, ruined lives and economic consequences. In the US alone, $9.8 trillion of wealth was lost as home prices plummeted and retirement accounts vaporized. Millions lost their jobs and unemployment soared to 10%.

In an effort to prevent a repeat of this calamity, global regulators introduced new regulations and limitations aimed at distributing risk across the financial system and preventing any one bank from ever again becoming too big to fail.

By and large, the measures worked. Today, the global financial system is safer and despite the occurrence of domestic and regional financial crises in the years since, no event (not even Covid-19) has triggered a negative impact at the scale we saw in 2008.

The trade-off is that stringent capital requirements and new risk accounting policies have made it expensive for banks to originate and warehouse the financial products that businesses, governments and consumers have historically relied on. In parallel, a 10+ year bull run led to the accumulation of trillions of dollars of investor capital, a lot of which is sidelined “dry powder” without the relationships or reach to find the right investment outlets.

These dynamics combine to create a system that is not optimized. Banks turn away customers and potential business; would-be investors struggle to access products banks can readily originate; end-customers settle for non-ideal financing sources.

The regulatory backdrop is undoubtedly a good thing, but there is a noticeable – and widening – gap in the efficiency of our global capital markets.

Bridging the Gap

The Capitolis team is precisely the right group to tackle an opportunity of this magnitude. Capitolis CEO and Founder, Gil Mandelzis, has spent his career involved in the development of global capital markets. Prior to Capitolis, Gil was the CEO of EBS BrokerTec, NEX Group’s (formerly ICAP’s) foreign exchange and fixed income electronic markets business. In 2000, he founded Traiana, a post-trade processing company, which he sold to ICAP in 2007. In 2017, Gil launched Capitolis together with Tom Glocer, former CEO of Thomson Reuters, and Igor Teleshevsky, a long-time colleague and former EVP of Engineering at Traiana.

Leveraging decades’ worth of experience and industry relationships, Capitolis has developed unique value-add products and services for both banks and institutional investors and is rapidly emerging as an important platform for all types of financial institutions.

Through Capitolis’ solutions, investors gain access to the types of investments they’ve always wanted but rarely had access to; end-customers get more of the high-quality service that only banks can offer; and a more distributed, balanced, diffuse capital markets system emerges, with meaningfully less risk concentrated in a small handful of large financial institutions.

By aligning the needs of key stakeholders, Capitolis has begun to bridge the efficiency gap and created the conditions for a rare win-win-win value proposition.

Fueling the Future of Capital Markets

This notion of a win-win-win for the capital markets – and our confidence in Capitolis’ ability to drive positive change for the global financial system – are just part of why we are proud to announce our investment in Capitolis’ Series D Financing.

In relatively short order, Capitolis has managed to build a world-class team, attracting engineering talent, capital markets veterans and regulatory experts from some of the world’s leading institutions. Storied investment firms like Sequoia, Index, Spark and a16z invested in earlier rounds, alongside premier financial institutions like JP Morgan, Citibank, State Street, Silicon Valley Bank and others.

Their faith has not gone unrewarded. Just 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. In just the past year, the company has tripled revenue, growth rate, clients served and their employee base.

Capitolis’ solutions are highly strategic to our bank Limited Partners. Multiple Canapi LPs are already using Capitolis’ innovative marketplace solutions to gain access to attractive new investment products. In the quarters to come, we’re excited to help Capitolis partner with more banks, and bring additional efficiency, value and safety to the capital markets.

Traction notwithstanding, we believe the Capitolis team is in the early innings of building a platform of global importance and enduring impact. We’re thrilled to be co-leading Capitolis’ Series D financing, alongside 9 Yards and SVB Capital, and we look forward to working with the entire Capitolis team and board for years to come.

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