Why Canapi is Leading OpenYield’s Seed Financing

Fixed Income: A Massive Market, Stuck in the Past

Fixed income, valued globally at ~$140T, is one of the world’s largest asset classes and a cornerstone of the modern financial system. Countries, corporations, and local governments rely on these markets to fund infrastructure, fuel investments and deliver steady returns to investors. Yet, despite its scale and importance, fixed income lags far behind other asset classes in technological sophistication.

Whereas equity trading technology has seen so much innovation that it’s almost too easy to trade stocks (we recommend streaming Dumb Money for more on this!), fixed income remains hampered by inefficiencies. This is partly due to their inherent complexity: while a company like GE may have a single stock, it might issue hundreds of bonds, each with unique yields, durations, and tax implications. Municipal bonds further compound the challenge, with millions of securities issued by local governments for everything from road repairs to school construction.

Liquidity is another hurdle. Bonds are designed for long-term holding, delivering predictable returns but discouraging frequent trading. This limits availability and complicates price discovery. Unlike stocks, where prices are consistent and visible, bond prices can vary widely, influenced by factors ranging from issuer credit quality to personal buyer-seller dynamics.

Historically, fixed income trading has relied on a request-for-quote (RFQ) system (often conducted by phone!) where buyers request prices from sellers. Without centralized exchanges, this opaque process favors entrenched players and excludes all but the most seasoned participants.

For retail investors and wealth advisors, these barriers have been prohibitive. High costs, lack of transparency, and operational hurdles make fixed income far less accessible than equities or even crypto. Bond ETFs give investors some of the value of fixed income but tend to be one-size-fits-all and cannot deliver the tax and portfolio-optimization benefits that investors really want. While the shift toward electronic, equity-like trading is underway, progress has been slow. AI and automation - already mainstays in equity markets - are only just now beginning to make inroads in fixed income.

Over the past two decades, electronic trading platforms like MarketAxess, Tradeweb and Trumid have introduced centralized order books and multidealer platforms, improving liquidity and transparency. Order and execution management systems like FlexTrade and Aladdin have enhanced operational efficiency and the rise of algorithmic trading strategies at firms like Citadel and Jane Street have provided counterparties with a much wider array of readily tradable fixed income securities. Yet, significant inefficiencies persist, leaving a clear white space for innovation.

The fixed income market is on the cusp of transformation. With the right technologies and platforms, it can become more transparent, efficient, and accessible - unlocking opportunities for investors of all kinds. This evolution isn’t just overdue - it’s essential to modernize one of the world’s most critical financial markets.

A Modern Fixed Income Platform

OpenYield is revolutionizing fixed income trading by delivering an equity-like experience for bonds. Their alternative trading system (ATS) brings cutting-edge technology to a market in desperate for innovation, transforming both how bonds are traded and who is able to trade them.

Axiomatically, the best companies start with the best teams, and OpenYield’s leadership is second to none. CEO Jonathan Birnbaum and CTO Hilton Lipschitz bring decades of experience from hedge funds, banking and fintech. They have led large teams, built complex systems and earned stellar reputations in the capital markets – crucial bona fides for navigating the intricate and at times insular world of fixed income trading.

Jonathan and Hilton have built the bond platform they’ve always wanted, methodically addressing the key pain points and barriers that have defined existing solutions.

• Opaque Pricing and Execution: OpenYield offers firm, actionable liquidity with live, algo-enabled two-way markets and no "last look." Investors see real prices they can rely on, improving transparency and execution.
• Technological Limitations: Legacy platforms with outdated systems hinder fast execution and usability. OpenYield’s low-latency, cloud-based infrastructure delivers real-time pricing and a seamless experience.
• Fragmented Liquidity: With over 170 electronic trading venues globally, liquidity is scattered. OpenYield consolidates this into continuous two-way liquidity sourced directly from top market makers, creating a curated selection of the most liquid bonds.
• Limited Retail Access: Historically, retail investors have been locked out of bond markets due to high minimums and inadequate tools. OpenYield democratizes access with intuitive workflows, no minimums, and institutional-grade market data.

Together, these features create a novel fixed income experience, enabling institutional investors to optimize strategies, market makers to access new demand, and retail investors to unlock the full potential of bonds.

What Happens When Yield is Truly Open?

OpenYield’s vision is transformative. Institutional asset managers and algorithmic traders will gain access to deeper liquidity, rich data, and APIs enabling scalable automation and AI applications. Trading will match the speed of equity markets, empowering firms to refine strategies, enhance returns, and operate with greater efficiency.

For wealth advisors and brokerages, OpenYield unlocks opportunities to attract new clients and deepen existing relationships. Advisors can allocate portfolios with precision, manage risk, provide steady income, and leverage tax savings. We’ve written before about the importance of wealth platforms delivering wider and more attractive solution sets; with OpenYield, fixed income will soon become a must-have tool in the arsenal of any ambitious wealth firm.

Retail investors also stand to benefit immensely. In the high-interest rate environment of the past few years, consumers have come to expect savings rates of 4 or 5%. While that is of course not sustainable as rates declines (and has never been a particularly favorable trade for the platforms that offer it), access to fixed income could well be the perfect replacement, delivering even higher yields with low risk and tax advantages to boot. Already we’re seeing retail platforms like Public roll out bond offerings; we expect this to become the norm as OpenYield partners with other popular retail platforms to democratize access to one of the world’s largest asset class.

Looking Ahead

The road ahead for OpenYield is both challenging and exciting. Success will depend on its ability to deliver best-in-class execution and unlock demand from retail and institutional investors alike. The early signs are promising, with leading algo dealers, retail platforms, and institutional partners already committed to the platform. In just 18 months, OpenYield has achieved key milestones that are rare to see in a Seed-stage company: regulatory approval for their ATS, strategic partnerships with industry leaders like TD Securities and RBC Clearing, and a robust pipeline of institutional and retail customers.

Those achievements are just the beginning. We believe OpenYield has the potential to transform the fixed income market, much like Tradeweb and MarketAxess did in their time. By addressing core inefficiencies, OpenYield not only streamlines bond trading but also paves the way for innovative use cases, from fixed income direct indexing to advanced tax strategies and beyond.

We’re excited to introduce OpenYield to our network of over 70 financial institution limited partners. As competition for wealth clients and demand for best-in-class retail experiences intensifies, OpenYield is poised to become a critical differentiator for early adopters, delivering meaningful value for customers and strengthening client relationships.

The entire Canapi team is thrilled to support Jonathan, Hilton and the rest of the OpenYield crew as they build the future of bond trading. If you’re a retail platform, institutional taker or market maker ready to modernize your fixed income operations, we encourage you to connect with OpenYield!