Capitolis Nabs $1.6 Billion Valuation and Adds Osborne to Its Board

(Bloomberg) -- Capitolis, a startup that helps banks manage their capital and risk exposures, raised $110 million in its latest funding round from investors including Canapi Ventures and George Osborne’s 9Yards Capital. 

The fundraising valued the company at $1.6 billion, Capitolis said in a statement Tuesday. Osborne, as well as Canapi’s Jeffrey Goldstein and Dan Beldy, will join the startup’s board. 

Capitolis, founded in 2017, has worked with more than more than 100 financial companies through its compression and novation platform and transacted more than $60 billion in its capital-marketplace business. The startup, which counts Citigroup Inc., JPMorgan Chase & Co. and State Street Corp. among clients, has tripled its revenue over the past two years and expanded its reach, with a deal last year to acquire optimization and compression provider LMRKTS. The latest funding round will help Capitolis invest in its business and refill its coffers if another deal comes along, according to founder Chief Executive Officer Gil Mandelzis. 

“We want to refill the tank plus some, and we want to have enough fuel in the tank such that we could opportunistically make additional acquisitions,” Mandelzis said in an interview. “The last couple of years have been very meaningful for us from a growth perspective and impact perspective in the market. So we’ve grown massively.”

Mandelzis said the company plans to take three additional offerings live this year, in addition to its two already established products. He expects demand from customers to remain strong as markets adjust to new regulations and need help refining how they handle their capital and balance sheets.

‘Something Huge’

“Capital markets need to change,” Mandelzis said. “We believe that we have an opportunity to do something huge here.”

Earlier this month, Capitolis helped some global banks reduce their exposure to the Russian ruble amid sanctions from the invasion of Ukraine and economic turmoil in the country.

“They really do solve a specific problem,” Canapi’s Goldstein said in an interview. “They allow their clients to optimize capital and balance-sheet exposures without incremental risk and that is the key to the current regulatory environment.”

Mandelzis previously founded and built trading technology company Traiana which was bought by ICAP Plc for about $247 million in 2007. He’s planning on a different path for Capitolis, aiming to keep the company independent. He also sees “meaningful disadvantages” to public markets, saying that he’d likely wait for any initial public offering if the firm does eventually choose that route. 

Osborne is a former U.K. chancellor of the exchequer while Canapi’s Goldstein has worked at the U.S. Treasury Department. Osborne said he hopes to help Capitolis navigate the regulatory and private industry elements of the business as a new board member.

“In technology, there is a general mindset to ‘move quickly & break things.’ Unfortunately, that does not work well in fintech -- this is a heavily regulated industry and for good reason,” Osborne said in an emailed statement. “We were encouraged to see Gil’s focus on building a business with regulators in mind -- thinking critically on how to satisfy both private and public sector objectives.”

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