Israeli fintech firm Capitolis has raised US$56 million in a funding round backed by Barclays, J.P. Morgan, and BNP Paribas.

The investment was made through a SAFE-like agreement, where the company’s valuation will be set in a future round.

Capitolis, founded in 2017, provides technology for banks to offset positions across assets and reduce regulatory capital requirements.

This is the firm’s second consecutive SAFE round, following a US$20 million raise in November 2023 led by Citibank.

The company has now raised a total of US$350 million from investors including Index Ventures, Andreessen Horowitz, Sequoia Capital, and Spark Capital.

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🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Consecutive SAFE rounds create growing complexity for mature startups

Capitolis’s second consecutive SAFE round within eight months highlights a growing trend that financial experts warn could complicate future fundraising.

Research shows that while SAFEs were designed in 2013 to simplify startup financing by eliminating upfront valuations, multiple SAFE rounds can lead to “cap table chaos” and unexpected dilution for founders 1.

This becomes particularly concerning for companies like Capitolis that have reached significant scale, with 160 employees and 40% annual growth, yet are still avoiding traditional priced rounds that would establish clear ownership stakes 2.

Financial advisors note that prolonged use of SAFEs without conversion can leave both investors and founders uncertain about actual equity positions, potentially creating complications when the company eventually pursues a traditional funding round 3.

The trend suggests that even well-established startups are prioritizing financing flexibility over valuation clarity, despite having previously raised at a $1.6 billion valuation in 2022.

2️⃣ Client-investors signal strategic value in challenging fintech market

The participation of major banks as both clients and investors demonstrates confidence during a period when fintech investment dropped 48% globally in 2023 to $51.2 billion 4.

Banks like Barclays, J.P. Morgan, and BNP Paribas investing in Capitolis—a company whose platform they actively use to optimize regulatory capital—represents a strategic validation of the business model beyond typical venture returns.

This client-investor dynamic is particularly significant given that fintech funding has struggled to return to pre-2021 levels, with down rounds becoming more common at 20% of new fintech investments in recent quarters 5.

The regulatory capital optimization that Capitolis provides becomes more valuable during economic uncertainty, when banks face stricter capital requirements and seek operational efficiencies.

The fact that banks are willing to invest while maintaining client relationships suggests they view Capitolis’s technology as essential infrastructure rather than an optional service, potentially explaining their willingness to participate without demanding traditional valuation disclosure.

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