Investing in Capstack Technologies, the World's First Integrated Bank-to-Bank Loan Marketplace

In the wake of the 2023 Silicon Valley Bank crisis and amid high interest rates, the drive for small and midsized banks to diversify their deposit exposure and loan portfolios has begun.

As these banks — which comprise the vast majority of all banks in the U.S. — are more likely than larger banks to focus on a single sector or geographic area, they’re at increased risk of heightened regulatory scrutiny or even failure if their target market is disrupted. Overexposure to a particular customer base also leaves banks less resilient against defaulting borrowers, fraud and operational errors.

Banks can help mitigate these concentration risks via loan participation, by selling interests in loans they originate to other banks and/or purchasing interests in loans other banks originate. This can improve net interest margins as well as fund balance sheets and promote financial stability for both originating and participating banks. But the manual, relationship-driven processes behind traditional loan participation — not to mention small and midsized banks’ antiquated loan origination systems (LOS) and core banking stacks — have made bank-to-bank loan participation nearly impossible to implement at scale.

We believe that the time is ripe for a revolutionary solution that leverages digitization and cloud technology to streamline loan participation for the small and midsized bank sector. That’s why we’re excited to invest in Capstack Technologies.

Capstack Technologies is developing the first integrated operating system and bank-to-bank loan marketplace that helps financial services firms cooperate to diversify assets. The company’s SaaS solution integrates into originating banks’ core banking systems and LOS to extract and display data on loans these banks are looking to syndicate, then enables participating banks to search for loans that meet their specific criteria, ask questions live and submit bids with just a click. This helps originating banks manage their loan books, deposit mix and asset/liability matching while providing participating banks additional revenue streams. Capstack Technologies also integrates with participating banks' core banking systems for loan servicing and performance monitoring.

This innovative, scalable solution to a widespread concern springs from the minds and efforts of an impressive founding team. Capstack Technologies' co-founder and CEO Michal Cieplinksi is an experienced fintech lending and marketplace operator, having co-founded unicorn fintech lender Pipe and Fundbox, an embedded working capital platform for small businesses. On the technology front, co-founder and CTO Tzvika Perelmuter brings immense know-how from the over four years he spent leading R&D for loan management at Fundbox.

Given Capstack Technologies’ industry-leading solution, accomplished team and first-mover advantage in the untapped loan participation market, we’re pleased to announce our seed investment in Capstack Technologies, joining prior investors Fin Capital, Alloy Labs, Cambrian Ventures, Cowboy Ventures, Future Perfect Ventures, Gaingels, Selah Ventures, Uncorrelated Ventures and Valor Equity Partners. We believe that Capstack Technologies represents a potential sea change in how banks can utilize modern technology to optimize their balance sheets, and are excited to work with them for years to come. Our congratulations to Michal, Tzvika and the Capstack Technologies team!