Founded by Pipe co-founder Michal Cieplinski, CapStack, a start-up on a mission to establish a unique operating system for banks, has successfully raised $6m in a recent funding round.
The round was led by Fin Capital, a previous lead investor in Pipe, and saw contributions from Alloy Labs, Cambrian Ventures, Cowboy Ventures, Future Perfect Ventures, Gaingels, Selah Ventures, Uncorrelated Ventures, and Valor Equity Partners, according to a report from TechCrunch.
In layman’s terms, Cieplinski envisions CapStack as the “first bank-to-bank marketplace”, a platform that promotes connectivity amongst banking institutions, giving them a clear view into each other’s portfolios.
Currently, banks, particularly small and mid-sized ones, operate in isolation with limited capital sources. CapStack intends to address this issue by providing a platform for these institutions to invest deposits and loans effectively, thereby “de-riskifying their portfolios”. This innovative solution has garnered the attention of more than 60 banks who pledged to join the platform even before it was fully developed.
The new funding will be utilised to build out the platform, which aims to host loans originated by financial institutions and facilitate other banks to participate in those loans, move deposits, and potentially invest in other bank assets to diversify their risk.
Cieplinski transitioned from his role as chief business officer to a senior advisor at Pipe at the end of February, following allegations surrounding the company’s use of capital. CapStack represents a fresh start for the seasoned executive who has also co-founded FundBox and served as a senior VP of LendingClub.
Fin Capital’s founder and managing partner, Logan Allin, now a board member at CapStack, expressed his belief in the company’s potential. He said that CapStack has the opportunity “to dramatically improve solutions for bank risk management at a critical time for the stability of our country’s banking infrastructure. Banks still rely on legacy technology for managing risks around their balance sheets, and to restore confidence for consumers, commercial customers, regulators, and other stakeholders, they absolutely need an upgrade.”
It is worth noting that Pipe, prior to the current leadership, raised over $300m in funding and was valued at $2bn. Cieplinski plans to conduct beta testing with CapStack’s design partners in the fourth quarter of 2023 or the first quarter of 2024.
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