Pipe co-founder raises $6M for CapStack, a bank-to-bank marketplace aimed at ‘de-riskifying portfolios’

CapStack, a startup shaped by Pipe co-founder Michal Cieplinski, has raised $6 million towards its effort to construct an built-in working system for banks.

In easier phrases, Cieplinski described CapStack because the “first bank-to-bank market,” giving the establishments the power to share and have visibility into each other’s portfolios.

Cieplinski began CapStack in March with Tzvika Perelmuter and, apparently, says they managed to lift the capital nearly instantly after launching the corporate and proper earlier than the meltdown of Silicon Valley Financial institution — not solely pre-revenue, however pre-product.

“One thing I noticed is that banks are islands,” Cieplinski advised TechCrunch in an interview. “Every financial institution operates by itself and there’s no connectivity…They usually’re all trying to find a capability to diversify capital sources.”

Small and mid-sized banks specifically, mentioned Cieplinski, are restricted by geographical footprint with most of their prospects residing close to a financial institution department.

“We don’t essentially understand how critical that’s,” he mentioned. “Particularly as a result of small and mid-sized banks usually are not funding banks — they don’t get cash apart from deposits.”

What Cieplinski envisions constructing would give not solely these banks, however bigger monetary establishments as nicely, a strategy to make investments deposits and loans and “de-riskify their portfolios.”

“Over 60 banks agreed to affix the platform even earlier than the primary line of code was written and a single worker was employed,” Cieplinski mentioned. “And with that I went to VCs.”

Fin Capital, which additionally was a lead investor in Pipe, led CapStack’s spherical, which additionally included participation from Alloy Labs, Cambrian Ventures, Cowboy Ventures, Future Excellent Ventures, Gaingels, Selah Ventures, Uncorrelated Ventures and Valor Fairness Companions.

Cieplinski transitioned from his position as chief enterprise officer to a senior advisor at Pipe at the finish of February, just a few months after the choice financing startup made headlines for the remainder of its co-founders stepping down at the same time amid a hunt for a brand new, “veteran” CEO. Pipe, which had raised greater than $300 million in funding and was as soon as valued at $2 billion, was the goal of a number of allegations surrounding its use of capital — all of which the corporate vehemently denied.

With CapStack, the chief — who additionally co-founded Fundbox and is a former SVP of LendingClub — says he desires to offer monetary establishments the power to host on CapStack’s platform the loans that they originate and the power for different banks to take part in these loans, borrow/transfer one another’s deposits and to see what different property one other financial institution might need that they will spend money on to allow them to “diversify threat and publicity into different non-correlated property.”

Within the banking sector, defined Cieplinski, there are establishments which originate nice property, akin to loans, however could not have sufficient capital to fund them — akin to small and mid-size banks. Then there are bigger banks, which sit on large deposit bases however have “no approach of originating loans” as a result of they don’t have relationships on the bottom.

“My TAM is successfully all of the banking methods in America, sub the High 30. However even a number of the high 30 banks need to be consumers of those property too,” Cieplinski mentioned. 

Fin Capital founder and managing accomplice Logan Allin, who has joined CapStack’s board, mentioned in a written assertion that he believes CapStack has the chance “to dramatically enhance options for financial institution threat administration at a crucial time for the steadiness of our nation’s banking infrastructure.

“Banks nonetheless depend on legacy know-how for managing dangers round their steadiness sheets, and to revive confidence for customers, business prospects, regulators, and different stakeholders, they completely want an improve,” Allin added.

Cieplinski is concentrating on the fourth quarter or first quarter of 2024 to carry out the primary beta testing with design companions.

“All people knew what was taking place with SVB — it had an over-concentration of property,” he mentioned. “Each single one of many banks that need to be a part of the platform are additionally over-concentrated in some property — a few of them have an excessive amount of deposits, they usually don’t know find out how to deploy it, however they should present the return to their depositors to the shoppers.”

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