145+ Tech Startups Focused On Transforming Capital Markets In One Market Map

The transformation of capital markets technology has been underway for over a decade, but adoption among incumbents has been slow. A new wave of entrants has been gaining traction with investors and set a record in 2016 with 216 deals worth approximately $1.89B. Armed with private funding, this set of companies is leveraging technology with the aim of automating, digitizing, and creating access to global capital markets.

Using CB Insights data, we identified over 145 companies in the capital markets tech space providing software and/or services for investment banks, hedge funds, investment managers, and so forth. We organized the companies into 3 main categories based on the traditional area of the business model they are attacking (front-office, middle-office, or back-office). We then categorized them across 15 different subcategories based on the software and services they offer to address pain points for financial services professionals.

We included companies in our map based on recency of funding, quality of investors, and Mosaic score — CB Insights’ proprietary algorithm that uses financial and non-financial signals to predict private company health.

We define capital markets tech broadly to include software and technology companies that are augmenting or replacing established business processes for financial institutions, including securities issuance, trading, clearance & settlement, and companies creating alternative solutions leveraging newer technology including AI, machine learning, and blockchain.

This category excludes payments, lending, and credit monitoring.

Please click on the map to enlarge. The map is not meant to be exhaustive of companies in the space and more companies can be found in the Collection link below

The breakdown is as follows:

Front-Office

This category covers the front-office or customer-facing areas of the business including sales, trading, and research. This includes marketplaces and platforms that create access to primary and secondary markets, alternative exchanges to buy and sell assets, and general software that supports the sales and trading desk.

• Exchange / Trading Platform: These companies offer alternative exchanges or trading platforms for institutional investors for asset classes including stocks, bonds, ETFs, foreign exchange (forex), derivatives, and more. This includes IEX, an equity trading platform owned and operated independently of a major exchange and Trumid, an electronic bond trading platform.
• Portfolio Management: This is a broad subcategory of software that supports traders and investment advisors with tools that automate, digitize, and centralize portfolio and investment management workflows. This includes Opera Solutions, a company that provides investment recommendations while leveraging machine learning to conduct on-going portfolio performance updates and surveillance and Archer, a cloud-based investment management platform for institutional, retail, and private wealth managers, is also part of this subcategory.
• Hedge Fund Tech: These companies are leveraging technology to build alternative platforms for hedge fund and high-frequency trading. This subcategory includes Clearpool Group, a developer of electronic trading software that supports hedge funds.

Middle-Office

This category covers the middle-office, or support function, and includes investment risk, research, and analytics platforms.

• Alternative Data: Companies in this space provide investors with alternative access to data and non-traditional data sets that aim to complement or replace legacy data providers. This includes startups that are leveraging sentiment analysis like iSentium and companies that provide customer behavioral data such as Earnix.
• Business Intelligence: This subcategory includes companies that provide investors and advisors with tools to make strategic investment decisions. Companies include Addepar, which provides software to unify investment management and aggregates clients’ investment portfolios. It also includes MX, a centralized application that draws and cleanses disparate data sets from across platforms.
• Market Data Platforms: Companies in this subcategory collect unstructured data sets and provide investors with a platform to access market data, analytics, and conduct research. This includes AlphaSense, a platform that collects exchange rates, inflation data, and more. It also includes Xignite, a cloud-based marketplace for financial market data APIs.

Back-Office

This category covers the back-office or administrative functions and includes clearance & settlement, risk & compliance, and information technology broadly. Startups in this space help firms with post-trade clearance & settlement, regulatory compliance and risk mitigation, and general operations.

• AML / KYC: This includes companies that address anti-money laundering (AML) requirements, which prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. Know Your Customer (KYC) tools help verify the identity of clients or personnel and are relied on by firms to conduct continuous monitoring and due diligence. Companies in this subcategory include Digital Reasoning Systems and Fenergo.
• Cap table management: This subcategory of companies is replacing a core administrative function of the back office — recordkeeping. This includes startups like eShares, which is creating and managing digital stock certificates, a historically manual process.
• Chatbots / Virtual assistants: Companies in this subcategory are leveraging AI to expedite or replace customer help desks, which includes the use of chat bots and personal assistant applications. Personetics Technologies, a personal assistant that uses predictive interaction to help financial services firms personalize the customer experience, is a notable company in the space.
  
• Clearance & Settlement: These companies are leveraging technology to disrupt existing clearance firms and innovate on the established settlement process. This includes ClearBank, a digital-first clearing bank, and Finxact, an enterprise software provider that provides core infrastructure built on the cloud. This also includes companies developing computational computing technologies, which have known applications in financial services, but have not yet been widely adopted. D-Wave Systems, a quantum computing developer, is a company in this subcategory.
• Clearance & Settlement-Blockchain: These companies are providing clearance & settlement for digital currencies and/or leveraging blockchain technologies to enhance core clearance & settlement including Digital Asset Holdings.
• Communication tools: This set of companies helps financial firms communicate securely both internally and externally with other firms. Notable startups include Symphony Communication Services Holdings and Cloud9 Technologies.
• Financial Services Software: This is a broad subcategory of companies that provide software for financial services firms to enhance existing products or introduce new ones. Startups include Plaid Technologies, a software intermediary that helps banks adopt a mobile strategy as well as InvestCloud, a cloud application developer that builds and deploys applications for asset managers, fund of funds, and investment advisors.
• Monitoring: This subcategory includes companies providing software that monitors employees, analyzes customer interactions, and/or identifies actionable anomalies for financial institutions. Droit Fintech, an over-the-counter (OTC) derivative trading platform that facilitates compliance with applicable global regulations and Bigstream Solutions, a data analytics platform that leverages machine learning to analyze user behaviors to proactively identify misconduct, are two companies in the space.
• Risk & Compliance: These companies are providing software that identifies and mitigates broader risk management and helps firms meet compliance requirements. This includes Riskalyze, software that aids advisors in measuring client risk tolerance thresholds and nCino, a bank operating software that provides a suite of portfolio risk management services.

See the full list of startups below:

Looking for more capital markets investment data and analytics? Sign up free for the CB Insights Venture Capital Database.