About Gil Mandelzis
Gil Mandelzis, CEO and co-founder of Capitolis, has described the company as operating within wholesale banking and capital markets, working with banks and institutional investors to make more capital available while maintaining services like clearing and prime brokerage. He stated that Capitolis is not disrupting banks but rather connecting them with additional capital, and he characterized the notion of fintech replacing banks as "a very dangerous thing." Mandelzis said that after the Russian invasion of Ukraine, banks approached Capitolis to offset positions, and the platform reduced "hundreds of millions — actually probably billions of dollars — of risk" within days. He added that the company gave 50 percent of related revenues to Ukrainian causes.
Mandelzis said the industry is "preparing for an overall slowdown in the economy" and expects "a pretty long winter" for 2023. He compared the current environment to the post-dot-com bubble period, calling for a return to "fundamental business." Mandelzis also expressed support for gun control, stating he does not understand why anyone would need "military-grade" weapons, and emphasized the importance of being purpose-driven, noting that employees notice when a company takes a stance. He predicted that digital currencies and digital assets will happen "for sure" but said the world is "not at the beginning of the beginning yet" for that transformation.
Source: AI-verified profile updated from Gil Mandelzis's recent appearances.
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Transcript (14 segments)
I
Interviewer0:12
Hi Gil, hiya. How are you?
G
Gil Mandelzis0:16
I'm very good, thank you. And it's a real pleasure to be here today.
I
Interviewer0:19
From a VC perspective, there's so many startups in consumer finance, insurance, but there's been terribly little in capital markets. I would love to hear what led to the birth of this idea, sitting within the center of this industry as the financial crisis was happening.
G
Gil Mandelzis0:43
It was quite shocking to see how the world was really unraveling, and the regulator stepped in with very meaningful limitations to reduce the systemic risk of the banks and the domino effect. And they made it so that there was not enough banking capacity to provide the services that the industry needed. I was thinking about how do we solve that. While this was happening, in Silicon Valley you started seeing companies like Airbnb, like Uber, the whole sharing economy started taking off, and it was a model that was just so exciting. The whole notion was there is all of this spare capacity elsewhere in the industry — apartments, cars, everywhere we go there's just spare capacity — that if you just connect the two, you could unlock huge value.
I
Interviewer1:52
So how does it really work? I mean, we do know how the stock exchange works.
G
Gil Mandelzis2:10
Life is great post-crisis. A, you need to put it on the banks' balance sheets, and B, the regulator created wisely a mechanism whereby the most expensive cost of capital is for the largest bank in the world, and the bigger you get, you actually have to allocate more capital. So from a balance sheet perspective, it's very expensive for them to do, actually non-economic. At the same time, asset managers love the risk but don't have access and don't know how to underwrite it. The platform is a combination of bits and bytes technology as well as financial technology. Just like Airbnb, you're connecting this spare capacity. We continue shrinking the banks, but we are bringing tons of additional capital. We know now that we've implemented that the results have been far better than what we ever expected in terms of the benefits and in terms of the desire of both sides and the willingness to work together.
I
Interviewer3:28
And could you reveal who were the first clients who took a chance on you?
G
Gil Mandelzis3:35
I would say on the sell side it was Citigroup, and then very shortly thereafter it was State Street, and very shortly thereafter was JPMorgan. They believed in us and they also saw our execution of what's happening, and all three, as we've announced, became strategic investors last summer.
I
Interviewer3:54
Could this marketplace democratize capital markets?
G
Gil Mandelzis4:11
We already launched the financing of equity total return swaps. Within the first four months, we were pleasantly surprised to see that a very well-known technology corporation is an investor and a provider of some bank balance sheet.
I
Interviewer4:30
Give us a sense of the size and impact of the company overall.
G
Gil Mandelzis4:36
As an industry, we've reduced about eight trillion dollars of overall positions with about 75 clients. By the end of this year, we'll have over a hundred. And the nice thing is, with every one of our clients, we started with one product. People started one place, but by now we're describing what is still relatively early days. People ask me what is the size of the universe. I don't know how to size it. It's big. The banks have infinite ability to originate and process business, but from a capital perspective, for almost anything they do, there is cheaper and available capital elsewhere. And the beautiful thing about this huge industry is that every segment we're talking about in trillions of dollars — yeah, with a T. So it's a huge market. So what is the dream? The dream is that the largest banks become fintechs themselves. Every institutional client in the world will have access to the best services that are out there. But we're going to do that while reducing the systemic risk of these banks. And how do you do that? You use capital from basically every safe, trustworthy system that's reliable and stable and just is at the core, to me, of democracy of the free world. We thought a lot about this. We think this is the only solution. This approach is basically reimagining, rethinking the capital markets or the future of capital markets in a fashion that will help it be both safe, healthy, growing, vibrant, with access to all. So we're very excited about the journey ahead and continuing to grow together.
I
Interviewer6:39
Likewise, thank you.
G
Gil Mandelzis6:46
Thank you.
