The capital market sector has undergone significant changes because of the digitalization of trading platforms and investment asset classes in the last decade. The growing adoption of cutting-edge technologies is resulting in improved and innovative trading practices and new assets are entering the market at a rapid pace today. Although this is good news for investors, many traditional financial services companies are finding it difficult to adapt to this new normal. As a result, many startups have emerged to provide advanced and scalable solutions that eliminate technological and operational barriers, and some of these startups seem to have what it takes to transform the capital markets industry in the coming years.
Exberry, an Israeli startup incorporated in 2017, provides trading technology expertise to exchanges, banks, and online marketplaces. Its comprehensive software solution enables market participants to launch a fully compliant and end-to-end encrypted exchange platform in a matter of days without having to write a single line of code. The company handles the entire process of launching a new marketplace, including buyer and seller onboarding, transactions, and asset configuration. The cloud-native SaaS solution used by Exberry expands the capabilities of exchanges and marketplaces by providing second-to-none matching and price discovery capabilities. With the use of flexible deployment architecture, exchange platforms can also transfer assets between markets without incurring additional transaction costs or settlement delays using Exberry’s technology platform. The company, with its software solutions offering, is addressing many important hurdles faced by exchange marketplaces today.
Founded in 2009, Mercatus is an investment data management platform for private market fund managers and asset owners. The company addresses investment data challenges in portfolio monitoring, deal management, valuation management, and ESG factors by focusing on underlying data architecture and systematized workflow challenges which include the ability to extract, cleanse, connect, access, and analyze increasingly complex and distributed volumes of asset and investment data. Users can create their own mobile, personalized dashboards that are automatically integrated into the underlying data, workflows, and models to produce real-time insights. Mercatus is the only platform that allows for large-scale scenario analysis and valuations at the asset and fund levels.
Riskalyze, a fintech company founded in 2011, provides SaaS solutions to financial advisors in the United States. The company’s software enables advisors to capture a quantitative measurement of client risk tolerance using risk questionnaires that are later assigned numbers. The numbers generated by this program help advisors in creating portfolios that match their clients’ risk tolerance capacity. The Riskalyze program, in addition to quantifying risk into a single number, allows advisors to run stress tests on a portfolio using a variety of scenarios. The company works with RIAs, hybrid advisors, independent brokers, RIA networks, plan and account custodians, clearing firms, asset managers, and local banks. Riskalyze also offers an automated investing program called AutoPilot, and a comprehensive compliance program called Compliance Cloud.
Droit, founded in 2012, is a global provider of financial information services. Its innovative enterprise technology solution, which combines computational law with automated real-time decision making, assists investors in navigating the complex financial regulatory system. The platform incorporates digitized legal documents, machine-readable rules, and machine-executable implementation to assess the complex rules governing transactions as they take place. The company enables derivatives trading across asset classes, regulators, CCPs, and execution applications. Many leading financial institutions, including Goldman Sachs and Morgan Stanley, rely on Droit’s tech because of its ability to monitor thousands of rules and regulations, as well as changes in market microstructure.
The capital market industry is changing rapidly, giving headaches to well-established players in this industry. However, a few startups have emerged in the recent past to make life easier for both businesses and consumers in this sector. Startups discussed in this article have a long runway for growth ahead of them given that these companies are disrupting the financial services industry to drive this sector toward an innovative, more efficient model.