The Future Of Wall Street: Fintech 50 2021
Stock markets trade almost entirely electronically and many of Wall Street’s most valuable companies now provide data, technology and software to the big banks, private equity firms and hedge funds that execute the day’s big trades
Even before the Coronavirus pandemic closed bank branches and emptied Wall Street’s once-boisterous trading floors, the digitization of all things finance was well underway. Stock markets trade almost entirely electronically and many of Wall Street’s most valuable companies now provide data, technology and software to the big banks, private equity firms and hedge funds that execute the day’s big trades. Covid only accelerated the push for firms to digitize their businesses and handle an increasingly distributed workforce.
Behavox, founded by former Goldman Sachs stock analyst and hedge fund portfolio manager Erkin Adylov, has become the go-to solution for banks, hedge funds and PE firms looking to maintain control over their data as their workers trade and communicate digitally. Founded seven years ago by Kyrgyzstan-born Adylov, Behavox’s natural language processing algorithms and data lakes track and store email and voice communications for large banks and hedge funds, helping to protect against issues like market manipulation, insider trading and the stealing of intellectual property.
Business boomed for Behavox as workforces went remote during the pandemic, creating enormous challenges for risk and compliance departments. Adylov’s fast growing company signed up new customers ranging from quant fund Schonfeld Strategic Advisors to private equity firm Jordan Company. Investment bank Jefferies implemented Behavox’s software in the summer of 2020 as its workers operated remotely and Behavox is the software that Danske Bank is using to revamp its controls. Just before the pandemic, Behavox added $100 million in VC funding from the Softbank’s Vision fund, adding Masa Son’s firm to investors that include Citigroup and Index Ventures.
The firm is one of the honorees on the Forbes’ 2021 Fintech 50 List, our ranking of the most promising private financial technology companies. Across finance, listmakers are revolutionizing the way people spend, save and invest. On Wall Street, innovations are opening new markets, driving greater efficiency, and helping to rein once unmanageable operations.
Trumid, founded in 2014 by bond trading veterans from Citigroup and Lehman Brothers, is a fast-growing electronic venue to negotiate some of the industry’s biggest corporate bond trades. Using Trumid, traders around the world can convey bids and asks of U.S. dollar-denominated corporate bonds to the entire marketplace, and then negotiate matching trades in a few mouse clicks. The innovation means traders are increasingly taking to Trumid’s sleek online marketplace to move bonds, instead of pounding phone lines and instant message chat rooms to request quotes. When trades are executed, prices are conveyed to the broader marketplace, increasing transparency.
With some 2,000 traders at 570 different institutions, including big banks like Goldman Sachs, on its platform, Trumid handles over $2 billion in corporate bond trades daily, an increase of 80% from the second quarter of 2020. Last year, with the backing of Singapore’s SGX and Hillhouse Capital, Trumid launched its trading technologies in Asia. The seven year old company reached unicorn status after a $200 million funding round led by Dragoneer Investment Group. Other Trumid backers include TPG, DST Global, Blackrock and T. Rowe Price.
Fintech Carta has revolutionized the way private companies manage their stock and option ownership digitally. More than 20,000 private companies with over a million employees and investors use Carta to manage their capital tables. The technology allows rank and file employees to handle and exercise option awards in an easy-to-use interface, or even a mobile app. When companies go public, Carta is often the bookkeeper of their capital tables. In 2021, Carta launched a secondary market for private company employees and investors to trade their stock and option holdings. The first trades done in CartaX were in Carta’s own company, done at a valuation nearing $7 billion.
Here are the companies serving Wall Street’s biggest firms that made the Forbes Fintech 50 in 2021, including a brief description of what they do, who their users are and how much they’re worth.
Addepar Mountain View, California
Cloud-based software used for tracking and analyzing portfolios has a dominant position, with 600 customers including wirehouses such as Morgan Stanley and AllianceBernstein; private banks such as Jefferies and Silicon Valley Bank; and hundreds of independent RIAs and family offices. Addepar users can connect with platforms like Morningstar, Citco Fund Services, Quovo, iCapital Network and Salesforce.
Funding: $325 million from WestCap, 8VC, Sway Ventures
Latest valuation: $1.1 billion according to Pitchbook
Bona fides: Client assets recently eclipsed $2.5 trillion. Added nearly 150 new firms last year, as growth hit new highs.
Cofounders: CEO Eric Poirier, 39; Executive Chairman Joe Lonsdale, 38
Behavox New York City
Its compliance software helped Wall Street keep track of traders as they worked from home during the pandemic. Behavox charges banks hundreds of thousands of dollars for enterprise licenses so their compliance officers can monitor traders for potential insider trading, market manipulation and even threats like the leak of proprietary data. Its AI algorithms screen email and chat data, while its voice biometrics can track phone calls on loud trading desks.
Funding: $175 million from SoftBank, Citigroup and Index Ventures and others
Latest valuation: $300 million
Bona fides: New customers include investment bank Jefferies, Danish banking giant Danske Bank, quant hedge fund Schonfeld Strategic Advisors and private equity firm The Jordan Company
Founder: Erkin Adylov, 38, a Kyrgyzstan-born former Goldman analyst and hedge fund portfolio manager
Carta San Francisco, California (Wall St.)
Tracks capital tables (shares, ownership, value, dilution and options) for private companies, their investors and employees on the cloud. Recently launched a secondary marketplace called CartaX to enable workers at unicorns to sell their shares to investors.
Funding: $692 million from Andreessen Horowitz, Tribe Capital, LightSpeed Ventures and others
Latest valuation: $6.8 billion, according to Pitchbook
Bona fides: Now manages cap tables for 20,000 companies (including online brokerage Canva and GitLab) with more than one million employees and investors
Cofounder & CEO: Henry Ward, 45, who started Carta as eShares in 2012
Trumid New York City (Wall St.) (Antoine Gara)
Fast-growing electronic corporate debt trading platform allows participants to anonymously post bids and asks, and then connects them to privately negotiate deals. Used by over 2,000 traders daily to make some of the bond market’s biggest and highest stakes trades. In January, launched a joint venture with Singapore Exchange and Hillhouse Capital to bring its platform to Asian bond markets.
Funding: $525 million from Dragoneer Investment Group,. TPG, BlackRock, T. Rowe Price and others, including Peter Thiel and George Soros.
Latest valuation: $1.4 billion
Bona fides: Used by nearly 600 firms including largest banks in the world like Citigroup. Average daily trading volume is now over $1.8 billion after rising 80% from 2020 levels.
Cofounders: CEO Ronnie Mateo, 47; President Mike Sobel, 41