Caplight Company Profile

Background

Caplight Technologies, founded in 2021 by Javier Avalos and Justin Moore, is a San Francisco-based fintech company specializing in enabling institutional investors to hedge, generate income, or take long and short positions on private company stocks through structured products and synthetic derivatives. The company's mission is to bring the infrastructure and ease of public markets to the venture capital-backed asset class, thereby allowing large institutional investors to access private markets with public equity market-like transaction data, execution, and settlement mechanics.

Key Strategic Focus

Caplight's strategic focus centers on providing institutional investors with tools to actively manage risk across illiquid assets. By offering proprietary financial products and unique price discovery tools, the company enables investors to make long and short directional investments on venture-backed private company stocks. This approach facilitates hedging, income generation, and investment strategies in private company stocks, effectively transforming the traditionally "long only" venture capital asset class into one with comprehensive risk management capabilities.

Financials and Funding

As of October 2022, Caplight has raised a total of $10 million in funding. This includes a $5 million seed round led by Better Tomorrow Ventures in January 2022 and a $3 million strategic investment from Deutsche Börse Group in October 2022. Other notable investors include Fin Capital, Susquehanna Private Equity Investments, LLLP, and Clocktower Ventures. The funds are intended to expand operations and business reach, further developing Caplight's technological infrastructure and enhancing user experience on the platform.

Technological Platform and Innovation

Caplight's platform stands out by offering synthetic, cash-settled derivatives that allow institutional investors to take both long and short positions on private company stocks. This innovation brings public equity market-like transaction data, execution, and settlement mechanics to private markets, providing investors with tools to actively manage risk across illiquid assets. The platform's proprietary financial products and unique price discovery tools enable hedging, income generation, and investment strategies in private company stocks.

Leadership Team

Javier Avalos, Co-founder & CEO: Prior to founding Caplight, Avalos was an early employee at Forge Global, where he oversaw the company's Marketplace business.

Justin Moore, Co-founder & CTO: Also an early employee at Forge Global, Moore spearheaded much of the early technology development.

Michael Steinberg, Chief Compliance Officer: Steinberg brings extensive experience in compliance and regulatory affairs to the team.

Competitor Profile

Market Insights and Dynamics

The global pre-IPO secondary market has grown significantly, surpassing $100 billion traded annually. This growth has led to the emergence of a large, but inefficient and opaque marketplace, with numerous broker-dealers competing to serve a vast number of investors and private company shareholders.

Competitor Analysis

Caplight's competitors include companies like Velotrade, Clearmatch, MR Presta, and Bee Invested. These companies offer various financial services such as online marketplaces for financing opportunities, platforms providing access to quality credit portfolios, digital lending platforms, and equity crowdfunding platforms.

Strategic Collaborations and Partnerships

In October 2022, Caplight secured a $3 million strategic investment from Deutsche Börse Group. This partnership aims to expand derivatives trading and hedging on private company shares and explore collaboration opportunities with Eurex, a wholly owned subsidiary of Deutsche Börse, to bring structured pre-IPO investment products to the global financial markets.

Operational Insights

Caplight's platform is highly complementary to existing public market infrastructures. By providing private market participants with secure infrastructure to manage risk, Caplight aligns with the mission of entities like Eurex in public markets to be the power of innovation.

Strategic Opportunities and Future Directions

Caplight aims to power index and derivative products that make it easier for investors to access the pre-IPO asset class and manage their private equity risk. By increasing data and liquidity in private markets, Caplight seeks to attract more institutional capital to the space, allowing private technology companies to continue to innovate.