Written by Laura Lenz, Dave Wechsler and Ryan Zauk
Over the last four decades, capital markets have undergone tectonic shifts. One by one, asset classes once thought too complex, too relationship-driven, or too fragmented were eventually modernized by technology.
From the early electronification of equities to the emergence of data-driven marketplaces in commodities, fixed income, and derivatives, history has shown us that even the most entrenched parts of Wall Street are not immune to disruption.
Yet amid this change, a few major markets have stubbornly held out, notably syndicated loans and CLOs.
A Last Holdout in a Changing Market
For decades, the leveraged loan market has operated in an analog world: trades are conducted via email, Bloomberg, or phone, settlement times are long, data is fragmented, analysts are hand-writing details, and pricing transparency is lacking. Market access is often determined by the largest players with the oldest rolodexes. Despite its size, (U.S. loan market alone exceeds $1 trillion outstanding) innovation in loan markets has lagged far behind other asset classes. The excuse of market complexity is obsolete - technology platforms are ready and able to handle a reinvention, no matter how complex the industry may be.
We can compare this cycle to what happened in equities and fixed income. In the 80s and 90s, traders scoffed at the idea that digital platforms or electronic trading could disrupt their domain. But, as we all know, technology slowly but steadily reshaped the very heart of Wall Street, gutting trading floors in favor of a globally connected, open, competitive market. Our team members recently took visits to the NASDAQ and NYSE, where no physical traders exist. Instead, these massive buildings in Times Square and Wall Street stand as homages to the old way of business.
Today’s reality is that more than 90% of equities, 65% of Treasuries, and 40% of Corporate Bonds are traded electronically.
What can we learn from some of these platform shifts?
What changed those markets wasn’t just software. It was evolving market structure, rapid asset class growth, and network effects, often launched from inside the industry.
Companies synonymous with global market infrastructure like MarketAxess, Tradeweb, NASDAQ, ICE, and even Lloyd’s and Verisk, actually began as various forms of industry-backed, collaborative ventures. These FIs recognized the inevitability of change, choosing to help build the future rather than resist it.
Syndicated loans and CLOs are facing that similar breakthrough moment. Asset volume is growing, there is a flood of new participants on the buy & sell side, new technologies are emerging across the deal process, and industry willingness for disruption is appearing.
Meet Octaura: Built by the Market, for the Market
Launched in 2023, Octaura offers a centralized marketplace that streamlines the trading of these instruments with real-time data, standardized workflows + communication, and straight-through processing. Octaura’s platform provides a digital loan auction across multiple dealers, simultaneously increasing execution efficiency and pricing visibility.
In just two years since founding, Octaura has achieved a level of traction we rarely see in financial infrastructure: 4.6% of total market volume achieved in just two years and 140+ buyside firms and 25 sellside dealers onboarded.
We believe Octaura is the platform poised to transform how this market is analyzed, accessed, and ultimately traded. And so, we’re proud to announce our investment in Octaura - an electronic trading and data platform for syndicated loans and CLOs. We are investing alongside new investors Barclays, Deutsche Bank, BNP Paribas, Apollo and Motive Partners, MassMutual Ventures, and joined by existing investors Bank of America, Citi, Goldman Sachs, J.P. Morgan, Morgan Stanley, Wells Fargo, and Moody’s.
Why We’re Investing: The Keys to Our Thesis
1. Proven Network Effects
Finance is the strongest and oldest proof of the power of network effects. Success in trading platforms largely hinges on one thing: adoption from both sides of the market. With critical mass across both the top buyside and sellside players, Octaura is creating durable network effects that will be hard to disrupt.
2. Backed by the Right Players
Octaura’s bank origins and backing of the major dealers give it access from day one. Dealers aren’t just clients, they’re owners and champions, who influence industry dynamics and now have reason to push adoption. Octaura benefits from a defensible moat and flywheel most startups could only dream of.
3. Market Penetration at Impressive Speed
In the first quarter of 2024, roughly a year after launch, Octaura reached 1% share of secondary loan trading volume. Just one year later, Octaura achieved a 4.6% market share - a milestone that took other platforms in adjacent markets a decade. This velocity speaks to the clarity of the team’s execution and pent-up demand for a better solution.
4. A Wedge Into a Much Bigger Vision
While the near-term focus is on trading, Octaura has shown a long term vision harnessing its data to provide critical data and analytics to market participants. Over time, we see Octaura becoming not just the venue for trading, but a system of intelligence for the broader loan market.
5. The Right Team
The company, starting with CEO Brian Bejile, has assembled a world-class team, earned the trust of a complex group of partners, and laid the foundation for the next major financial infrastructure platform. In capital markets, especially infrastructure, we often favor a team of:
Deep subject matter experts with direct experience
Well-networked to go straight to the top of the key buyers (or find a shortcut there)
Savvy operators to assuage competing interests and politics on Wall Street
Experience launching products, building a new business, or leading a hyper-growth team
High integrity leaders to execute client-first and compliance-first over the long run
The Octaura leadership team fits all of these characteristics – a group of industry veterans that have led everything from CLO desks to tech companies to emerging market exchanges.
We've been watching the alternative assets class for a while now, and believe strongly that in the midst of so much opportunity for change, select startups will emerge as big winners and category-defining industry leaders in the coming decade.
We’re honored to be on this journey with Octaura and look forward to supporting Brian and his team for years to come!
