Onramp Invest, a startup that faced a cash crunch in April and solicited its investors for help, announced Monday that it is raising a Series A round of funding. The round will be led by JAM FINTOP, an investor in early-stage fintech companies on behalf of a network of financial services firms.
“The purpose of our latest funding round is twofold — locate a partner that can provide operating experience and growth capital to accelerate our go-to-market strategy, as well as position Onramp Invest for the next phase of digital asset growth, which we believe will run through regulated financial institutions. We are confident our partnership with JAM FINTOP provides us both opportunities,” Onramp CEO and founder Eric Ervin wrote in a statement.
No terms of the deal with JAM FINTOP were disclosed in the statement about the investment and the round, which remains open. Onramp and JAM FINTOP both declined to share how much money the startup planned to raise, how much JAM FINTOP invested, or if there were any other investors. They did not share what valuation Onramp was seeking for the round or any details about JAM FINTOP’s stake in the company. This was JAM FINTOP’s first time investing in the startup.
Chris Haley, a general partner at JAM FINTOP who is joining Onramp’s board of directors, said the companies plan to announce the total raised during the round sometime “down the line.”
Haley plans to leverage his experience in the wealth management industry to help Onramp, a platform that financial advisors use to manage cryptocurrency portfolios for clients. Haley was previously the chief financial officer and general counsel for the Black Diamond Wealth Platform, a performance reporting software used by more than 1,500 wealth management firms. He also previously sat on the boards of Wealth Access and Bridge Financial Technology, two wealth management-focused technology companies.
Haley told RIA Intel that he and Ervin, who is also a member of the board, are actively recruiting a third, independent director.
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“Eric and his team have a clear vision of where they want to go with the company and we’re bringing in our operational backgrounds and our connections in the financial ecosystem to help them out and so I view it as a very collaborative team effort,” Haley said.
JAM FINTOP is a joint venture between Jacob Asset Management, or JAM, a boutique financial services investment firm founded in 1995, and FINTOP Capital, a venture capital firm made up of general partners that are founders and operators who have worked in wealth management and other financial technology. The companies jointly manage two funds, the JAM FINTOP Banktech and the JAM FINTOP Blockchain. The latter has raised $164 million in capital and is focused on investing in blockchain and digital asset infrastructure companies, like Onramp Invest, on behalf of its network of regulated financial institutions. The limited partners in the two funds include over 85 banks with a total of more than $1 trillion in assets.
Onramp is one of three companies the JAM FINTOP Blockchain fund has invested in since December 2021. The fund is expected to close in June 2022.
In March, shortly after Onramp co-founder and then CEO Tyrone Ross Jr. departed the company, RIA Intel reported that Ervin sent Onramp investors a letter explaining the startup had made poor decisions, including hiring too many employees, and that it was on track to run out of cash in four to five weeks. He asked them for $5 million to stabilize the company. Onramp also laid off 18 of its 53 full-time employees.
Ervin told RIA Intel at the time that Onramp was not in danger of becoming insolvent because it was a growing company and new investors could step in if existing ones didn’t. Blockforce Capital, Ervin’s cryptocurrency investment firm formerly called Reality Shares, could also support the startup, if necessary, he said.
It appears Onramp got the help it needed and has continued normal operations through April and May. When asked if Onramp raised the total $5 million it sought in March, and who invested that money, Onramp declined to comment.
Onramp said in March that about 50 wealth management firms were using its platform and that number was almost doubling every month. The company declined to share details about the growth rate and how many wealth management firms are currently using the platform.
Haley said Onramp’s early troubles and the letter Ervin sent to investors in March were not concerning to JAM FINTOP.
“[Eric] has done a really good job of communicating with his constituencies at a hard time. And there are a lot of entrepreneurs that would not have taken the harder road that Eric took to be as open and transparent about where he was and what he was doing. And so, from my perspective, I just really respect Eric for how well he was communicating with the shareholders through a hard process,” Haley said.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.
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