Cryptocurrency platform Onramp Invest is contemplating its next steps after a tumultuous week that included the resignation of its charismatic CEO, walkouts by members of its advisory board and numerous employee layoffs.
The San Diego-based firm reassured clients and investors about the viability of the company moving forward in a blog post Monday, and sent a heartfelt message to colleagues that were let go.
“Last week was extraordinarily difficult at Onramp,” the company said in the post on its website. “There is no way around that.”
The shakeup began March 1 with the unexpected departure of Chief Executive Tyrone Ross Jr., followed by the resignations of at least two Onramp advisory board members, the firing of Torie Happe, head of business development, and the layoffs of a undisclosed number of staffers. Onramp also had stopped working with its outside public relations firm in February.
“If you are a business owner, you can understand that this was a decision we never wanted to make,” the company said about the layoffs. “These folks are talented and contributed to where we are today.”
A major issue was a lack of capital, according to the company, which said investors needed to see more progress at the firm before raising additional funding. The layoffs were deemed necessary, and unfortunately unavoidable. “Therefore, we made the painful decision to let many great people go at no fault of their own.”
As to its saliency, the company pointed to robust relationships with investors like SoftBank Group Corp., Coinbase Global Inc., WisdomTree Investments Inc. and Galaxy Digital, and said its parent company, Reality Shares Inc., is well-capitalized and in a position to support Onramp if necessary.
When reached by email, Onramp spokesman Nyle Bayer declined to comment and would not make co-founder Eric Ervin, who has taken over as CEO, available for an interview.
“They over-hired with hopes of rocket-ship growth,” said Timothy Welsh, president at consulting firm Nexus Strategy. “Maybe Onramp didn’t raise enough money, maybe adoption was slower. The last thing you want to do is go back to raise more money at a lower valuation.”
In a letter to investors sent out last week, Ervin looked to reassure investors about the company’s future and referenced how he and Ross had agreed that in order to build scale, both executives would focus on their strengths. The agreement had Ross focusing on raising capital and building the brand, while Ervin handled the day-to-day operations.
“Onramp is clearly going through a challenging time, as many startups do,” said Robert Sofia, CEO of wealth management fintech Snappy Kraken. “And while it’s easy to judge success or failure from the outside, situations like this are always much more complicated than appearances betray. Only time will tell whether this turns out to be a pivotal learning experience or the beginning of the end.”
In December, Ritholtz Wealth and WisdomTree announced the launch of a cryptocurrency index designed to provide financial advisers access to crypto for their clients, which was licensed to Onramp Invest and was made available through separately managed accounts.
Still, some industry observers are still struggling to understand the company’s business model, value proposition to customers and strategy moving beyond Ross. “Why is this such big news? Start up with questionable product market fit overspends after the initial raise,” tweeted Patrick Brewer, president and CMO at WealthSource.
For Welsh, Ross’s departure could delay progress at the firm by months and shows the challenge, opportunity and risk of having such a dynamic spokesperson. “As long as they can weather the storm, I think they will be okay,” he said.
In the post, Onramp also announced current and upcoming rollouts with prominent wealthtech firms — like Riskalyze Inc., Redtail Technologies Inc., Wealthbox, Advyzon and Orion Advisor Solutions — many of which were brokered during Ross’ tenure at the firm.
“What’s next?” the company asked. “We keep moving forward.”
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.