Founder Spotlight: Eric Ervin

The Origin Story of Onramp Invest

Onramp Invest

February 28, 2022

As I step into the role of CEO of Onramp Invest – the company I originally founded in 2018 – I wanted to share a bit about my background in the industry, my past successes in building and selling businesses (Reality Shares, Blockforce Capital), and the Onramp Genesis Story.

The Background

After close to 20 years at Morgan Stanley & Smith Barney as a financial advisor and portfolio manager, I founded Reality Shares ETFs. During my tenure as CEO of Reality Shares, I raised significant growth capital to build and launch seven publicly traded funds listed on both the New York Stock Exchange and the Nasdaq exchange.

The ETF business is heavily regulated. To operate, we had to register with the SEC as an RIA, with the CFTC and NFA as a CPO and CTA, and had to be registered under FINRA to use a Broker Dealer to sell our funds, to name a few regulatory hurdles. As an ETF issuer, financial advisors invested hundreds of millions of dollars in the fund products we created. In 2020, I sold Reality Shares to explore other business opportunities we identified while running the company.

Through these experiences, I came to know and understand the RIA market very well, and learned what it takes to build and scale a business – both in times of uncertainty and times of prosperity.

An Idea is Born

We had to spend millions on administrators, custodians, auditors, and more in order to run Reality Shares. And yet, I saw first-hand the amount of operational inefficiency in the traditional asset management space. Nightly reconciliation files were sent over email or file transfer protocol (FTP), which led to consistent settlement errors between custodians, administrators, brokers, and more.

All the issues we faced seemed to center around a legacy technology stack that people simply kept “putting up with.” I’m not joking when I say this, but we had to fax Bank Of New York requests for fund transfers. FAX.

I just knew there had to be a better way. Watching these inefficiencies in the current system play out is what got me so excited about the potential future application of blockchain and cryptoassets. I saw them as a breakthrough technology that could disintermediate much of the legacy financial tech stack

Reality Shares – Pivoting our Strategy

With these observations, I embarked on a strategy to pivot the business from low margin ETFs focused on traditional asset classes to innovating and incubating companies that would bridge the gap between the legacy financial system and the modern financial system being built on this new technology.

In 2016, I founded Blockforce Capital, a quantitative cryptoasset hedge fund manager. The idea behind Blockforce was to create a platform where we could invest firm and employee capital directly into the crypto asset class. We also thought of it as a product platform where we could launch many investment products and offerings based on quantitative research and strategies. Our goal was to be the “institutional grade” asset manager in the space, enabling institutions and professional advisors an onramp to the cryptoasset ecosystem in actively managed funds. 

We are very proud of what Blockforce Capital has achieved since launch. In addition to incredible returns for our investors, it was recognized by BarclaysHedge as one of the Top Ten CryptoAsset Hedge Funds of 2022.

Onramp – The Better Way

The hedge fund structure was an easy onramp for institutional investors. However, the idea of cryptoassets in a “fund structure” always felt a little off to me. Even though I was a huge advocate for ETFs, it didn’t make sense that the industry was trying so hard to wrap bitcoin into an ETF. As I often joke, that is like putting training wheels on a ferrari. 

Bitcoin is an asset that offers 24/7 trading and self custody. It is something you can borrow, lend, send, sell, or buy any time of day, 365 days/year. Yet, the legacy financial system was solely focused on wrapping it up into an Exchange Traded Fund…which can only be traded 8 hours/day, 5 days/week, with no transfer or self custody privileges. Kind of a square peg, round hole situation.

This realization was the genesis for Onramp. I wanted to create a simple, effective solution so the traditional financial system could treat a direct investment into bitcoin (or any other cryptoasset) just like they would any stock or fund investment. We needed to connect the financial advisors to the crypto custodians.

Onramp is Born

We started building Onramp in late 2018 with the idea that we would create a mobile-first presence for individual investors to access portfolios of cryptoassets. The platform would include automatic rebalancing, dollar cost averaging, credit card roundups, and more. Through this lens, Onramp would essentially be a robust robo-advisor for crypto. Our initial strategy was to launch with a retail-first presence, but to build out an API driven backend that would later allow us to build out an institutional offering. RIAs and traditional wealthtech companies could then build onto our rails, because we would already have the integrations with the cryptoasset custodians.

In 2019, we had an offer to sell the entire Reality Shares Business, and all of its incubated entities. We put Onramp on hold to pursue the acquisition. Unfortunately, the deal broke at the last hour. This was amongst one of the hardest periods I’ve ever faced as an entrepreneur. We were ill prepared for such an event, and I had to go into crisis mode. For the latter part of 2019 and early half of 2020, we were solely focused on survival and selling the ETFs so we could get back on track.

In the summer of 2020, the clouds parted and the sale of the ETF business was imminent, so we dusted off the blueprints to finally launch Onramp. By this point, I had learned many hard lessons. I was not going to repeat my mistakes. I knew if we were going to build Onramp, we needed someone solely focused on it. I could think of no better person than my friend, Tyrone Ross, Jr.

Tyrone had so many fantastic qualities to lead this company: he was persuasive, an outspoken advocate of crypto for advisors, a proponent of direct access for clients, and he had an incredibly magnetic personality that could inspire almost anyone. Most importantly, he had the grit and determination required to build a company from the foundation. 

I couldn’t think of a better person to start this business with. I asked him if he would help me build Onramp for advisors as a co-founder and CEO. Because I was still the CEO of Blockforce Capital and the parent Reality Shares, he would be responsible for all of the CEO duties for Onramp which primarily consisted of raising capital, building the brand, setting the strategy, and recruiting the team. I, on the other hand, was able to spend a significant amount of time helping to build Onramp with him. I focused on the product and many of the operational items involved in building and scaling the company.

However, like many startups before us, we hit a wrinkle. As we began to scale Onramp from the initial phase of conception to the next phase of rapid growth, it became clear to Tyrone that he no longer felt he was the right fit for the role. Therefore, I have stepped into the role as CEO and am prepared to put my experience in the financial services industry to good use with a team that is energized for the next chapter.

No doubt, there’s still a lot of work to do, and we are incredibly excited for the opportunity that still lies before us. While there may be a different face in the “office of the CEO” now, the core vision – and the core business – remains the same. The team is laser-focused on providing RIAs the foundational tools they need to add a cryptoasset proficiency to their practice and serve their clients in this quickly growing economy.

From myself and the team, thank you for your support!

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