Rocketplace raises $9M in seed funding to build ‘Fidelity for crypto’ – TechCrunch

Rocketplace, a startup that aims to build a “next-generation crypto management platform,” has raised $9 million in a seed funding round.

A few things about this hike stood out. First, the funding comes at an interesting time in the crypto world – during the so-called “crypto winter” and a period that has seen other major players in the space such as Voyager and Celsius go bankrupt and others such as Robin Hood and Coin base carry out mass redundancies. Secondly, Rocket site – which offers commission-free trading of more than 30 tokens – claims to “not be just another crypto exchange.”

It wants to go a step further by making fund distribution and management the center of the offer. This is based on the belief that there will be an “explosion” of new digital financial products offered in the crypto space, and that all of these products will need distribution.

In the meantime, CEO Louis Beryl points out, clients will need appropriate disclosures and compliance, especially as regulation increases in the industry.

The history of the founding team is also noteworthy.

Beryl and Ben Hutchinson (COO) previously built online lender Earnest together. That company sold to Navient in 2017 for around $155 million. Beryl was also a partner in both a16z and Y Combinator, and also founded Solid Energy Systems, which became public via a SPAC merger on the NYSE earlier this year.

Launchpad Capital led Rocketplace’s seed round, which also included participation from TTV, Accomplice, Menlo Ventures and Soma Capital. Accomplice led its pre-seed round, which totaled $8 million over two tranches and included checks from Launchpad and Better Tomorrow Ventures.

“If you think about Fidelity’s business model in traditional finance, there are two big areas – retail and institutional,” explained Beryl. “Within retail, you have customer accounts that allow you to buy and sell shares and bonds. But on the other side of the business you have fund distribution. Fidelity began creating its own funds and partnering with funds created by competitors.”

The brokerage then built a business around fund custody and administration.

“We are building a similar business, with a similar ethos,” Beryl added. “And we’re building it on top of an extremely affordable, high-quality, self-service digital resource platform.”

Because Rocketplace does not charge commissions, it can be purchased as volume weights. It makes money via a small spread between the price that a buyer is willing to pay (bid) and a price that a seller is willing to sell at (bid).

But Beryl maintains that the startup’s biggest differentiator lies in the fund distribution model.

“WI think what’s going to happen in the crypto space, which is very similar to what we’ve seen happen in traditional finance, is you start to see this proliferation of financial products that investors can invest in – imagine an index in you know, like Vanguard have created,” he told TechCrunch. “So these types of products come in all shapes and sizes, sometimes they’re bullish markets, sometimes they’re bearish markets … my belief is that we’re going to start seeing a huge proliferation of those in the crypto asset class.”

So, what Rocketplace is building, Beryl added, is the distribution of these products “so that retail investors can evaluate these products, invest in these products, get the right data and tax information on these products and actually, very importantly, get the right regulations and frameworks for compliance and disclosure for these products. None of this exists today.”

He points to the bankruptcies of Voyager and Celsius as evidence of the need for more transparency around performance and more “appropriate” disclosures.

Image credit: Rocket site

Currently, Rocketplace has 10 employees and plans to use the new capital in part to double the team over the next six months. The majority of the capital will be used to launch the fund distribution business.

Ryan Gilbert, founder at Launchpad Capital, said his firm is “excited to partner” again with Beryl and Hutchinson. (Gilbert also backed the pair’s previous venture, Earnest, while at another VC firm, Propel).

“Fund distribution and fund management are central to the Rocketplace offering, and the timing couldn’t be better,” he told TechCrunch via email. “We expect an explosion of new digital financial products in the crypto space, and these products need compliant, well-managed distribution.

Gardiner Garrard, co-founder and managing partner of Atlanta-based TTV Capital, said his firm is “acutely aware that crypto is a fundamental part of the financial future” and was drawn to Rocketplace’s mission to make crypto “more accessible to everyone. ”

“A key part of the Rocketplace vision is the human aspect of crypto – making the asset class more accessible, intelligent and transparent,” Garrard told TechCrunch. “While most crypto platforms are designed to be transactional in nature, Rocketplace was built to provide a holistic, user-first experience. The Rocketplace team has the opportunity to build a lasting brand similar to Fidelity or Charles Schwab in traditional financial services .”