Rocketplace Raises $9M in Seed Funding to Build 'Loyalty for Crypto'

Rocketplace, a startup that aims to create a "next-generation asset management platform for crypto," has raised $9 million in a funding round of startup.

A few things about this increase stood out. For one, 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 Robinhood and Coinbase carry out mass layoffs. Secondly, Rocketplace - which offers a commission-free exchange of 30+ tokens - claims "not to be just another crypto exchange".

It wants to go further by placing distribution and fund management at the center of its 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 to be distributed.

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

It is also worth noting the background of the founding team.

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

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

“If you think about, in traditional finance, the business model of Fidelity, there are two big areas: retail and institutional,” Beryl explained. "In retail, you have customer accounts that buy and sell stocks and bonds. But on the other side of the business, you have fund distribution. Fidelity started building its own funds as well as to partner with funds created by competitors."

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

“We are building a similar company, with a similar philosophy,” added Beryl. "And we're building it on an extremely low-cost, high-quality self-service digital asset platform."

Since Rocketplace does not charge commissions, it is able to buy as its volume grows. It makes money via a small spread between the price a buyer is willing to pay (offer) and a price at which a seller is willing to sell (offer).

But Beryl argues that the startup's biggest differentiator is the fund distribution model.

"What I think is going to happen in the crypto space, which is very similar to what we've seen happen in traditional finance, is you're starting to see this proliferation of financial products in which investors can invest in - imagine an index in you know, like Vanguard created it," he told TechCrunch. "So these types of products come in all shapes and sizes, sometimes they're bullish in the market sometimes they are bearish in the market…i think we are going to start to see 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 proper data and tax information about these products and in fact, what's really important is getting the right regulatory, compliance, and disclosure framework for these products. None of that exists today."

He cites the Voyager and Celsius bankruptcies as evidence of the need for greater transparency around performance and more "appropriate" disclosures.