Significant changes that included job cuts were needed at Onramp Invest for the company to counter the massive amount of startup capital it was spending without generating positive cash flow and gaining additional capital, it disclosed on Monday.
The company's revenue had "hit new highs every month," the company said in a blog post on "The Future of Onramp Invest" at its website. "However, our burn rate was too large to justify without mounting a significant capital raise. In light of the macro picture, investors want to see more before we can raise the kind of capital required to justify such a burn."
As a result, Onramp "made the painful decision to let many great people go at no fault of their own," it said. "If you are a business owner, you can understand that this was a decision we never wanted to make.
"Hiring strong and early has worked for some, while it has come at a cost for others. For us, it came at a cost, and we felt there was no other path forward towards sustainability than to make hard decisions of aggressive change," the company added.
The company's explanation came one week after Tyrone Ross unexpectedly stepped down as the firm's CEO, less than eight months after he announced that trading started on the company's crypto-asset integration and education platform for financial advisors.
Onramp's disclosure was made one day after an RIA Intel report said Eric R. Ervin, who co-founded Onramp with Ross and replaced him as CEO last week, told investors in an email on Friday that the company had an immediate need for working capital and to reduce its burn rate, and that Ervin was "executing a plan to stabilize the business and set it up for growth success."
Onramp slashed more than one third of its staff (18 of its 53 full-time employees), was cutting ties with some vendors, and only had enough cash to support it for 4-5 weeks but wasn't in danger of becoming insolvent, according to the report.
Onramp didn't immediately respond to a request for comment. Ross and Onramp did not give a reason last week for the ex-CEO's departure from the company.
