NFX and Galaxy Digital (Jon Kol, Director of Principal Investments) recently co-led a seed investment in Ramp. Jon and I co-wrote the below to share what got us particularly excited about this company.

If crypto is going to be a thing, then more and more fiat money has to be converted to crypto. The mechanism to convert fiat into crypto is called an “on-ramp.”

Over the last few years, exchanges have dominated as the on-ramp for first time crypto users. The most valuable companies in the industry to date are exchanges. Coinbase is the most valuable public company in the industry with a market cap of roughly $50B; Binance’s token BNB trades with a ~$55BN market cap; and FTX was recently valued at $18B. This is because on-ramps into the industry allow for value creation, and these companies capture a portion of the value transferred through them.

Ramp has the same value creation and capture that we like as investors. But Ramp isn’t an exchange. Ramp is what we consider to be a next-generation crypto on-ramp.

A next-generation crypto on-ramp

We believe the next wave of participants in the cryptoeconomy will be onboarded through increasingly more mainstream apps — and Ramp is enabling that.

Previous versions of on-ramps merely transferred money between two bank accounts. Money would go from our traditional fiat bank accounts to Coinbase’s bank, and then we could buy crypto on Coinbase. But if we believe that the next wave of users will be onboarded into crypto directly from new experiences with crypto-native applications and use cases, then, going to an exchange adds friction.

What you don’t want as a user: discovering an experience (a game you want to play, an NFT you want to buy), realizing you can’t do that thing, having to go to an exchange, signing up & buying there, get those funds back to said initial experience and then finally getting going.

What you don’t want as an application developer: an interested user leaving your property to go elsewhere to buy crypto and then hoping they make their way back.

With Ramp, (as a consumer) you don’t have to BYOC (bring your own crypto), you don’t have to go somewhere else to make an account and get exposure, you don’t have to figure out how to get that crypto back to the initial application. Your entire onboarding happens with Ramp, within the app. And, as a developer, you become a one stop shop.

This is both a step-function change in the user experience and also a step-function change in what crypto developers can now do directly with users.

Future applications will live on-chain

We also believe that the future of crypto can’t just be about passively storing the assets. Instead, the future is about users dynamically interacting with crypto assets in their native habitat. This will enable use cases and behaviors that we barely have the mental models for today.

We’re starting to see an increasing number of experiences that are both targeted towards non-crypto-native users and involve on-chain interaction. Ramp is the tool that allows these developers to implement their vision.

Positioned to dominate

With regards to the team, traction and competitive advantage, Ramp is positioned to dominate this space because:

1. Ramp co-founders Szymon Sypniewicz & Przemek Kowalczyk have built a great team. They are product and data minded, with strong regulatory focus. Ramp recently secured rare regulatory approval from the United Kingdom Financial Conduct Authority — they are the 1st fiat on-ramp (and the 8th cryptoasset firm) to be registered.
2. Strong traction and go-to-market. Ramp is the on-ramp of choice for much of the NFT space. They are the exclusive on-ramp solution for Sorare, Dapper’s Flow chain, Axie Infinity and many others.
3. They are proactively building defensibility through network effects, scale and regulation
4. And the timing is right. We’re now seeing serious attempts to build mainstream products outside of the store-of-value hypothesis — so onramps make sense today as a critical part of the crypto growth engine.

Increasing the GDP of the cryptoeconomy

As investors, it is our goal to keep increasing the GDP of the cryptoeconomy. We make investments into teams who help achieve this goal. To us, it’s a matter of when, not if, these applications come to fruition. Ramp is going to bring us to that future, faster.