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Crypto Portfolio App Ember Seeks $1 Million in SEC-Registered Securities Sale

Danny Nelson

Ember Fund, makers of an AI-managed cryptocurrency portfolio app, is seeking to raise up to $1 million through a Securities and Exchange Commission-registered securities sale.

The year-old company revealed their intention in today’s filing with the SEC, detailing their sale of “Crowd SAFE” securities that will occur through the end of January 2020 on Republic, an online startup investment platform. SAFE stands for “simple agreement for future equity;” it is an investment contract entitling holders to equity if and when Ember Fund is acquired or goes public. Investors must post a $100 minimum buy-in.

Ember Fund markets itself as an app-based equivalent to crypto hedge fund, with an automated AI system re-balancing a portfolio of cryptocurrencies. Ember is not itself a hedge fund, however; as a non-custodial service Ember Fund never actually touches or transmits crypto – all coins remain on users’ phones.

In May, Ember Fund CEO Alex Wang told CoinDesk that the service, that he and two others bootstrapped in 2018, saw nearly $2 million in transactions in April 2019.

The current financial status is unknown because the company’s public reporting is until the end of 2018. The four-person company reported in their filing with the SEC that they had only $2,557.00 in cash on hand on December 31, 2018. Ember Fund’s reported loss for the year was $24,523.00. Wang told CoinDesk that they began processing transactions in November 2018.

Ember Fund’s target fund numbers are relatively low; the minimum target sale is $25,000 and a maximum of $1,070,000. But Wang told CoinDesk the funding round – which he said is directed at “friends and family” – is small by design.

“Our hope is really to raise as little money as possible,” said Wang, who wants to ensure that he and his founding partners Guillaume Torche and Mario Lazaro retain control of the company they founded, and funded, in 2018.

Since that time Wang said they have learned their user acquisition costs and value, enabling Ember Funds to develop a strategy for continued growth. This, he said, makes them different from many move-fast-and-break-things-type California startups rushing to trade their equity for capital.

“A lot of companies go out and raise a ton of money without having a business model. We took the other approach: let’s have a business model and then scale it up.”

A transcript of a marketing video included in the SEC filing indicated that Ember Fund will use the capital to expand. The narrator, CTO Guillaume Torche says:

“We have already processed about $10 million to the platform without any marketing budget. We’re at a point where we’re ready to scale.”

Bitcoin markets image via Shutterstock