A slew of investors is backing bitcoin brokerage River Financial to the tune of $5.7 million.

Announced Wednesday, the San Francisco-based startup has closed a seed round joined by Polychain Capital, Slow Ventures, Castle Island Ventures, DG Lab Fund, Cygni, Pfeffer Capital and IDEO CoLab Ventures, according to a release from the firm. Several individual investors participated as well, said a River spokesman, including Steve Lee of Square Crypto.

Launched in 2019, River’s first funding round adds its name to a growing body of cryptocurrency asset managers, differentiated by focusing exclusively on the first and largest cryptocurrency by market capitalization.

Bitcoin is the heart and soul of the operation, said River co-founder and CEO Alex Leishman in a phone interview with CoinDesk. Leishman, who left Polychain to start the venture, said his fund wants to go in a “different direction” than Coinbase or other exchanges, hinting at criticisms leveled at retail exchanges for propping up little-known alternative cryptocurrencies.

“We do bitcoin better than any other financial institution,” Leishman said.

The fresh capital will be used for scaling River, particularly as it seeks licensing across the United States. The firm currently offers a spot market, cold-storage solution and private client product intended for family offices or high-net-worth individuals in 15 states with 25 more planned for this summer, Leishman said.

“We see River Financial as bridging the gap between traditional finance and Bitcoin,” Polychain Capital founder Olaf Carlson-Wee said in a statement. “The evolution of finance is only happening faster in the wake of the current global economic crisis, which has illuminated holes within traditional financial systems that can potentially be filled by Bitcoin.”

Big picture

Given macroeconomic uncertainties, River – like many other bitcoin firms – entered into 2020 strongly. The firm’s volume has increased 80% month over month since January and its client count has doubled over the same time period, Leishman said. The startup is eyeing profitability by year’s end, he added. 

Read more: The ‘Great Lockdown’ Is Boosting Demand for Bitcoin Custody Solutions

Notably, River’s consumer composition consists of a demographic most would likely not suspect: baby boomers. That generation makes up 77% of the firm’s market to date, Leishman said. Investors over 55 years of age are looking for a hedge against inflation given erratic U.S. Federal Reserve monetary policy in response to the COVID-19 pandemic.

Just like boomers getting into the bitcoin game late, River’s entrance into the bitcoin asset-manager space has led to underrated pay-offs, too. 

Lightning Labs co-founder and CEO Elizabeth Stark – an adviser to the firm – told CoinDesk that River has embraced novel bitcoin tech that has helped the firm scale more quickly. 

Stark pointed to River’s integration with the Lightning Network as an example and said Leishman remains “at the forefront of bitcoin technology.” River also retains Blockstream co-founder Jonathan Wilkins as chief security officer (CSO), a January hire.

Read more: Blockstream Co-Founder Joins Bitcoin-Only Startup River Financial

“There’s still a lot of Bitcoin legacy tech [in the market]. River is Bitcoin future tech,” Stark said.

Stark said first movers in the cryptocurrency market such as exchanges have often failed to implement scaling techniques, such as segregated witness (SegWit) or batching. These technical upgrades keep the network healthy, but also aid in the average user’s purchase experience.

Not only that, but Stark said Leishman has a customer service habit you’d struggle to find elsewhere: Personal phone check-ins with normal users.

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