ARK Invests in Lucra, Its First Non-AI Startup Lead
▼ Summary
– ARK Invest Venture Fund has made its first-ever lead investment in an early-stage startup called Lucra, which raised a $20 million Series B round.
– Lucra’s software platform transforms corporate loyalty programs into interactive, eSports-like tournaments where customers can compete for cash or prizes.
– The ARK fund is an SEC-regulated interval fund open to many investors, but its director of research is a “tough sell,” making leading deals rare.
– ARK was initially hesitant because a past investment in a similar company, Skillz, did not perform well, but Lucra’s B2B model differed.
– The investment proceeded after extensive due diligence, as Lucra’s founder convincingly addressed past industry failures and the company’s financials were promising in a non-AI sector ARK understands.
ARK Invest has broken new ground by leading its first-ever startup funding round, a significant milestone for the firm’s venture fund. The investment is a $20 million Series B for Lucra, a company transforming traditional corporate loyalty programs into competitive, interactive experiences. Founder Cathie Wood expressed clear enthusiasm for the deal, highlighting it as a notable departure from the fund’s typical investment pattern.
Lucra operates a B2B software platform that enables brands to create eSports-like tournaments for their customers. Participants can compete against each other, with opportunities to win cash prizes or branded rewards. This model has already attracted clients such as Five Iron Golf, Chess Kings, and Dave & Busters. The funding round was led by the ARK Invest Venture Fund, with several other firms participating.
This lead investment is exceptional for ARK. Its venture fund is structured as an SEC-regulated interval fund, accessible to many investors but not traded on a public exchange. The fund’s director of research, Nick Grous, is known for being a particularly tough critic, making a lead commitment a rare event. A prior disappointing investment in a company called Skillz, which operated in a vaguely similar space, had made the team especially cautious about this sector.
The key distinction that won over ARK’s skepticism was Lucra’s B2B platform focus. Unlike Skillz, which licensed games directly to consumers, Lucra sells its gamified loyalty solutions to other businesses. Grous noted that the firm’s deep research into the sports-betting and gamification spaces allowed them to grasp Lucra’s specific opportunity. Having already participated in Lucra’s Series A, ARK was familiar with the company’s trajectory and its CEO, Dylan Robbins.
Woods explained that convincing the investment committee required overcoming the “first screen” of their past reticence. Robbins was subjected to rigorous questioning about potential pitfalls, drawing lessons from both Skillz’s failures and Lucra’s own challenges. His unwavering conviction and prepared answers ultimately proved persuasive. The company’s solid financials and presence in a sector ARK understood well, separate from the frothy AI investment landscape, further solidified the deal.
While ARK’s portfolio holds major AI players like OpenAI and Anthropic, Wood sees strategic value in looking beyond the current hype. She argues that the intense focus on artificial intelligence has led to other innovative companies being overlooked. Identifying these potentially neglected companies represents a distinct opportunity for ARK, leveraging its broader research mandate across multiple technological frontiers.
(Source: TechCrunch)
