ARK Invest Venture Fund has made its first-ever lead investment in an early-stage startup called Lucra, firm founder Cathie Wood told TechCrunch.  

“We feel pretty excited about it,” Wood (pictured above) mentioned in the recent interview regarding the investment in the startup.

Lucra developed a software platform that reimagines corporate loyalty programs into interactive, esports-like events such as tournaments where customers can play each other, even betting or winning cash or firm giveaways. The startup remarked its customers include Five Iron Golf, Chess Kings, and Dave & Buster’s.

Lucra stated on Wednesday that it raised a $20 million Series B, led by the ARK fund, with participation from Alumni Ventures, Astralis Capital, Harlo Equity Partners, Simplex Ventures, SeventySix Capital, and WTI. 

There are a few reasons why the famed financial corporation has never led a startup deal before. For one, the ARK Invest Venture Fund is not a typical VC fund. It’s an SEC-regulated interval fund (also known as a closed-end mutual fund), meaning anyone can invest in it, for as little as $500. it is not traded on a public exchange, so investors cannot trade shares at will. They can trade limited shares on specific dates, quarterly., on the other hand  

Wood also noted that the person running the fund, director of research Nick Grous, “is a tough sell,” leaving startups with the difficult task of getting him excited enough to advocate to lead a deal.

What’s even wilder is that ARK was particularly gun-shy about this sort of business because it got burned after investing in a somewhat similar firm a few years ago.

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“We had actually owned a firm called Skillz, which kind of operated in this space,” Grous mentioned. “It didn’t work out well for us and many other investors.” 

Skillz was a once-hot public firm that later became mired in troubles and lawsuits. The massive difference, the investor commented, is that Lucra is a B2B platform, selling interactive esports as a loyalty program, rather than trying to license and run games directly to consumers.

“Overcoming our initial hurdle, especially given our experience with Skillz, overcoming our reticence, having Nick overcome it, that was our first screen,” Wood noted of how this startup convinced her firm to write a significant check. 

In this case, ARK Invest had participated in Lucra’s previous Series A round, and had grown familiar with its business model, its trajectory, and its founder and CEO Dylan Robbins, Grous told TechCrunch.  

“We had been in constant communication,” Grous remarked, adding that his venture-esq fund attempts to have quarterly conference calls with the startups in the portfolio, similar to how public companies report to investors quarterly. ARK mostly works in the public industry, offering a slate of publicly traded EFT funds.  

Despite already being in the portfolio, Lucra’s founder was grilled numerous times when it came time to purchase more shares — first by Grous and then ARK’s investment committee, both he and Wood described. 

During those calls, Robbins “had thought about all the things that went wrong” with similar companies like Skillz, as well as with Lucra, and had answers, Wood remarked. “No matter how many times we went at him, his conviction, there was just no let up,” she described.  This also touches on aspects of software update.

It also helped that this company’s financials were promising, it was in an area that ARK knew well, and this was not AI, aka the most hyped, most expensive area these days.

“We’ve been underwriting the sports-betting space, understanding the gamification aspects of entertainment,” Grous remarked, meaning that the investment firm could “really understand the opportunity here.” 

The ARK Invest Venture Fund holds shares of companies like Epic Games, Kalshi, and Discord, for instance. It also holds OpenAI, Anthropic, Replit, Grok, and Perplexity, so it knows the AI scene well.  

“We are all over AI, just like everyone else, because it is a massive revolution,” Wood explained. “But in the process, a lot of companies are being neglected.” This means that spotting such potentially neglected companies is “our opportunity because we are doing research in many other areas than AI,” she remarked.

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