ARK Invest makes first-ever lead startup investment in Lucra

Lucra, a developer of a software platform for corporate loyalty programs, announced on Wednesday that it has raised a $20 million Series B funding round. The investment was led by the ARK Invest Venture Fund, marking the first time the investment firm has led a funding round for an early-stage startup.

Other participants in the Series B round included:

• Alumni Ventures
• Astralis Capital
• Harlo Equity Partners
• Simplex Ventures
• SeventySix Capital
• WTI

The ARK Invest Venture Fund operates differently than traditional venture capital vehicles. It is an interval fund regulated by the Securities and Exchange Commission (SEC, the US securities regulator), which is a type of closed-end mutual fund that is not traded on public exchanges. This structure allows retail investors to participate with investment minimums as low as $500. However, because the fund is not publicly traded, investors cannot sell their shares at will, and are instead limited to selling shares on specific quarterly dates.

ARK leadership was initially hesitant to lead the transaction due to a previous investment in Skillz, a company that operated in a similar space. Skillz eventually became mired in troubles and lawsuits, according to the source. Nick Grous, director of research at ARK, noted that the previous investment did not work out well for the firm or other investors. However, ARK was convinced by Lucra’s business-to-business (B2B) model. Unlike Skillz, Lucra operates as a B2B platform that sells interactive esports as a loyalty program to corporate clients, including Five Iron Golf, Chess Kings, and Dave & Buster’s.

While ARK remains heavily exposed to the artificial intelligence sector, the firm views this non-AI investment as a strategic opportunity. Cathie Wood, founder of ARK Invest, explained that while the firm is heavily focused on the sector, the intense market concentration on AI has left other promising areas underserved. “We are all over AI, just like everyone else, because it is a massive revolution,” Wood, the firm’s founder, explained, adding that the resulting neglect of other sectors creates opportunities for ARK to deploy capital where it conducts deep research.

Why it matters

This deal marks a strategic shift for the ARK Invest Venture Fund, which previously avoided leading startup rounds due to past negative experiences with similar companies like Skillz. By stepping into a lead role, the fund is looking beyond the artificial intelligence sector to back promising companies in other areas that are currently being neglected by the broader market.