Our investment in Arcade — Making for one million happy workers around the globe
It’s been a busy first half of 2021 for the OIF Ventures team, backing a number of diverse and disruptive new companies and partnering with some exceptional founders. One such company is Arcade, co-founded by David Cherrie (CEO) and James McLaren (CTO), which we recently invested AUD$1.3 million in as part of their Growth Seed round.
Arcade is a SaaS-based ‘low code / no code’ employee engagement platform providing managers and organisations an ‘off the shelf’ solution to use short-form gamification to increase employee motivation, productivity, engagement and exceed KPIs. There is added functionality allowing companies to use Arcade as their internal social feed or communications tool, as well as integrating Arcade with other existing leading communication tools such as Microsoft Teams and Slack.
When we first met David — who is now based in Dallas, Texas — we instantly believed in him and his mission to make work more engaging, purposeful and productive for millions of ‘non-desk’ workers globally. Having previously worked in front-line retail, David had the first-hand and empathic understanding that a more engaged workforce produces better business outcomes. It was while he was working in retail that the concept for Arcade was born.
Launching in July 2018, Arcade’s platform provides dynamic personalised gamification utilising real-time data and integrating with the organisation’s point of sale (POS) and CRM systems. The platform allows managers to provide employees with targeted and real-time games to alter their work activity. The platform not only provides significant value to managers, as they are able to seamlessly set performance incentives and team goals within Arcade, but also for employees, who can experience increased enjoyment and success at work. Employees are motivated by daily incentives and gamified rewards from hundreds of redemption partners including Amazon, Netflix, Starbucks plus many others. As the organisation inputs more data and builds more game types in Arcade, the platform becomes more valuable for them and their employees — Arcade is replacing the traditional ‘employee of the month’ model with a software and data-led platform.
The Arcade revenue model is two-fold:
- Subscription licensing (SaaS)– users pay for access to the platform on an enterprise-grade freemium model
2. Reward fees (transaction)– employers / managers buy rewards to incentivise employees from over 250 reward partners including Netflix, Apple, Starbucks, Xbox, Disney from which Arcade takes a revenue share
The problem it’s solving: An increasingly unengaged workforce?
Labour markets, both in Australia and globally, are complicated and the COVID-19 pandemic has added another layer of challenges for employers and employees. Through a combination of structural factors such as stagnant wage growth, casualisation of the workforce, globalisation and expanding generational gaps, evidence shows that employees are increasingly becoming disengaged. US data indicates that ~70 million decentralised workers are disengaged and unhappy at work, which is estimated to cost US companies ~US$600 billion from the loss of productivity and employee turnover.
The rise of employee engagement
Employee engagement is increasingly recognised as a critical success factor for organisations — strong engagement metrics drives productivity and supports employee retention. Despite its importance, employee engagement is not the easiest thing for organisations to significantly improve.
One antidote to the employee engagement problem is to connect a company’s goals to real-time gamified incentives designed to lift employee effort and productivity at the team and individual level. We’re seeing that gamification and incentives can drive outsized positive outcomes.
Additionally, companies often don’t have the appropriate tools to implement this effectively, meaning many managers are currently using spreadsheets, paper or CRMs to track team incentives, and are communicating haphazardly via group email or message groups. The approach is not streamlined nor seamless, and as a consequence, organisations receive minimal feedback on the actual results incentives have on driving employee engagement and the ROI of any recognition efforts.
What convinced our team that we had to be involved?
1. Exceptional founders
2. Demonstrated traction with a competitive advantage as a first mover in the ‘non-desk’ worker category with some key integrations and partnerships
3. Strong tailwinds in large market for performance engagement software
Arcade have an early position in the emerging class of software products for employee performance engagement, especially as it’s focused on ‘non-desk’ workers. With its evidenced rapid growth trajectory plus a materially large and growing market opportunity ahead, we strongly believe that now is the right time to build on the momentum and accelerate.
Since launch, Arcade has achieved a tremendous amount, demonstrating initial product market fit through a disciplined market focus on industries traditionally less serviced by technology. This is why we believe it is the perfect time for OIF to partner with David, James and Arcade and work together to significantly scale the company — first, in the ‘non-desk’ worker category, to then emerge as the global leader in the space.
Welcome to the OIF family Arcade — we’re so excited to be alongside you on your mission to be the reason why more than one million people love their work!
If you believe that engaged employees are the bedrock to a successful company, check out Arcade — they’re hiring!
OIF Ventures is a leading Australian venture capital firm that champions exceptional founders, driven by purpose, who add material value to their customers, markets, and communities. OIF Ventures invests in early-stage companies with innovative, high-growth and disruptive technologies with demonstrated market demand.
Founded in 2016 by a team of founders, entrepreneurs, and business-builders, OIF Ventures has raised two funds to date, managing over $300 million and closing its upsized Fund II in mid-2021 for over $115 million. OIF Ventures is exclusively backed by founders, business-builders, ASX executives, HNW and family offices. While focused on backing Australian founders, OIF Ventures seeks to partner with ambitious founders who have the opportunity to expand into global markets, in particular the US, where we can support this expansion through our extensive network of potential customers and investors.
The OIF Ventures team have backed some of Australia’s leading emerging technology companies including Go1, Instaclustr, Assignar, Enboarder, Kasada, Circle In, Adventus.io, Clear Dynamics and more.