Arcade, a rising AI infrastructure startup, has secured $12 million in fresh funding led by Laude Ventures—a new venture fund founded by Perplexity AI’s co-founder, Andy Konwinski. The funding aims to support Arcade’s mission to solve one of the biggest pain points in AI: making AI agents actually useful.
Laude Ventures Makes Its First Big Bet on Arcade
Laude Ventures, launched in 2024, has made several early investments but chose Arcade as its first publicly announced deal. Pete Sonsini, Laude’s co-founder and general partner, shared the news in an interview with TechCrunch. Sonsini, a seasoned investor known for his success at NEA backing Databricks, Anyscale, and Perplexity, believes Arcade fits perfectly into their strategy of betting on deeply technical founders.
Andy Konwinski, who also helped launch Databricks, brings significant expertise in AI and infrastructure—a factor that aligns with Arcade’s core focus.
Meet the Founders on a Mission to Rebuild AI Agents
Arcade was co-founded in early 2024 by Alex Salazar, a seasoned entrepreneur and former Okta executive, alongside Sam Partee, a well-known engineer in the open-source AI community. Before Arcade, Salazar successfully built Stormpath, an authentication API startup acquired by Okta in 2017. He spent several years leading product development at Okta post-acquisition.
Partee, meanwhile, made his mark contributing to major open-source projects like LangChain and LlamaIndex while building large language model (LLM)-powered applications.
Their journey with Arcade began when Salazar recognized the potential of AI agents after the release of ChatGPT 3.5. However, excitement quickly turned into frustration as they realized how poorly most AI agents perform in real-world tasks.
The Harsh Reality: AI Agents Still Don’t Work Well
Initially, the team set out to build a site reliability engineering (SRE) agent designed to rival companies like Datadog. But they hit a major roadblock—AI agents simply couldn’t perform tasks reliably.
“We kept hitting walls just trying to get our agent to connect with other services and fetch the data it needed,” Salazar admitted. The core problem? Most AI agents rely heavily on LLMs trained on public datasets, leaving them blind to private company data like delivery confirmations or order statuses.
This glaring flaw made them rethink their approach entirely.
From AI Agents to the Engine That Powers Them
Realizing the real demand was not in the agents themselves but the tech that could make them work, Salazar and Partee pivoted. Instead of creating another AI agent, they built a robust tool-calling platform—Arcade—that enables agents to securely interact with apps and data as seamlessly as human workers.
“People didn’t care much about the agent. They cared about how we made it function,” Salazar explained. That feedback sparked the pivot that defines Arcade today.
How Arcade’s Platform Unlocks AI Agent Potential
Arcade acts as the invisible bridge between AI agents and the complex world of SaaS apps, websites, and internal company data. The platform integrates directly with OAuth protocols, giving it access to thousands of apps while securely managing credentials.
By keeping sensitive tokens away from LLMs, Arcade ensures enhanced security and prevents unauthorized data exposure—something many current AI agents fail to address.
Arcade’s platform is now available through usage-based pricing or subscription plans, offering flexibility for businesses of all sizes.
Why Investors See Billion-Dollar Potential in Arcade
For investors like Sonsini, the technical complexity behind Arcade’s platform is exactly what makes it so attractive. Unlike many AI startups chasing the latest LLM trends, Arcade is tackling the foundational infrastructure—where Sonsini believes massive businesses are born.
“We’re laser-focused on technical founders. Our network includes top researchers, and our LPs come from that world,” Sonsini shared. “Arcade is operating at the infrastructure layer, and that’s where billion-dollar companies are built.”
