Arcade, an AI agent infrastructure startup founded by former Okta exec Alex Salazar and former Redis engineer Sam Partee, has raised $12 million from Laude Ventures.
Laude is the new fund launched in 2024 by Perplexity co-founder Andy Konwinski, the UC Berkeley computer scientist who also co-founded Databricks.
This isn’t the only check Laude has cut. But it is the first publicly announced one, Laude co-founder and general partner Pete Sonsini told TechCrunch. Sonsini is well-known for his years at NEA, where he led early investments in Databricks, Anyscale, and Perplexity.
As for Salazar, he’s a repeat founder. He landed at Okta after selling his authentication API startup, Stormpath, to the company in 2017. He spent the next few years at Okta as a VP building products. Partee, for his part, had been building LLM-based applications and contributing to some key open source projects like LangChain and LlamaIndex, according to Arcade.
When Salazar saw the debut of ChatGPT 3.5, he saw the future, and his next startup idea: an AI agent company. Arcade was founded in February 2024.
Then he and Partee quickly discovered that AI agents don’t really work.
“We were trying to build a site reliability agent that was going to compete with [companies] like Datadog,” Salazar said. But “most agents suck. They don’t do much.”
Salazar and Partee kept “beating our heads against the wall” trying to get their agent just to connect to other services and get the data needed to do their job.
One reason, they discovered, is because many agents use LLMs trained on public data, but not private data. So they can, for instance, talk about product features but can’t confirm that an order was delivered.
The pair decided Arcade would do for AI agents what Okta once-upon-a-time did for SaaS cloud services. The founders built a tool-calling platform for their site reliability agent.
“People were very surprised when we would show them the demo of that agent. They weren’t that interested in the agent itself,” Salazar said. They wanted to know how they got the agent to actually work.
“Ultimately, we just looked at each other and said … Why don’t we just, like, stop with the agent and sell the underlying tool-calling platform?” Salazar said.
Enter Arcade, which helps each agent get access with the same privileges to the same apps and data as the worker it assists, or the job role it plays. Arcade is available via usage-based pricing or subscriptions.
Arcade integrates with OAuth, so it can handle the authentications of thousands of SaaS services and websites. It also acts an intermediary, providing secure token management that prevents the LLMs themselves from accessing those credentials, Salazar said.
When Sonsini, who had backed Salazar with Stormpath, heard that the founder was doing a new startup, he reached out and wanted in.
“We’re very, very focused on super technical type founders, and so we’re very plugged in with the research community. We have limited partners that are researchers,” Sonsini said.
Whereas many AI startup founders are focused on the “shiny object” around LLMs, like agents, “my background is the lower levels, the infrastructure where billion-dollar businesses can be built,” Sonsini said. And Arcade “falls right in that space.”