Cadoo receives $1.5 million to gamify fitness through wagering challenges
Cadoo receives $1.5 million to gamify fitness through wagering challenges
Cadoo, a US-based startup that gamifies fitness by transforming it into a betting opportunity, using the prospect of winning (or losing) real money to motivate people to get off the couch, has raised $1.5 million in seed funding from Sam & Max Altman's Apollo Ventures and the student-focused Dorm Room Fund.
Although the app has been around since 2018, it launched a "challenge model" in March 2020 that allows users to stake money to participate in a challenge related to a specific fitness goal — such as running 10 miles in ten days or walking three miles in three days.
Participants who complete the challenge receive their stake back in addition to a pro-rata share of the staked entry fees paid by losers.
Cadoo's challenges ("from daily steps to marathon training") cater to a variety of fitness levels, with approximately 50 public challenges hosted each week.
This month, it's also introducing private challenges, which will enable users to host and configure fitness challenges for themselves/family and friends, as well as larger groups, such as companies, clubs, or schools.
The app verifies challenge-related activity using API data from activity trackers and fitness apps. (Which hopefully means Cadoo is intelligent enough to detect when someone's Fitbit is attached to their dog... )
The app integrates with a variety of third-party fitness services such as Strava, Fitbit, and Apple Health.
Colm Hayden, the startup's CEO and founder, describes it as "DraftKings for your own fitness goals."
“Our audience is made up of 25-50 year old fitness enthusiasts who use Cadoo to stay committed to their monthly/weekly fitness goals,” he explained to TechCrunch, adding, “When people are serious about achieving a goal, they want intense motivation to back them up.”
He claims the app has attracted approximately 7,000 wager-obsessed users thus far.
Cadoo's business model
Cadoo's business model is based on collecting a fee from challenge losers before distributing their entry fee stakes to challenge winners — which may provide the business with an incentive to set more difficult challenges than users are capable of completing.
However, users are free to choose which challenges to enter and thus commit their hard-earned cash to.
In addition, it claims that 90% of users who sign up for Cadoo challenges complete them successfully.
Hayden says it intends to expand its monetization potential in the future by offering fitness products to winners — and charging a premium for them. Additionally, by diversifying your goals beyond running/walking.
“We're developing a motivation platform that enables anyone to achieve their goals,” he explains. “Financial incentives are an extremely powerful motivator, and 90% of users who join Cadoo challenges achieve their fitness goals. We're expanding Cadoo beyond running goals and will eventually incentivize almost any goal verifiable on the internet.”
While the app is based in the United States, Hayden says it is capable of international participation — at least in countries where PayPal is available.
In a statement announcing the seed round, Apollo VC's Altman brothers added: "Cadoo makes it simple to motivate users to stay active through financial incentives." We believe that the motivation industry that Cadoo is pioneering will be a significant use case for digital money.”
Cadoo claims to have raised $350,000 in an angel round from Tim Parsa's Cloud Money Ventures Angel Syndicate, Wintech Ventures, and Daniel Gross's Pioneer prior to the seed round.
Of course, gamification of health is not new — given the data-driven quantification and goal-based motivation that has been occurring in the fitness industry for years, aided by wearables that make tracking steps, distances, and calories burned trivial.
However, adding money to the mix adds another layer of competition, which may be beneficial for motivating a certain type of person to get or stay fit.
Cadoo is not the only fitness-focused startup taking this approach, with a number of apps rewarding users for losing weight or staying active (albeit, in some cases, less directly through the use of digital currency that can be exchanged for'rewards'). Others in the space include HealthyWage (a 2009 TC50 company we covered! ); Runtopia; and StepBet, to name a few.
