Raised to Date: Raised: $41,802
Rolling Commitments ($USD)
Do you wish you could find the motivation to be more active? Or are you in HR, or running a business, where you wish you could help your employees to get healthier (and therefore help reduce your health care costs)? If this sounds like you, then CARROT might just be the investment you’ve been looking for. This mobile app provides financial incentives for people to get their steps in, get healthier, and earn rewards along the way.
CARROT provides that “carrot” of incentive many of us need to start getting healthier. It’s a mobile app that offers a gamified approach to fitness tracking. Everyone from people with manuel wheelchairs to marathoners can equally benefit, and they offer wellness programs for both individuals and corporations. CARROT tracks participants daily activity, creates customized goals and individual challenges, and provides financial incentives as rewards to help motivate people. Rewards can include digital gift cards, contests to enter, or rewards from employers. CARROT currently has about two dozen paying clients, 60,000 paid participants, and people in more than a dozen countries who participate. Plus -- it works. About 85% of participants engage with the app daily, increasing their daily steps by 22.8% in the first two months! Add in the fact that an audience of more than 400 CEOs and HR professionals named CARROT the “Most Innovative Solution” to engage millennials in health care at the 2016 Crain’s Detroit Business Health Care Leadership Summit, and CARROT’s founder and CEO, Michael Antaran, was named as one of the “50 Names to Know in Information Technology” by Crain’s Detroit Business….and it’s clear that CARROT is walking its way to success, one step (and reward) at a time.
The Bottom Line:
Sometimes simply tracking your steps isn’t enough. You need a little more incentive to get off the couch and on your feet, and CARROT provides that incentive. Plus, their wellness programs for corporations can help employees get healthier and keep healthcare costs down. With CARROT, it pays to walk -- literally.
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It is hardly a secret that the United States healthcare system is characterized by equal parts high (and rising) costs and stagnant quality of care. Not tasty cocktail in my opinion. Increasing healthcare costs put pressure on companies of all size to offer competitive coverage benefits to their staff without breaking the bank.
Underlying this trend, is the unfortunate reality of the battle-tested 80-20 rule: 80% of the cost is created by 20% of the workforce. Ok, those aren’t exact figures, but the point remains that the bulk of health care costs is attributable to the unhealthy minority that disproportionally utilize medical benefits. It is a frustrating dynamic for all involved and despite rapid inflow of corporate investment into health and wellness initiatives, little has changed.
The team at CARROT believes that the key to successful health and wellness initiatives is, at its core, engagement. Without a high percentage of employee engagement, corporate dollars aimed at health initiatives merely stimulate the already-active (and relatively healthy) employee cohort to drive a small up-tick in activity. This is great, but it is also low-hanging fruit. Most corporate wellness programs don’t sufficiently incentivize that higher-hanging fruit: the minority of employees who drive the proverbial 80% of health care cost need a greater incentive to get up, get going, and improve their health.
CARROT has created a solution that seeks to stimulate even the most sedentary of staff members to lead more active lives by ‘gamifying’ the incentive scheme through P2P gaming and other challenge-based games. CARROT rewards activity with digital currency that can be later redeemed for real-money gift-card programs integrated right into the application. With CARROT, employees can earn tangible monetary rewards that create compelling incentives when compared to alternatives in the marketplace.
Why We Like it
- Solving a real need: Based on the information provided, CARROT appears to have had early success with its initial clients. This, to me, is probably the second most important factor in considering an investment in an early stage company like CARROT: simply put, ‘do they solve a real problem for their clients?’ I believe CARROT has the potential to do just that. Early results indicate a strong uplift in participation and employee engagement for an affordable price tag. Particularly when contextualized by the amount companies spent annually on employee healthcare coverage, CARROT’s price point is unlikely to cause heartburn. Put yourself in the shoes of a business owner with, say, 50 employees. You pay $2,500 up-front an $500 per year thereafter. At $3,000 of total spend for the first year, the potential cost savings front a healthier workforce greatly outweigh the downside (ostensibly just the $3,000 lost in exchange for a status-quo healthcare spend).
- Thoughtful exit approach: When evaluating early-stage opportunities, a common theme is the lack of a developed thesis around liquidity – said another way, young companies often struggle to articulate an answer to the “what do we want to be when we grow up?” question. CARROT appears to understand that early investors seek a combination of (i) supporting the growth of a product or service they believe in and (ii) and opportunity to realize an investment return commensurate with the risk they incur giving their hard-earned dollars to a start-up. CARROT dedicating attention to this topic in their investment pitch deck shows an earnest appreciation for the pluralistic goals of their potential investor base. This is, in my eyes, promising as understanding that “what do we want to be when we grow up?” question can be instrumental in guiding management through strategic and resource prioritization challenge as the business scales.
Uses of Capital
CARROT plans to use the first $8,000 of capital raised to paydown outstanding debt, the remainder of which will be allocated to working capital to provide support to sales and marketing activities needed to reach revenue goals.
The target uses include: hiring a sales lead and onboard incremental sales and account support staff. That stated goal, as according to their offering statement, suggests to me that the team is excited by their level of success to-date and are eager to accelerate their sales efforts with this capital (as opposed to needing capital to further develop the product, for instance).
I take that to be a positive signal for the state of the affairs at CARROT that the primary uses of capital are commercially oriented.
Michael Antaran – Founder & CEO: Antaran brings to CARROT 15 years of design, programming, and leadership experience at two major automotive manufacturers and a depth prior start-up experience. In 2008, Antaran founded Marvel Apps, LLC – a holding company through which he has created more than 20 applications. Antaran holds a BS in Mechanical Engineering from Wayne State University and an MSME from Oakland University.
Michael Murray – VP of Marketing and Communications: Murray brings a diverse background in media and communications experience across 6+ companies in academia, professional sports, and healthcare. Murray holds a bachelor’s degree from the University of Michigan.
Founder Profile: The Man Behind The CARROT
Imagine taking the leap of faith to build a gaming startup, give it everything you have, prove it effective, only to be coerced by your significant other to give it all up because it’s mission was not necessarily aligned with your values.
That is the decision Michael Antaran made when he decided to move away from the gaming company he founded to build CARROT in order to promote a healthy lifestyle over an unhealthy one. Talk about a well-intentioned individual and frankly it’s paying off.
With an innovative approach to creating an engaging corporate wellness program, Michael and his lean team already have hundreds of thousands in annual recurring revenue and are proving that doing well and doing good are possible together.
Check out the CARROT story below.