Loyalty Startup Belly Inks $10M Series B to Fuel Rapid Expansion

Belly, the Chicago-based rewards startup aimed at local small businesses, today announced $10 million in new funding from Andreessen Horowitz, which the company intends to use to help fuel its growth and kick its U.S. expansion into high gear. Belly CEO Logan LaHive told BetaKit that in this hotly contested space, he believes that first-mover advantage is key, and this new investment should help the company build on its early success, with 200,000 active users onboard since its launch in August 2011.

In addition to a strong user base, Belly has also already managed to sign up 1,400 merchants, and is signing up new businesses at a rate of over 100 per week. Alongside the funding announcement, the company is also debuting the availability of its platform in New York and Boston, adding to its existing reach of Chicago, Austin, Milwaukee, Madison, Washington D.C. and Phoenix.

Belly works by providing businesses with everything they need to provide their customers with a digital rewards system, including cards for shoppers (who can also use their mobile devices to participate), iPads, software and promotional materials, and marketing information on the backend, including analytics related to customer shopping patterns. They do this on a subscription basis, through a variety of tiered offerings that start at around $50 per month and range upward depending on how many tools and how much support a business is looking for, LaHive said.

This differs significantly from many other recent loyalty programs out there, which often focus on software-side solutions and work solely with existing customer hardware. Other entrants in the field, like Swipely, are trying to tie rewards to payment cards that customers are already using, eliminating even the need for additional hardware on either end of the customer/merchant equation. Still, LaHive says that the active space only validates that it’s a worthy target for Belly to pursue, and contends that Belly still has some significant advantages over the rest of the field.

“From our perspective, success really comes down to whoever’s product creates the most engagement and the best relationships between businesses and customers, and whoever can scale it fastest,” he said. “With this level of investment, particularly in a Chicago-based early stage startup from Andreessen Horowitz, I think it really validates us as the best-positioned company to become the leading digital loyalty solution for a universal loyalty program.”

On the customer side, Belly members can redeem their rewards at any participating merchant. Pooling the currency adds a discovery element to Belly, which can provide shoppers with info about rewards in their area. Encouraging merchants to use reward-giving as a platform for interacting with customers in meaningful ways is another way Belly differs from a lot of its competition; for instance, shoppers at Dog-A-Holics in Chicago can get a portrait of themselves and their pet put up on the boutique wall in exchange for Belly points. LaHive cites this as a key difference in Belly’s approach, and one that increases engagement by fostering more personal relationships between shoppers and shop-owners.

There’s no shortage of loyalty startups out there, including some notables like Perkville, PunchTab, Swipely, LocalBonus, and Sweet Tooth. But at least Belly is going into this competitive space with eyes wide open, and a clear plan of attack about how to take an early lead. The biggest threat to its success may be tools that integrate directly with the payment options buyers are already using, like CardSpring‘s “apps for payment cards” application programming interface, and Swipely’s offering. But if it comes down to a land-grab, Belly is definitely out to an early lead.

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