At the beginning of the year, Square doubled its retail presence, landing in about 20K outlets nationwide. As Jack Dorsey’s mobile payment system continues to find legs, all the major players have been rushing to bring their own solutions to market. Every day there’s a new headline about mobile payments solutions, yet in spite of all the noise, no one in particular has all the traction. That’s why Seth Priebatsch (of SCVNGR fame) and team launched LevelUp, a mobile payment and rewards network, into beta in July 2011.
They wanted to create an easy, carrier, card agnostic payment and loyalty system that could be used everywhere. It’s a lofty goal, but since launch, the mobile payment network has been growing fast. It now counts over 200K users and has partnered with more than 3K merchants in eight cities, including Boston, NYC, Philadelphia, Atlanta, Seattle and San Francisco. And, today, SCVNGR and LevelUp are adding more coin to their coffers to kick the payment network’s expansion into high gear, announcing that they’ve collectively raised $12 million in funding.
SCVNGR’s existing investors, including Highland Capital, Google Ventures, Balderton Capital participated in the round, along with new investors Continental Advisors and Transmedia Capital.
Priebatsch tells us that the raise is part of a larger round of fundraising and it will be used to support LevelUp’s recent growth, adding to its expansion into retail chains like boloco, Johnny Rockets, and Ben & Jerry’s. LevelUp’s 200K users, Priebatsch says, are spending at a volume of $2 million per month with the startup’s app, engagement which the founder says has acted as early validation for the mobile payment network.
For those unfamiliar, LevelUp is attempting to solve a big problem for those looking to pay for items using mobile devices, that is being able to bypass NFC or needing to have a certain credit card to pay for their meal, for example. LevelUp, which is now on iPhone, Android, the mobile web, and in physical card form, allows users to register their most-used credit cards or debit cards on LevelUp, get their own unique QR code, whereupon they can scan to pay at one of the company’s 3K participating stores.
Once the transaction is completed, they’re emailed a receipt. The goal here, Priebatsch says, is to allow users to turn their phones into debit cards, scanning them at checkout. In turn, the value proposition for businesses is the opportunity to attract new customers by offering rewards and deals as well as those targeted at repeat customers to encourage long-term loyalty.
In the mobile payments game, however, it’s all about scale and offering a solution that is carrier and credit card agnostic. ISIS seems ready to offer both of those, but it won’t really be in play until next year, so in the meantime there’s a chance for the plucky little guys to make some headway. Priebatsch believes that LevelUp can do away with enough of the limitations and niche requirements, allowing most with web-connected devices to show up at their favorite merchants and pay.
In the short-term, that could be enough, though in the long term he says that the company is preparing for NFC integration — whenever it’s finally ready to go big. As he’s told us in the past, the specific technology doesn’t matter so much to the end-user, whether it’s NFC, QR Code, ultrasonic — “it’s about offering a solution that the majority of people can use, with the majority of credit cards, and building value on top of that agnostic platform.”
SCVNGR has now raised $30 million to date, and, with its new funding in tow, the startup will be continuing to expand its staff to accomodate growth, adding 40 new recruits to its sales team in recent months.
As to why LevelUp has gone for a multi-part raise? Priebatsch told Scott Kirsner of the Boston Globe:
We got a ton of investment interest, and chose to close part of the round a week or two back. Turns out that SEC Form D filings now must be done electronically within 15 days of the financing. This basically announces the funding for you because anyone can (and TechCrunch does) troll these filings to see who’s getting money. So we closed on 12MM, but we’ve got 1-2 more major strategic partners investing in this round also (same terms), but they move more slowly cause they’re big strategics.
For more on LevelUp, check ‘em out at home here.