FiveStars raised a generous $13.9 million in a first round of funding for its rewards program that replaces old-school loyalty punch cards with a [slightly] more hi-tech and convenient alternative.
Instead of five, worn-out, hole-ridden paper cards or a slew of keychain swipe cards, FiveStar provides consumers with one single card that can be used to earn rewards from a wide range of local businesses, from yogurt shops to yoga studios.
The system operates similarly to grocery store member cards that are swiped at the checkout counter. It is used at the point-of-sale, which means neither offline merchants nor customers need to change their shopping behavior. Customers can earn discounts right there or points that will pay off in the future.
Since launching in 2011, FiveStars has recruited over 400,000 customers across the country, who have purchased 3.5 million items collectively. The company participated in Y Combinator in 2011 and has since raised a total of $16 million in investment. This round was led by Lightspeed Venture Partners and DCM.