Investors Back Loyalty Startup To The Tune Of $50M

For small businesses, turning first-time customers into repeat ones can mean the difference between profitability and insolvency, and FiveStars now has the financial means to put more SMBs on the former side.

TechCrunch reported that the San Francisco-based loyalty platform startup FiveStars recently finalized a Series C funding round worth $50 million led by HarbourVest Partners. Founded in 2011, FiveStars has now raised a total of $105 million — a number that CEO and Cofounder Victor Ho explained will help his company break through to SMBs hidden behind a wall of white noise in the modern market.

“All of the difficulties of selling to small businesses are true,” Ho told TechCrunch. “It’s incredibly difficult. They will not find you, and you often can’t find them through Google. They are small retailers, and the only way to get them is to get in front of them with a direct sales force. Even Square uses one.”

However, Ho and FiveStars are careful to stuff plenty of technical power into their sales package to SMBs. On top of an extant database on consumer habits, FiveStars boasts Chris Luo, formerly the head of global SMB marketing at Facebook, as its vice president of marketing. Using an algorithm developed by Luo, FiveStars can automatically identify businesses that are lagging on social or are being hampered by an improperly designed website. This targets the efforts of its sales staff and allows FiveStars to achieve higher visibility with less resources.

Ho declined to comment on FiveStars’ possible valuation after the most recent funding round, claiming that he did “not want to be a part of the whole stack ranking game.” However, if the $50 million gets more SMBs on board with FiveStars’ loyalty services, it won’t be able to avoid the calls of financial transparency from its clients or competitors much longer.