Four Reasons Why Andreessen Horowitz Is Investing $10 Million in Belly
Andreessen Horowitz has invested $10 million in Belly, a Chicago-based company that is building a loyalty network for retailers that will replace punch cards with a mobile rewards program.
Since launching in August, Belly has signed up 1,400 merchants in eight markets, and is adding an average of 100 more merchants each week. Additionally, it has more than 200,000 active users, who have checked into business more than 800,000 times.
The business draws a little bit from Foursquare, because it requires users to check in to earn points; and also draws a little bit from Groupon, because of its focus on local commerce.
But Jeff Jordan, a partner at Andreessen Horowitz, argued that Belly is not at all like Groupon. “It’s the anti-Groupon,” he said. “Groupon is doing lead generation through discounting. … What Belly is trying to do is loyalty.”
The difference, Jordan said, is that Belly doesn’t require merchants to offer discounts to get consumers to come back.
For example, a Chicago comic book store owner is letting shoppers punch him in the stomach; a Washington, D.C., Ben & Jerry shop is giving away a chance to eat ice cream with Jerry after 200 visits; and a barber is handing over the clippers to frequent customers, who will shave off his own beard.
Jordan, the former chairman and CEO of OpenTable and former president of PayPal, said there are four reasons why he was attracted to the start-up:
- The management team: Founder and CEO Logan LaHive previously worked at Redbox, and before that, Pay By Touch, the biometrics payments company that raised $350 million in capital before failing.
- Product execution: Jordan said both merchants and customers like the product. Merchants must install an iPad at the register, where consumers can check in to earn points by scanning a bar code from their phone or a loyalty card.
- DNA of the investors: Before Andreessen Horowitz got involved, LaHive incubated the company in the offices of Lightbank, the VC fund created by Groupon founders in Chicago. Jordan believes that the one who gets to market fastest will win in this market. Belly has that in its DNA.
- Connected retailers: Once retailers have an iPad in every store, there will be additional opportunities for Belly to roll out other services.
LaHive said the capital will be used to fuel expansion into new markets and to develop new services. To date, the company has raised $13 million.
Belly charges merchants $50 to $100 a month for the service, which includes an iPad, a case and lock for the iPad, marketing materials, and data and analytics to manage their business better.