Payment facilitator Fivestars announced last week that it has raised $52.5 million, bringing its total funding to $145.5 million.
Fivestars operates a marketing and loyalty platform for small businesses. The company also offers payments capability integrated into its platform.
The latest fundraise combined debt with a Series D equity round that was led by Salt Partners, according to TechCrunch. Lightspeed Venture Partners, DCM Ventures, Menlo Ventures and HarbourVest Partners participated, the article said.
Fivestars co-founder and CTO Matt Doka told PaymentFacilitator that the company raised the money prior to the coronavirus shutdown that began in March but chose not to announce it until now.
“The timing didn’t feel right back then as our customers were suffering through the effects of the shutdowns,” he said.
Instead, the company prioritized helping merchants at that time, giving away more than $1 million worth of credits and providing free messaging upgrades to enable businesses to communicate with their customers about changes to their operations. The company also began offering the first month on its platform free.
Since that time, Fivestars has not seen a decrease in demand, Doka said.
“In fact, the pandemic accelerated the need for updated technology,” he said. “Small businesses are realizing that digitalization is no longer an option, but a matter of survival so our business model to support them with both a network and technology is working.”
“As both a loyalty marketing platform and a PF, we’re uniquely positioned to support their journey and meet the unprecedented demand,” he said.
The company launched Fivestars Pay – the POS system for retailers that is integrated into its platform – last year. It became a PF with the help of Infinicept, which provided the company with the payments infrastructure, technology and expertise it needed to get up and running.
As a result, the company is able to offer payments with only one incremental full-time employee managing payment operations, Doka said.
For Fivestars, the pandemic has driven home the need for businesses to take advantage of financial technology to build relationships with customers. The company’s payments product is an important part of building out its network, Doka said.
“With Fivestars powering payments, a new customer is added to a merchant’s marketing database with each swipe, dip or tap of a credit card, allowing merchants to retarget customers and bring them back in the door again. Our platform connects with 500+ POS systems, allowing easy access in a fragmented market,” he said.
Last year, the 60 million shoppers in Fivestars’ network spent $3 billion across the 14,000 merchants on its platform, Doka said.