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SCVNGR finds $12 million more to support LevelUp mobile payment product

Posted by Scott Kirsner  June 7, 2012 09:00 AM

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SCVNGR, the Boston company that originally set out to develop mobile games that could be played in the real world, has raised another $12 million from investors. But the money will go to support a newer SCVNGR product that seems to be building more momentum: the company's LevelUp mobile payment offering. It lets you pay for retail transactions simply by showing the screen of your mobile phone, and it allows merchants to offer a discount — like $2 off your first purchase — to lure you in, as well as continuing rewards for long-term loyalty. (I wrote about LevelUp back in March.)

The company says that 3,000 merchants in eight cities now accept LevelUp as a form of payment. Users are spending about $2 million monthly with the app. The new funding will enable the company to roll out LevelUp in more cities, the company says.

SCVNGR has now raised about $32 million in total. The new round includes prior investors like Google Ventures and Highland Capital Partners, but also new participants like Transmedia Capital and Continental Investors. The company's press release indicates that the $12 million is part of a larger round the company is raising, and CEO Seth Priebatsch told me it will also include some corporate backers.

I asked Priebatsch about the decision to announce the funding before the round was completed. Here's what he said:

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.

Rather than wait for the big strategics to finish all their due diligence and close, we decided to close the round in two parts and just deal with the mechanics of a split announcement (one now, one in ~6 weeks), rather than holding off for a single close 6 weeks from now. All the financial investors were itching to move forward and I figured, hey, why not.

I think multi-part closes happen more often that you think (especially when you've got mega corporations investing), but you're only starting to see them more recently because of the SEC Form D filings being digital and thus outing fundings whether the company's ready to announce or not.

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Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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