Bitcoin rewards startup Lolli has raised $5 million in pre-Series A funding to continue developing its shopping product and expand its services internationally.
Lolli offers a browser extension that activates bitcoin rewards up to 30%, depending on the merchant, for online shopping purchases in the US and it’s currently beta testing that capability in a mobile shopping experience. The average reward is 7% bitcoin back.
Over the next few weeks the company plans to roll it out to all users and expand both the mobile and desktop services to other markets, CEO Alex Adelman told Blockworks. The idea is to both give people access to bitcoin, without making them buy bitcoin, and educate them on it.
“Our users experience or interact with bitcoin every single day, whereas most people on exchanges interact with bitcoin maybe once a month or once every few months,” Adelman said. “Most people are not investors, and even fewer people are day traders. So if we can continue to make bitcoin a part of everyday life, people are going to be way more interested in the Lolli ecosystem and thus bitcoin.”
The funding round includes investments from Seven Seven Six, the venture capital fund headed by Reddit cofounder Alexis Ohanian, Night Media, the management company that represents YouTube star MrBeast, and Serena Williams’ Serena Ventures participated in the fund raise. A number of creators and influencers also participated including Casey Neistat, Phil Defranco, Cody Ko, Noel Miller, Ian Borthwick and Gabriel Leydon.
Lolli makes money from its merchant partners, which pay it when its users shop their sites. Lolli then shares that commission with its users — that’s the bitcoin reward that goes in their Lolli wallets.
Eventually, the company plans to evolve its wallet functionality to serve customers for payments as well as rewards. In the next few years, Lolli could introduce interest-earning accounts to allow its customers to earn some yield on their bitcoin rewards, Adelman said. He’s also considering adding a bitcoin and stablecoin buying service and creating the ability for customers to pay merchants on the Lolli network using those assets.
The price point
Still, it’ll be a long time before bitcoin assumes its role as a medium of exchange, Adelman said. Though international ecommerce is increasing and bitcoin provides a way to exchange money between two people across borders without intermediaries, “that’s just not a use case for many people today.”
“People are very much aligned with this idea of bitcoin as a store of value,” Adelman said he learned from customer feedback. “The thing our users are very excited about is price.”
The price of bitcoin has gone up 11x since Lolli first launched in 2018.
With the Covid-19 pandemic, the public has become more aware of how the government creates money; the average consumer might not have cared previously or wouldn’t have understood inflation the way they might today, Adelman said, adding that bitcoin has proven to be a good store of value during this period.
“Everybody now understands this idea that the government’s printing money, the national debt continues to rise and inflation is skyrocketing,” he said. “More money will be printed, inflation will go up and people will retreat to different stores of value, and those that do the best will attract more people every time the flywheel goes around.”
Internet stars, internet money
Lolli’s previous investors include Pathfinder (Peter Thiel’s Founders Fund’s early-stage investment vehicle), Bain Capital Ventures, Craft Ventures and Digital Currency Group.
But its newest investors are some of the biggest influencers and creators. “They’re like the kids of the internet, they’re internet native celebrities,” Adelman said.
While they’re important for Lolli’s marketing and fundraising, they also understand bitcoin, the world’s first native currency of the internet, better than anyone else, he added. Their perspective on money is critical to the education and awareness of newcomers to bitcoin and other digital assets.
“Most people that have grown up on the internet understand how broken money is. They’ve tried to move money all around the world because when you when you grow up on the internet — having friends, being connected and having fans all over the world — you don’t really understand why there are these barriers. Why can’t I send money anywhere freely, why are there 20 tax collectors along the way every time I move money?”
Adelman also said many creators have been drawn to crypto or even participants of the cryptocurrency ecosystem for a long time but haven’t had a way to responsibly talk about it with their millions of followers.
Before Lolli was born, the only way for everyday consumers to get exposure to bitcoin was to buy it on an exchange. Not only is that not easy — user interfaces and experiences have improved significantly over the years but are still lacking — it’s also not responsible for internet stars, who would be giving financial advice to their followers encouraging them to buy a risky and volatile asset. (Whereas with Lolli, customers shop for things they’d already shop for in dollars and earn a free bitcoin reward for shopping through Lolli.)
“These creators understand what we’re doing better than most Silicon Valley investors,” Adelman said. “They saw Honey well before anybody else, before Silicon Valley though it was going to be a success.”
Similar to Lolli, Honey is a browser extension that automatically finds and applies coupon codes at checkout. It launched in 2012, and in late 2019, shortly after MrBeast began endorsing Honey, became PayPal’s largest ever acquisition.
“A lot of these creators are looking at us as the next Honey, and we’ve made this jump to say, ‘we’re not just going to pay you creator fee, we want you to be a real part of this. If you help us grow, we want to help you.’ So we invited them to invest in this and share in this journey.”