Investors have put their money on Lootsie and its loyalty rewards platform.

The Culver City startup, which incentivizes users to engage with an app by awarding points that are redeemed for real-life prizes, announced Wednesday it raised $3.5 million in seed funding to scale operations.

Developers decide how Lootsie points are distributed across in-app achievements. A fitness app, for example, could allocate points if a user runs three days in a row. A mobile game could grant points for reaching a difficult level. More than 70 brands offer rewards that range from a free Sprinkles cupcake and a $15 Lorna Jane gift code to a free bike from Solé Bicycles.

Chief Executive Marc Mitchell said a rewards program gives brands more efficient ways to reach consumers without using pesky ads, and developers benefit because they see higher user engagement while scoring some extra revenue. Lootsie shares the money made from advertiser-paid campaigns with its developers, though Mitchell declined to share the exact split.

“People take a lot of time to create an experience, and then to pollute it with banner ads is a waste,” he said.

Lootsie, which currently employs 20 people, will be profitable this year, he added.

Seed investors include Tim Kendall, head of product management at Pinterest; Michael Liou, founding partner at Anvil Capital; Brad Schwartz, founding partner at SLP Ventures; and angel Anthony Saleh. Lootsie plans to seek institutional funding later this year.

Staff reporter Melissah Yang can be reached at Follow her on Twitter @MelissahYang for the latest in L.A. tech news.

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