Crowdsourcing start-up DesignCrowd snares $3 million Starfish funding

Crowdsourcing start-up DesignCrowd is to accelerate its global expansion after securing a $3 million investment from heavyweight Australian VC firm Starfish Ventures.

The equity return for the investment was not disclosed, although Starfish says it now controls a “meaningful minority stake”.

DesignCrowd was launched in 2007 by 23-year-old entrepreneur Alec Lynch, from his mother’s dining room table.

The site acts as an online marketplace for designers, allowing businesses to “crowdsource” creative projects.

More than 40,000 designers are registered to the site, across 159 countries. A New Zealand site recently launched, with further international expansion planned.

Lynch says: “Starfish’s investment is very exciting – it will help us grow from a bootstrapped Sydney start-up into a global company.”

“We’ve done well in Australia, now we want to take on the world and Starfish is the perfect partner to help us succeed.”

Lynch took $300,000 in angel funding in 2009. He will now “hire aggressively” to help boost the business’ growth.

Tony Glenning, who led the investment for Starfish, tells StartupSmart that he sees great potential for the business.

“We really like the crowdsourcing model and we think Alec and his team have done a phenomenal job,” he says.

“There’s been a backlash against some crowdsourcing sites, but DesignCrowd has been able to make the process fair and sustainable.”

“You see the Freelancer.com model where it is almost a race to the bottom on price. DesignCrowd has a more sustainable business model where it’s fair pay for fair work. Businesses don’t necessarily want the cheapest, they want quality.”

“I think the crowdsourcing market is in the proliferation stage at the moment, I’m not expecting consolidation any time soon.”

“We’d like to see DesignCrowd achieve market leadership and then a trade sale would be a natural course. But we are concentrating on building the business first – the exit will then look after itself.”