99designs gets $35 million in funding from Accel Partners

Australian crowdsourcing pioneer 99designs will ramp up its marketing efforts and bolster its US presence after receiving $35 million in funding from US venture capital firm Accel Partners and a group of prominent angel investors including Flickr co-founder Stewart Butterfield, Survey Monkey CEO Dave Goldberg and former eBay executive Michael Dearing.

99designs, which was spun out of Mark Harbottle’s design and development hub Sitepoint in February 2008, is one of the pioneers of the rapidly-growing crowdsourcing sector.

The site allows users to access cheap design services by running contests, where designers from around the world bid to work on tasks set by users.

The company has more than 100,000 developers across 192 counties, and has paid $19 million to designers in the past three years.

99designs co-founder Mark Harbottle says while the business has doubled in size in the last four months, 99designs is yet to do any formal marketing or customer acquisition campaigns.

“We are going to spend a lot of this building out our marketing team in the US,” he says.

The fresh capital will also allow 99designs to hire a US-based chief financial officer, expand the company’s Australian-based development team and create or acquire new tools for the site’s designers.

“I think moving forward the management will transition to the US [but] we’ll still do the majority of our development and our support in Australia. We still think Australia has the best developers in the world.”

Harbottle says he first met with Accel, which has also invested in Australian tech firms Atlassian Software and OzForex, in late 2009.

“These guys were another one of the VCs. We didn’t think much of it, we weren’t looking to raise money.”

“But they’ve been great at just keeping in contact, and have made introductions when we needed them. You get a lot of VC’s saying that, but not many follow through.”

When talks eventually turned to investment, Accel’s experience in Australia became a big advantage.

“We closed this deal in 30 days. Obviously them having that investment in Atlassian and OZForex really helped with that process.”

“It’s definitely a big deal for us but it’s also a big deal on the Australian stage.”

While the crowdsourcing sector has become increasingly crowded in recent years thanks to fellow Australian-founded sites such as DesignCrowd and Freelancer, Harbottle is not keen to actively drive consolidation in the sector.

“We track those guys very closely… We are so much bigger than them that the consolidation wouldn’t make sense. Right now, there is no clear number two. There is us and then there are a whole lot of others.”

And while the three-year-old crowdsourcing industry looks positively ancient when compared to the group-buying sector, Harbottle says it is still “early days” for crowdsourcing.

“Everything is becoming digital and it all needs to be designed. I think that’s what Accell saw as well – they saw us as the leader in a fast-growing sector.”

One change in the sector that Harbottle is seeing is a need for improved customer service.

He says one of the biggest growing pains from 99designs’ sudden burst of growth in the last four months has been keeping up with customer support.

To this end, the company has added a team of US-based telephone customer support staff to its online support efforts.

“It’s become quite an advantage for us – we’ve realised customers do like to be able to call someone.”

Harbottle says this support will be beefed up as marketing initiatives are rolled out in the coming months.