Accel Leads $35 Million Round For Design Marketplace, 99Designs

sample 99designs logoA logo for sale on 99designs

Photo: Ben Branham, 99designs

Accel Partners, known for its smart early investments in fast-growing companies like Facebook and Groupon, has led a $35 million first round investment into 99designs, an crowdsourced online marketplace for designers.99designs started in February 2008 as a spin-out from a forum on SitePoint, and caters mostly to small businesses who lack their own design department. Businesses post jobs as “contests” for things like designing a new logo or Web site, along with a reward for the winner. 99designs takes a cut of each payout.

Designers also contribute spec designs — like the one here by Ben Branham — to a logo store on the site. Businesses can then buy a customised version of each logo for $99.

Right now, businesses are posting around 4,000 contests per month on 99designs, and it’s paying out more than $1 million per month to designers.

While the investment may seem like another example of a frothy funding marketplace — it’s hard to imagine such a narrowly tailored company becoming the next Groupon — 99designs is lean (only 26 employees) and profitable, and showing 120% annualized revenue growth.

Plus, online marketplaces typically benefit from first-mover advantage and network effects — think eBay or Amazon.

CEO Patrick Llewellyn says 99designs will use the funding to expand internationally — most of its business comes from the U.S. and Australia, where the company has its two offices — as well as for new platform features like a reputation engine to help businesses rate designers. hiring in marketing and finance, and M&A.

Other investors in the round include Flickr cofounder Stewart Butterfield and former eBay exec Michael Dearing.

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