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.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.